PBGC, IRS Request Input on Multiemployer Plan Guidance

The PBGC and the IRS have issued requests for information to help them with issuing guidance about the Multiemployer Pension Reform Act of 2014.

Regulators are looking for input from stakeholders in the multiemployer retirement plan industry before issuing guidance about the recently passed Multiemployer Pension Reform Act of 2014 (MPRA).

In a request for information (RFI) from the Pension Benefit Guaranty Corporation (PBGC), the agency is asking for input about expanded rules for partitions and mergers of multiemployer plans. Section 122 of MPRA replaced the multiemployer partition rules under Section 4233 of the Employee Retirement Income Security Act (ERISA) with new rules. Section 121 of MPRA added a new provision to the multiemployer merger rules under ERISA Section 4231.

Before MPRA, PBGC could partition a multiemployer plan likely to become insolvent on its own accord or upon application by a plan sponsor. The MPRA provides that, upon the application by the plan sponsor of an “eligible multiemployer plan,” PBGC may order a partition. The MPRA also gives PBGC new statutory authority to facilitate the merger of two or more multiemployer plans if certain requirements are met.

PBGC is requesting information about the application process, as well as its determination that a partition is necessary for a plan to remain solvent, or that financial assistance is necessary for a merged plan to become or remain solvent. The agency is also asking for information about special considerations for small plans and for plan participants and beneficiaries, as well as information about the notifications that must be provided to participants.

In a request for information from the Internal Revenue Service (IRS), the agency notes that the MPRA generally permits a sponsor of a multiemployer defined benefit (DB) plan that is in critical and declining status to suspend certain benefits following the provision of specified notice, consideration of public comments, approval of an application for suspension and satisfaction of other specified conditions, including a participant vote. “Critical and declining status” is a new status that the MPRA adds to multiemployer plan statuses as defined by the Pension Protection Act of 2006 (PPA).

The PPA added Section 432 of the Internal Revenue Code (IRC), which prescribes funding rules for certain multiemployer defined benefit plans in endangered and critical status and permits plans in critical status to be amended to reduce certain otherwise protected benefits. Section 202 of the PPA amended Section 305 of ERISA to prescribe parallel rules. The PPA provided that IRC Section 432 and ERISA Section 305 would sunset for plan years beginning after December 31, 2014. However, MPRA Section 101 made them permanent, with certain modifications.

The IRS is asking for information about how to determine if a plan is in critical and declining status, the determination that a plan is projected to become insolvent if benefits are not suspended, and issues regarding participants who have already retired.

Text of the PBGC’s request for information is here.  

Text of the IRS’ request for information is here.