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—
§ 1426 TITLE 29—LABOR Page 574

(1) a multiemployer plan is insolvent if the

plan’s available resources are not sufficient to

pay benefits under the plan when due for the

plan year, or if the plan is determined to be insolvent under subsection (d) of this section;

(2) ‘‘resource benefit level’’ means the level

of monthly benefits determined under subsections (c)(1) and (3) and (d)(3) of this section

to be the highest level which can be paid out

of the plan’s available resources;

(3) ‘‘available resources’’ means the plan’s

cash, marketable assets, contributions, withdrawal liability payments, and earnings, less

reasonable administrative expenses and

amounts owed for such plan year to the corporation under section 1431(b)(2) of this title;

and

(4) ‘‘insolvency year’’ means a plan year in

which a plan is insolvent.

(c) Determination by plan sponsor of plan in reorganization of resource benefit level of plan

for each insolvency year; uniform application of suspension of benefits; adjustments of

benefit payments

(1) The plan sponsor of a plan in reorganization shall determine in writing the plan’s resource benefit level for each insolvency year,

based on the plan sponsor’s reasonable projection of the plan’s available resources and the

benefits payable under the plan.

(2) The suspension of benefit payments under

this section shall, in accordance with regulations prescribed by the Secretary of the Treasury, apply in substantially uniform proportions

to the benefits of all persons in pay status (within the meaning of section 1421(b)(6) of this title)

under the plan, except that the Secretary of the

Treasury may prescribe rules under which benefit suspensions for different participant groups

may be varied equitably to reflect variations in

contribution rates and other relevant factors including differences in negotiated levels of financial support for plan benefit obligations.

(3) Notwithstanding paragraph (2), if a plan

sponsor determines in writing a resource benefit

level for a plan year which is below the level of

basic benefits, the payment of all benefits other

than basic benefits must be suspended for that

plan year.

(4)(A) If, by the end of an insolvency year, the

plan sponsor determines in writing that the

plan’s available resources in that insolvency

year could have supported benefit payments

above the resource benefit level for that insolvency year, the plan sponsor shall distribute the

excess resources to the participants and beneficiaries who received benefit payments from

the plan in that insolvency year, in accordance

with regulations prescribed by the Secretary of

the Treasury.

(B) For purposes of this paragraph, the term

‘‘excess resources’’ means available resources

above the amount necessary to support the resource benefit level, but no greater than the

amount necessary to pay benefits for the plan

year at the benefit levels under the plan.

(5) If, by the end of an insolvency year, any

benefit has not been paid at the resource benefit

level, amounts up to the resource benefit level

which were unpaid shall be distributed to the

participants and beneficiaries, in accordance

with regulations prescribed by the Secretary of

the Treasury, to the extent possible taking into

account the plan’s total available resources in

that insolvency year.

(6) Except as provided in paragraph (4) or (5),

a plan is not required to make retroactive benefit payments with respect to that portion of a

benefit which was suspended under this section.

(d) Applicability and determinations respecting

plan assets; time for determinations of resource benefit level and level of basic benefits

(1) As of the end of the first plan year in which

a plan is in reorganization, and at least every 3

plan years thereafter (unless the plan is no

longer in reorganization), the plan sponsor shall

compare the value of plan assets (determined in

accordance with section 1423(b)(3)(B)(ii) of this

title) for that plan year with the total amount

of benefit payments made under the plan for

that plan year. Unless the plan sponsor determines that the value of plan assets exceeds 3

times the total amount of benefit payments, the

plan sponsor shall determine whether the plan

will be insolvent in any of the next 3 plan years.

(2) If, at any time, the plan sponsor of a plan

in reorganization reasonably determines, taking

into account the plan’s recent and anticipated

financial experience, that the plan’s available

resources are not sufficient to pay benefits

under the plan when due for the next plan year,

the plan sponsor shall make such determination

available to interested parties.

(3) The plan sponsor of a plan in reorganization shall determine in writing for each insolvency year the resource benefit level and the

level of basic benefits no later than 3 months before the insolvency year.

(e) Notice, etc., requirements of plan sponsor of

plan in reorganization regarding insolvency

and resource benefit levels

(1) If the plan sponsor of a plan in reorganization determines under subsection (d)(1) or (2) of

this section that the plan may become insolvent

(within the meaning of subsection (b)(1) of this

section), the plan sponsor shall—

(A) notify the Secretary of the Treasury, the

corporation, the parties described in section

1422(a)(2) of this title, and the plan participants and beneficiaries of that determination,

and

(B) inform the parties described in section

1422(a)(2) of this title and the plan participants

and beneficiaries that if insolvency occurs certain benefit payments will be suspended, but

that basic benefits will continue to be paid.

(2) No later than 2 months before the first day

of each insolvency year, the plan sponsor of a

plan in reorganization shall notify the Secretary

of the Treasury, the corporation, and the parties

described in paragraph (1)(B) of the resource

benefit level determined in writing for that insolvency year.

(3) In any case in which the plan sponsor anticipates that the resource benefit level for an

insolvency year may not exceed the level of

basic benefits, the plan sponsor shall notify the

corporation.
Page 575 TITLE 29—LABOR § 1441

(4) Notice required by this subsection shall be

given in accordance with regulations prescribed

by the corporation, except that notice to the

Secretary of the Treasury shall be given in accordance with regulations prescribed by the Secretary of the Treasury.

(5) The corporation may prescribe a time other

than the time prescribed by this section for the

making of a determination or the filing of a notice under this section.

(f) Financial assistance from corporation; conditions and criteria applicable

(1) If the plan sponsor of an insolvent plan, for

which the resource benefit level is above the

level of basic benefits, anticipates that, for any

month in an insolvency year, the plan will not

have funds sufficient to pay basic benefits, the

plan sponsor may apply for financial assistance

from the corporation under section 1431 of this

title.

(2) A plan sponsor who has determined a resource benefit level for an insolvency year which

is below the level of basic benefits shall apply

for financial assistance from the corporation

under section 1431 of this title.

(Pub. L. 93–406, title IV, §4245, as added Pub. L.

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

1259.)

WITHDRAWAL LIABILITY OF EMPLOYER FROM PLAN TERMINATING WHILE PLAN INSOLVENT WITHIN THIS SECTION: DETERMINATIONS, FACTORS, ETC.

Section 108(c)(3) of Pub. L. 96–364 provided that:

‘‘(A) For the purpose of determining the withdrawal

liability of an employer under title IV of the Employee

Retirement Income Security Act of 1974 [this subchapter] from a plan that terminates while the plan is

insolvent (within the meaning of section 4245 of such

Act [this section]), the plan’s unfunded vested benefits

shall be reduced by an amount equal to the sum of all

overburden credits that were applied in determining

the plan’s accumulated funding deficiency for all plan

years preceding the first plan year in which the plan is

insolvent, plus interest thereon.

‘‘(B) The provisions of subparagraph (A) apply only

if—

‘‘(i) the plan would have been eligible for the overburden credit in the last plan year beginning before

the date of the enactment of this Act [Sept. 26, 1980],

if section 4243 of the Employee Retirement Income

Security Act of 1974 [section 1423 of this title] had

been in effect for that plan year, and

‘‘(ii) the Pension Benefit Guaranty Corporation determines that the reduction of unfunded vested benefits under subparagraph (A) would not significantly

increase the risk of loss to the corporation.’’

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1053, 1202, 1322a,

1361, 1411, 1423, 1431, 1441, 1461 of this title.

PART 4—FINANCIAL ASSISTANCE

§ 1431. Assistance by corporation

(a) Authority; procedure applicable; amount

If, upon receipt of an application for financial

assistance under section 1426(f) of this title or

section 1441(d) of this title, the corporation verifies that the plan is or will be insolvent and unable to pay basic benefits when due, the corporation shall provide the plan financial assistance

in an amount sufficient to enable the plan to

pay basic benefits under the plan.

(b) Conditions; repayment terms

(1) Financial assistance shall be provided

under such conditions as the corporation determines are equitable and are appropriate to prevent unreasonable loss to the corporation with

respect to the plan.

(2) A plan which has received financial assistance shall repay the amount of such assistance

to the corporation on reasonable terms consistent with regulations prescribed by the corporation.

(c) Assistance pending final determination of application

Pending determination of the amount described in subsection (a) of this section, the corporation may provide financial assistance in

such amounts as it considers appropriate in

order to avoid undue hardship to plan participants and beneficiaries.

(Pub. L. 93–406, title IV, §4261, as added Pub. L.

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

1261.)

EFFECTIVE DATE

Part effective Sept. 26, 1980, except as specifically

provided, see section 1461(e) of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1306, 1307, 1322a,

1426 of this title; title 26 section 418E.

PART 5—BENEFITS AFTER TERMINATION

§ 1441. Benefits under certain terminated plans

(a) Amendment of plan by plan sponsor to reduce benefits, and suspension of benefit payments

Notwithstanding sections 1053 and 1054 of this

title, the plan sponsor of a terminated multiemployer plan to which section 1341a(d) of this title

applies shall amend the plan to reduce benefits,

and shall suspend benefit payments, as required

by this section.

(b) Determinations respecting value of nonforfeitable benefits under terminated plan

and value of assets of plan

(1) The value of nonforfeitable benefits under a

terminated plan referred to in subsection (a) of

this section, and the value of the plan’s assets,

shall be determined in writing, in accordance

with regulations prescribed by the corporation,

as of the end of the plan year during which section 1341a(d) of this title becomes applicable to

the plan, and each plan year thereafter.

(2) For purposes of this section, plan assets include outstanding claims for withdrawal liability (within the meaning of section 1301(a)(12) of

this title).

(c) Amendment of plan by plan sponsor to reduce

benefits for conservation of assets; factors

applicable

(1) If, according to the determination made

under subsection (b) of this section, the value of

nonforfeitable benefits exceeds the value of the

plan’s assets, the plan sponsor shall amend the

plan to reduce benefits under the plan to the extent necessary to ensure that the plan’s assets

are sufficient, as determined and certified in ac-