The Internal Revenue Service has issued Revenue Procedure 2017-43 containing revised procedures for applications for a suspension of benefits under a multiemployer defined benefit pension plan that is in critical and declining status.
The procedures replace the procedures set forth in Rev. Proc. 2016-27, and are intended to facilitate the review of an application for a suspension of benefits in light of the experience of the Department of the Treasury in processing applications. The procedures set forth in this revenue procedure must be followed for applications submitted on or after September 1, 2017.
This revenue procedure includes the following changes from Rev. Proc. 2016-27:
- Section 2.07 has been revised to provide that if the Treasury Department identifies an error in the application after it is submitted, then the Treasury Department may request that the plan sponsor provide additional materials to correct the error.;
- Sections 3.01(2) and 3.02(2) contain a new requirement that the projected withdrawal liability payments that are included as part of the projection of the plan’s available resources, and as part of the support for the certification that the plan is projected to avoid insolvency (taking the proposed suspension into account), must be separately identified as projected payments attributable to prior withdrawals and projected payments attributable to expected future withdrawals;
- Sections 4.01(1) and 4.01(2) have been simplified by replacing the requirement to provide sample calculations with respect to the guarantee-based limitation under Section 432(e)(9)(D)(i) of the Multiemployer Pension Reform Act of 2014 (MPRA) and the disability-based limitation under Section 432(e)(9)(D)(iii) for an individual in each category or group that is treated differently under the suspension with a requirement that those sample calculations be provided only for an individual currently receiving benefits, a contingent beneficiary of an individual currently receiving benefits, and a future retiree;
- Section 4.01(3) has been clarified to specify the age categories for which sample calculations with respect to the age-based limitation under Section 432(e)(9)(D)(ii) (taking into account the guarantee-based limitation and, if applicable, the disability-based limitation) must be provided;
- Section 4.04(2) has been revised to provide that certain information that would otherwise be required to demonstrate that the proposed suspension is equitably distributed in accordance with Section 432(e)(9)(D)(vi) need not be provided in the case of an application in connection with a proposed partition of a plan under Section 4233 of the Employee Retirement Income Security Act (ERISA);
- Section 4.05 has been revised to clarify the different categories of individuals with respect to which sample notices must be provided as part of the application;
- A new section 6.03 and Appendix B have been added to consolidate the descriptions of the actuarial assumptions used with respect to certain illustrations and projections included in the application (formerly contained in sections 3.01, 3.02, 4.02 and 4.03) and to provide additional detail regarding those assumptions;
- Section 6.09 (formerly section 6.08) has been revised to require the inclusion of a narrative statement of the reasons the plan is in critical and declining status;
- Section 7.08 has been revised to add a requirement to provide (as part of the required excerpts from the most recently filed Form 5500) the accountant’s report under section 103(a)(3) of ERISA; and
- Section 8.02 has been revised to add a requirement to provide the date on which the Treasury Department indicated that the application is a candidate for resubmission review, if applicable.
The new procedure also includes minor clarifications to the Model Notice of Application for Approval of a Proposed Reduction of Benefits and to the power of attorney and declaration of representative form.
Appendix D (formerly Appendix C) has been updated to make clarifications to the application checklist and to reflect the other changes made in the revenue procedure.
The MPRA permits the sponsor of a multiemployer defined benefit plan in critical and declining status to suspend benefits in certain situations. Since the issuance of final rules for applying for suspension of benefits, a number of plans have applied.