Page 547 TITLE 29—LABOR § 1385

tions from the requirements of such subparagraphs if the particular case warrants it. Before

granting such an individual or class variance or

exemption, the corporation—

(1) shall publish notice in the Federal Register of the pendency of the variance or exemption,

(2) shall require that adequate notice be

given to interested persons, and

(3) shall afford interested persons an opportunity to present their views.

(d) ‘‘Unrelated party’’ defined

For purposes of this section, the term ‘‘unrelated party’’ means a purchaser or seller who

does not bear a relationship to the seller or purchaser, as the case may be, that is described in

section 267(b) of title 26, or that is described in

regulations prescribed by the corporation applying principles similar to the principles of such

section.

(Pub. L. 93–406, title IV, §4204, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1220;

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

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

AMENDMENTS

1989—Subsec. (d). 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 1391, 1401, 1405

of this title.

§ 1385. Partial withdrawals

(a) Determinative factors

Except as otherwise provided in this section,

there is a partial withdrawal by an employer

from a plan on the last day of a plan year if for

such plan year—

(1) there is a 70-percent contribution decline,

or

(2) there is a partial cessation of the employer’s contribution obligation.

(b) Criteria applicable

For purposes of subsection (a) of this section—

(1)(A) There is a 70-percent contribution decline for any plan year if during each plan

year in the 3-year testing period the employer’s contribution base units do not exceed 30

percent of the employer’s contribution base

units for the high base year.

(B) For purposes of subparagraph (A)—

(i) The term ‘‘3-year testing period’’ means

the period consisting of the plan year and

the immediately preceding 2 plan years.

(ii) The number of contribution base units

for the high base year is the average number

of such units for the 2 plan years for which

the employer’s contribution base units were

the highest within the 5 plan years immediately preceding the beginning of the 3-year

testing period.

(2)(A) There is a partial cessation of the employer’s contribution obligation for the plan

year if, during such year—

(i) the employer permanently ceases to

have an obligation to contribute under one

or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute

under the plan but continues to perform

work in the jurisdiction of the collective

bargaining agreement of the type for which

contributions were previously required or

transfers such work to another location, or

(ii) an employer permanently ceases to

have an obligation to contribute under the

plan with respect to work performed at one

or more but fewer than all of its facilities,

but continues to perform work at the facility of the type for which the obligation to

contribute ceased.

(B) For purposes of subparagraph (A), a cessation of obligations under a collective bargaining agreement shall not be considered to

have occurred solely because, with respect to

the same plan, one agreement that requires

contributions to the plan has been substituted

for another agreement.

(c) Retail food industry

(1) In the case of a plan in which a majority of

the covered employees are employed in the retail food industry, the plan may be amended to

provide that this section shall be applied with

respect to such plan—

(A) by substituting ‘‘35 percent’’ for ‘‘70 percent’’ in subsections (a) and (b) of this section,

and

(B) by substituting ‘‘65 percent’’ for ‘‘30 percent’’ in subsection (b) of this section.

(2) Any amendment adopted under paragraph

(1) shall provide rules for the equitable reduction of withdrawal liability in any case in which

the number of the plan’s contribution base

units, in the 2 plan years following the plan year

of withdrawal of the employer, is higher than

such number immediately after the withdrawal.

(3) Section 1388 of this title shall not apply to

a plan which has been amended under paragraph

(1).

(d) Continuation of liability of employer for partial withdrawal under amended plan

In the case of a plan described in section 404(c)

of title 26, or a continuation thereof, the plan

may be amended to provide rules setting forth

other conditions consistent with the purposes of

this chapter under which an employer has liability for partial withdrawal.

(Pub. L. 93–406, title IV, §4205, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1221;

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

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

REFERENCES IN TEXT

This chapter, referred to in subsec. (d), 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.
§ 1386 TITLE 29—LABOR Page 548

AMENDMENTS

1989—Subsec. (d). 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.

APPLICABILITY TO CERTAIN EMPLOYERS ENGAGED IN

TRADE OR BUSINESS OF SHIPPING BULK CARGOES IN

GREAT LAKES MARITIME INDUSTRY

Section 108(c)(2) of Pub. L. 96–364 provided that:

‘‘(A) For the purpose of applying section 4205 of the

Employee Retirement Income Security Act of 1974 [this

section] in the case of an employer described in subparagraph (B)—

‘‘(i) ‘more than 75 percent’ shall be substituted for

‘70 percent’ in subsections (a) and (b) of such section.

‘‘(ii) ‘25 percent or less’ shall be substituted for ‘30

percent’ in subsection (b) of such section, and

‘‘(iii) the number of contribution units for the high

base year shall be the average annual number of such

units for calendar years 1970 and 1971.

‘‘(B) An employer is described in this subparagraph

if—

‘‘(i) the employer is engaged in the trade or business of shipping bulk cargoes in the Great Lakes Maritime Industry, and whose fleet consists of vessels the

gross registered tonnage of which was at least 7,800,

as stated in the American Bureau of Shipping Record,

and

‘‘(ii) whose fleet during any 5 years from the period

1970 through and including 1979 has experienced a 33

percent or more increase in the contribution units as

measured from the average annual contribution units

for the calendar years 1970 and 1971.’’

APPLICABILITY TO SPECIFIED PLAN YEAR, CESSATION OF

CONTRIBUTION OBLIGATIONS, AND CONTRIBUTION BASE

UNITS OF EMPLOYER

Section 108(d) of Pub. L. 96–364, as amended by Pub.

L. 98–369, div. A, title V, §558(b)(2), July 18, 1984, 98

Stat. 899, provided that: ‘‘For purposes of section 4205 of

the Employee Retirement Income Security Act of 1974

[this section]—

‘‘(1) subsection (a)(1) of such section shall not apply

to any plan year beginning before September 26, 1982,

‘‘(2) subsection (a)(2) of such section shall not apply

with respect to any cessation of contribution obligations occurring before September 26, 1980, and

‘‘(3) in applying subsection (b) of such section, the

employer’s contribution base units for any plan year

ending before September 26, 1980, shall be deemed to

be equal to the employer’s contribution base units for

the last plan year ending before such date.’’

LIABILITY OF CERTAIN EMPLOYERS ANNOUNCING PUBLICLY BEFORE DECEMBER 13, 1979, TOTAL CESSATION

OF COVERED OPERATIONS AT A FACILITY IN A STATE;

AMOUNT, COVERAGE, DETERMINATIVE FACTORS, ETC.

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

‘‘(1) In the case of a partial withdrawal under section

4205 of the Employee Retirement Income Security Act

of 1974 [this section], an employer who—

‘‘(A) before December 13, 1979, had publicly announced the total cessation of covered operations at

a facility in a State (and such cessation occurred

within 12 months after the announcement),

‘‘(B) had not been obligated to make contributions

to the plan on behalf of the employees at such facility for more than 8 years before the discontinuance of

contributions, and

‘‘(C) after the discontinuance of contributions does

not within 1 year after the date of the partial withdrawal perform work in the same State of the type

for which contributions were previously required,

shall be liable under such section with respect to such

partial withdrawal in an amount not greater than the

amount determined under paragraph (2).

‘‘(2) The amount determined under this paragraph is

the excess (if any) of—

‘‘(A) the present value (on the withdrawal date) of

the benefits under the plan which—

‘‘(i) were vested on the withdrawal date (or, if

earlier, at the time of separation from service with

the employer at the facility),

‘‘(ii) were accrued by employees who on December

13, 1979 (or, if earlier, at the time of separation from

service with the employer at the facility), were employed at the facility, and

‘‘(iii) are attributable to service with the withdrawing employer, over

‘‘(B)(i) the sum of—

‘‘(I) all employer contributions to the plan on behalf of employees at the facility before the withdrawal date,

‘‘(II) interest (to the withdrawal date) on

amounts described in subclause (I), and

‘‘(III) $100,000, reduced by

‘‘(ii) the sum of—

‘‘(I) the benefits paid under the plan on or before

the withdrawal date with respect to former employees who separated from employment at the facility,

and

‘‘(II) interest (to the withdrawal date) on

amounts described in subclause (I).

‘‘(3) For purposes of paragraph (2)—

‘‘(A) actuarial assumptions shall be those used in

the last actuarial report completed before December

13, 1979,

‘‘(B) the term ‘withdrawal date’ means the date on

which the employer ceased work at the facility of the

type for which contributions were previously required, and

‘‘(C) the term ‘facility’ means the facility referred

to in paragraph (1).’’

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1053, 1381, 1386,

1388, 1399, 1401 of this title; title 26 section 411.

§ 1386. Adjustment for partial withdrawal; determination of amount; reduction for partial

withdrawal liability; procedures applicable

(a) The amount of an employer’s liability for

a partial withdrawal, before the application of

sections 1399(c)(1) and 1405 of this title, is equal

to the product of—

(1) the amount determined under section 1391

of this title, and adjusted under section 1389 of

this title if appropriate, determined as if the

employer had withdrawn from the plan in a

complete withdrawal—

(A) on the date of the partial withdrawal,

or

(B) in the case of a partial withdrawal described in section 1385(a)(1) of this title (relating to 70-percent contribution decline), on

the last day of the first plan year in the 3-

year testing period,

multiplied by

(2) a fraction which is 1 minus a fraction—

(A) the numerator of which is the employer’s contribution base units for the plan year

following the plan year in which the partial

withdrawal occurs, and

(B) the denominator of which is the average of the employer’s contribution base

units for—