§ 1362 TITLE 29—LABOR Page 534

shall be paid by the corporation only out of the

appropriate fund. The corporation shall make

payments under the supplemental program to

reimburse multiemployer plans for uncollectible

withdrawal liability only out of the fund established under section 1305(e) of this title.

(Pub. L. 93–406, title IV, §4061, Sept. 2, 1974, 88

Stat. 1029; Pub. L. 96–364, title IV, §403(f), Sept.

26, 1980, 94 Stat. 1301.)

AMENDMENTS

1980—Pub. L. 96–364 substituted provisions relating to

payment of benefits under a single-employer plan terminated under this subchapter subject to limitations

and requirements of subtitle B of this subchapter for

provisions relating to payment of benefits under a plan

terminated under this subchapter subject to limitations and requirements of subtitle B of this subchapter.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96–364 effective Sept. 26, 1980,

except as specifically provided, see section 1461(e) of

this title.

§ 1362. Liability for termination of single-employer plans under a distress termination or

a termination by corporation

(a) In general

In any case in which a single-employer plan is

terminated in a distress termination under section 1341(c) of this title or a termination otherwise instituted by the corporation under section

1342 of this title, any person who is, on the termination date, a contributing sponsor of the

plan or a member of such a contributing sponsor’s controlled group shall incur liability under

this section. The liability under this section of

all such persons shall be joint and several. The

liability under this section consists of—

(1) liability to the corporation, to the extent

provided in subsection (b) of this section, and

(2) liability to the trustee appointed under

subsection (b) or (c) of section 1342 of this

title, to the extent provided in subsection (c)

of this section.

(b) Liability to corporation

(1) Amount of liability

(A) In general

Except as provided in subparagraph (B),

the liability to the corporation of a person

described in subsection (a) of this section

shall be the total amount of the unfunded

benefit liabilities (as of the termination

date) to all participants and beneficiaries

under the plan, together with interest (at a

reasonable rate) calculated from the termination date in accordance with regulations

prescribed by the corporation.

(B) Special rule in case of subsequent insufficiency

For purposes of subparagraph (A), in any

case described in section 1341(c)(3)(C)(ii) of

this title, actuarial present values shall be

determined as of the date of the notice to

the corporation (or the finding by the corporation) described in such section.

(2) Payment of liability

(A) In general

Except as provided in subparagraph (B),

the liability to the corporation under this

subsection shall be due and payable to the

corporation as of the termination date, in

cash or securities acceptable to the corporation.

(B) Special rule

Payment of so much of the liability under

paragraph (1)(A) as exceeds 30 percent of the

collective net worth of all persons described

in subsection (a) of this section (including

interest) shall be made under commercially

reasonable terms prescribed by the corporation. The parties involved shall make a reasonable effort to reach agreement on such

commercially reasonable terms. Any such

terms prescribed by the corporation shall

provide for deferral of 50 percent of any

amount of liability otherwise payable for

any year under this subparagraph if a person

subject to such liability demonstrates to the

satisfaction of the corporation that no person subject to such liability has any individual pre-tax profits for such person’s fiscal

year ending during such year.

(3) Alternative arrangements

The corporation and any person liable under

this section may agree to alternative arrangements for the satisfaction of liability to the

corporation under this subsection.

(c) Liability to section 1342 trustee

A person described in subsection (a) of this

section shall be subject to liability under this

subsection to the trustee appointed under subsection (b) or (c) of section 1342 of this title. The

liability of such person under this subsection

shall consist of—

(1) the outstanding balance of the accumulated funding deficiencies (within the meaning

of section 1082(a)(2) of this title and section

412(a) of title 26) of the plan (if any) (which,

for purposes of this subparagraph, shall include the amount of any increase in such accumulated funding deficiencies of the plan which

would result if all pending applications for

waivers of the minimum funding standard

under section 1083 of this title or section 412(d)

of title 26 and for extensions of the amortization period under section 1084 of this title or

section 412(e) of title 26 with respect to such

plan were denied and if no additional contributions (other than those already made by the

termination date) were made for the plan year

in which the termination date occurs or for

any previous plan year),

(2) the outstanding balance of the amount of

waived funding deficiencies of the plan waived

before such date under section 1083 of this title

or section 412(d) of title 26 (if any), and

(3) the outstanding balance of the amount of

decreases in the minimum funding standard

allowed before such date under section 1084 of

this title or section 412(e) of title 26 (if any),

together with interest (at a reasonable rate) calculated from the termination date in accordance

with regulations prescribed by the corporation.

The liability under this subsection shall be due

and payable to such trustee as of the termination date, in cash or securities acceptable to

such trustee.
Page 535 TITLE 29—LABOR § 1362

(d) Definitions

(1) Collective net worth of persons subject to

liability

(A) In general

The collective net worth of persons subject

to liability in connection with a plan termination consists of the sum of the individual

net worths of all persons who—

(i) have individual net worths which are

greater than zero, and

(ii) are (as of the termination date) contributing sponsors of the terminated plan

or members of their controlled groups.

(B) Determination of net worth

For purposes of this paragraph, the net

worth of a person is—

(i) determined on whatever basis best reflects, in the determination of the corporation, the current status of the person’s operations and prospects at the time chosen

for determining the net worth of the person, and

(ii) increased by the amount of any

transfers of assets made by the person

which are determined by the corporation

to be improper under the circumstances,

including any such transfers which would

be inappropriate under title 11 if the person were a debtor in a case under chapter

7 of such title.

(C) Timing of determination

For purposes of this paragraph, determinations of net worth shall be made as of a day

chosen by the corporation (during the 120-

day period ending with the termination

date) and shall be computed without regard

to any liability under this section.

(2) Pre-tax profits

The term ‘‘pre-tax profits’’ means—

(A) except as provided in subparagraph (B),

for any fiscal year of any person, such person’s consolidated net income (excluding

any extraordinary charges to income and including any extraordinary credits to income)

for such fiscal year, as shown on audited financial statements prepared in accordance

with generally accepted accounting principles, or

(B) for any fiscal year of an organization

described in section 501(c) of title 26, the excess of income over expenses (as such terms

are defined for such organizations under generally accepted accounting principles),

before provision for or deduction of Federal or

other income tax, any contribution to any single-employer plan of which such person is a

contributing sponsor at any time during the

period beginning on the termination date and

ending with the end of such fiscal year, and

any amounts required to be paid for such fiscal year under this section. The corporation

may by regulation require such information to

be filed on such forms as may be necessary to

determine the existence and amount of such

pre-tax profits.

(e) Treatment of substantial cessation of operations

If an employer ceases operations at a facility

in any location and, as a result of such cessation

of operations, more than 20 percent of the total

number of his employees who are participants

under a plan established and maintained by him

are separated from employment, the employer

shall be treated with respect to that plan as if

he were a substantial employer under a plan

under which more than one employer makes

contributions and the provisions of sections 1363,

1364, and 1365 of this title shall apply.

(Pub. L. 93–406, title IV, §4062, Sept. 2, 1974, 88

Stat. 1029; Pub. L. 95–598, title III, §321(b), Nov.

6, 1978, 92 Stat. 2678; Pub. L. 96–364, title IV,

§403(g), Sept. 26, 1980, 94 Stat. 1301; Pub. L.

99–272, title XI, §11011(a), (b), Apr. 7, 1986, 100

Stat. 253, 257; Pub. L. 100–203, title IX,

§9312(b)(1), (2)(A), (B)(ii), Dec. 22, 1987, 101 Stat.

1330–361; Pub. L. 101–239, title VII, §§7881(f)(2),

(10)(A), (B), 7891(a)(1), Dec. 19, 1989, 103 Stat. 2440,

2441, 2445.)

AMENDMENTS

1989—Subsec. (a). Pub. L. 101–239, §7881(f)(2), inserted

‘‘and’’ at end of par. (1), redesignated par. (3) as (2), substituted ‘‘subsection (c)’’ for ‘‘subsection (d)’’, and

struck out former par. (2) which read as follows: ‘‘liability to the trust established pursuant to section

1341(c)(3)(B)(ii) or (iii) of this title or section 1342(i) of

this title, to the extent provided in subsection (c) of

this section, and’’.

Subsec. (b)(2)(B). Pub. L. 101–239, §7881(f)(10)(A), substituted ‘‘so much of the liability under paragraph

(1)(A) as exceeds 30 percent of the collective net worth

of all persons described in subsection (a) of this section

(including interest)’’ for ‘‘the liability under paragraph

(1)(A)(ii)’’.

Subsecs. (c)(1), (d)(2)(B). Pub. L. 101–239, §7891(a)(1),

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.

Subsec. (d)(3). Pub. L. 101–239, §7881(f)(10)(B), amended

Pub. L. 100–203, §9312(b)(2)(B)(ii), see 1987 Amendment

note below.

1987—Subsec. (b)(1)(A). Pub. L. 100–203, §9312(b)(2)(A),

amended subpar. (A) generally. Prior to amendment,

subpar. (A) read as follows: ‘‘Except as provided in subparagraph (B), the liability to the corporation of a person described in subsection (a) of this section shall consist of the sum of—

‘‘(i) the lesser of—

‘‘(I) the total amount of unfunded guaranteed

benefits (as of the termination date) of all participants and beneficiaries under the plan, or

‘‘(II) 30 percent of the collective net worth of all

persons described in subsection (a) of this section,

and

‘‘(ii) the excess (if any) of—

‘‘(I) 75 percent of the amount described in clause

(i)(I), over

‘‘(II) the amount described in clause (i)(II),

together with interest (at a reasonable rate) calculated

from the termination date in accordance with regulations prescribed by the corporation.’’

Subsec. (c). Pub. L. 100–203, §9312(b)(1), redesignated

subsec. (d) as (c) and struck out former subsec. (c)

which related to liability to section 1349 trust.

Subsec. (d). Pub. L. 100–203, §9312(b)(1)(B), redesignated subsec. (e) as (d). Former subsec. (d) redesignated

(c).

Subsec. (d)(3). Pub. L. 100–203, §9312(b)(2)(B)(ii), as

amended by Pub. L. 101–239, §7881(f)(10)(B), struck out

par. (3) which read as follows: ‘‘The liability payment

years in connection with a terminated plan consist of

the consecutive one-year periods following the last

plan year preceding the termination date, excluding

the first such year in any case in which the first such

year ends less than 180 days after the termination

date.’’
§ 1363 TITLE 29—LABOR Page 536

Subsecs. (e), (f). Pub. L. 100–203, §9312(b)(1)(B), redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d).

1986—Pub. L. 99–272, §11011(a)(2), substituted ‘‘Liability for termination of single-employer plans under a

distress termination or a termination by the corporation’’ for ‘‘Liability of employer’’ in section catchline.

Subsec. (a). Pub. L. 99–272, §11011(a)(2), added subsec.

(a) specifying persons liable and the nature and extent

of liability and struck out former subsec. (a) specifying

employers covered.

Subsec. (b). Pub. L. 99–272, §11011(a)(2), added subsec.

(b) relating to liability to corporation and struck out

former subsec. (b) relating to amount of liability.

Subsec. (c). Pub. L. 99–272, §11011(a)(2), added subsec.

(c) relating to liability to section 1349 trust and struck

out former subsec. (c) relating to method of determining net worth of employer.

Subsec. (d). Pub. L. 99–272, §11011(a)(2), added subsec.

(d) relating to liability to section 1342 trustee and

struck out former subsec. (d) relating to corporate reorganizations.

Subsec. (e). Pub. L. 99–272, §11011(a), added subsec. (e)

and redesignated former subsec. (e) as (f).

Subsec. (f). Pub. L. 99–272, §11011(a)(1), (b), redesignated former subsec. (e) as (f), and substituted in heading ‘‘Treatment of substantial cessation of operations’’

for ‘‘Cessation of operations at one facility’’.

1980—Subsec. (a). Pub. L. 96–364 substituted ‘‘singleemployee plan’’ for ‘‘plan (other than a multiemployer

plan)’’.

1978—Subsec. (c)(2). Pub. L. 95–598 substituted ‘‘title

11’’ and ‘‘a debtor in a case under chapter 7 of such

title’’ for ‘‘the Bankruptcy Act’’ and ‘‘the subject of a

proceeding under that Act’’, respectively.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7881(f)(2), (10)(A), (B) of Pub.

L. 101–239 effective, except as otherwise provided, as if

included in the provision of the Pension Protection

Act, Pub. L. 100–203, §§9302–9346, to which such amendment relates, see section 7882 of Pub. L. 101–239, set out

as a note under section 401 of Title 26, Internal Revenue

Code.

Amendment by section 7891(a)(1) of 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.

EFFECTIVE DATE OF 1987 AMENDMENT

Amendment by Pub. L. 100–203 applicable with respect to plan terminations under section 1341 of this

title with respect to which notices of intent to terminate are provided under section 1341(a)(2) of this title

after Dec. 17, 1987, and plan terminations with respect

to which proceedings are instituted by the Pension

Benefit Guaranty Corporation under section 1342 of this

title after that date, see section 9312(d)(1) of Pub. L.

100–203, as amended, set out as a note under section 1301

of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99–272 effective Jan. 1, 1986,

with certain exceptions, see section 11019 of Pub. L.

99–272, set out as a note under section 1341 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96–364 effective Sept. 26, 1980,

except as specifically provided, see section 1461(e) of

this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95–598 effective Oct. 1, 1979,

see section 402(a) of Pub. L. 95–598, set out as an Effective Date note preceding section 101 of Title 11, Bankruptcy.

SPECIAL DELAYED PAYMENT RULE

Section 11012(d) of Pub. L. 99–272 provided that: ‘‘In

the case of a distress termination under section 4041(c)

of the Employee Retirement Income Security Act of

1974 (as amended by section 11009) [29 U.S.C. 1341(c)]

pursuant to a notice of intent to terminate filed before

January 1, 1987, no payment of liability otherwise payable as provided in section 4062(c)(2)(B) of such Act [29

U.S.C. 1362(c)(2)(B)] (as amended by this section [Act])

shall be required to be made before January 1, 1989.’’

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1322, 1341, 1342,

1363, 1364, 1367, 1368, 1370, 1398, 1412 of this title; title 26

section 404.

§ 1363. Liability of substantial employer for withdrawal from single-employer plans under

multiple controlled groups

(a) Single-employer plans with two or more contributing sponsors

Except as provided in subsection (d) of this

section, the plan administrator of a single-employer plan which has two or more contributing

sponsors at least two of whom are not under

common control—

(1) shall notify the corporation of the withdrawal during a plan year of a substantial employer for such plan year from the plan, within

60 days after such withdrawal, and

(2) request that the corporation determine

the liability of all persons with respect to the

withdrawal of the substantial employer.

The corporation shall, as soon as practicable

thereafter, determine whether there is liability

resulting from the withdrawal of the substantial

employer and notify the liable persons of such

liability.

(b) Computation of liability

Except as provided in subsection (c) of this

section, any one or more contributing sponsors

who withdraw, during a plan year for which they

constitute a substantial employer, from a single-employer plan which has two or more contributing sponsors at least two of whom are not

under common control, shall, upon notification

of such contributing sponsors by the corporation

as provided by subsection (a) of this section, be

liable, together with the members of their controlled groups, to the corporation in accordance

with the provisions of section 1362 of this title

and this section. The amount of liability shall

be computed on the basis of an amount determined by the corporation to be the amount described in section 1362 of this title for the entire

plan, as if the plan had been terminated by the

corporation on the date of the withdrawal referred to in subsection (a)(1) of this section multiplied by a fraction—

(1) the numerator of which is the total

amount required to be contributed to the plan

by such contributing sponsors for the last 5

years ending prior to the withdrawal, and

(2) the denominator of which is the total

amount required to be contributed to the plan

by all contributing sponsors for such last 5

years.

In addition to and in lieu of the manner prescribed in the preceding sentence, the corporation may also determine such liability on any

other equitable basis prescribed by the corporation in regulations. Any amount collected by

the corporation under this subsection shall be