29 U.S.C. § 1405 — Limitation on withdrawal liability

Page 719 TITLE 29—LABOR § 1405 with such employer by the labor organization which represented such employees immediately preceding such withdrawal. (h) Purchase of insurance by employer Nothing in this section shall be construed to prohibit the purchase of insurance by an em- ployer from any other person, to limit the cir- cumstances under which such insurance would be payable, or to limit in any way the terms and conditions of such insurance. (i) Promulgation of regulations for establishment and maintenance of fund The corporation may provide by regulation rules not inconsistent with this section gov- erning the establishment and maintenance of funds, but only to the extent necessary to carry out the purposes of this part (other than section 1402 of this title). (Pub. L. 93–406, title IV, § 4223, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1241; amended Pub. L. 101–239, title VII, § 7891(a), Dec. 19, 1989, 103 Stat. 2445.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (f), 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 prin- cipally 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. AMENDMENTS 1989—Subsecs. (b)(1), (c)(4)(B). Pub. L. 101–239 sub- stituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for purposes of codifica- tion was translated as ‘‘title 26’’ thus requiring no change in text. Statutory Notes and Related Subsidiaries 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. § 1404. Alternative method of withdrawal liability payments A multiemployer plan may adopt rules pro- viding for other terms and conditions for the satisfaction of an employer’s withdrawal liabil- ity if such rules are consistent with this chapter and with such regulations as may be prescribed by the corporation. (Pub. L. 93–406, title IV, § 4224, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1242.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 93–406, known as the Em- ployee 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. § 1405. Limitation on withdrawal liability (a) Unfunded vested benefits allocable to em- ployer in bona fide sale of assets of employer in arms-length transaction to unrelated party; maximum amount; determinative fac- tors (1) In the case of bona fide sale of all or sub- stantially all of the employer’s assets in an arm’s-length transaction to an unrelated party (within the meaning of section 1384(d) of this title), the unfunded vested benefits allocable to an employer (after the application of all sec- tions of this part having a lower number des- ignation than this section), other than an em- ployer undergoing reorganization under title 11 or similar provisions of State law, shall not ex- ceed the greater of— (A) a portion (determined under paragraph (2)) of the liquidation or dissolution value of the employer (determined after the sale or ex- change of such assets), or (B) in the case of a plan using the attrib- utable method of allocating withdrawal liabil- ity, the unfunded vested benefits attributable to employees of the employer. (2) For purposes of paragraph (1), the portion shall be determined in accordance with the fol- lowing table: If the liquidation or dis- tribution value of the em- ployer after the sale or ex- change is— The portion is— Not more than $5,000,000 .... 30 percent of the amount. More than $5,000,000, but not more than $10,000,000. $1,500,000, plus 35 percent of the amount in excess of $5,000,000. More than $10,000,000, but not more than $15,000,000. $3,250,000, plus 40 percent of the amount in excess of $10,000,000. More than $15,000,000, but not more than $17,500,000. $5,250,000, plus 45 percent of the amount in excess of $15,000,000. More than $17,500,000, but not more than $20,000,000. $6,375,000, plus 50 percent of the amount in excess of $17,500,000. More than $20,000,000, but not more than $22,500,000. $7,625,000, plus 60 percent of the amount in excess of $20,000,000. More than $22,500,000, but not more than $25,000,000. $9,125,000, plus 70 percent of the amount in excess of $22,500,000. More than $25,000,000 ......... $10,875,000, plus 80 percent of the amount in excess of $25,000,000. (b) Unfunded vested benefits allocable to insol- vent employer undergoing liquidation or dis- solution; maximum amount; determinative factors In the case of an insolvent employer under- going liquidation or dissolution, the unfunded vested benefits allocable to that employer shall not exceed an amount equal to the sum of— (1) 50 percent of the unfunded vested benefits allocable to the employer (determined without regard to this section), and (2) that portion of 50 percent of the unfunded vested benefits allocable to the employer (as determined under paragraph (1)) which does not exceed the liquidation or dissolution value of the employer determined— Page 720 TITLE 29—LABOR § 1411 (A) as of the commencement of liquidation or dissolution, and (B) after reducing the liquidation or dis- solution value of the employer by the amount determined under paragraph (1). (c) Property not subject to enforcement of liabil- ity; precondition To the extent that the withdrawal liability of an employer is attributable to his obligation to contribute to or under a plan as an individual (whether as a sole proprietor or as a member of a partnership), property which may be exempt from the estate under section 522 of title 11 or under similar provisions of law, shall not be sub- ject to enforcement of such liability. (d) Insolvency of employer; liquidation or dis- solution value of employer For purposes of this section— (1) an employer is insolvent if the liabilities of the employer, including withdrawal liabil- ity under the plan (determined without regard to subsection (b)), exceed the assets of the em- ployer (determined as of the commencement of the liquidation or dissolution), and (2) the liquidation or dissolution value of the employer shall be determined without regard to such withdrawal liability. (e) One or more withdrawals of employer attrib- utable to same sale, liquidation, or dissolu- tion In the case of one or more withdrawals of an employer attributable to the same sale, liquida- tion, or dissolution, under regulations pre- scribed by the corporation— (1) all such withdrawals shall be treated as a single withdrawal for the purpose of applying this section, and (2) the withdrawal liability of the employer to each plan shall be an amount which bears the same ratio to the present value of the withdrawal liability payments to all plans (after the application of the preceding provi- sions of this section) as the withdrawal liabil- ity of the employer to such plan (determined without regard to this section) bears to the withdrawal liability of the employer to all such plans (determined without regard to this section). (Pub. L. 93–406, title IV, § 4225, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1243; amended Pub. L. 109–280, title II, § 204(a)(1), (2), Aug. 17, 2006, 120 Stat. 886, 887.) Editorial Notes AMENDMENTS 2006—Subsec. (a)(1)(B). Pub. L. 109–280, § 204(a)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘the unfunded vested bene- fits attributable to employees of the employer.’’ Subsec. (a)(2). Pub. L. 109–280, § 204(a)(1), added table and struck out former table which provided for a por- tion of: 30 percent of the amount if the liquidation or dissolution value of the employer after the sale or ex- change is not more than $2,000,000; $600,000, plus 35 per- cent of the amount in excess of $2,000,000, if the employ- er’s liquidation or dissolution value is more than $2,000,000, but not more than $4,000,000; $1,300,000, plus 40 percent of the amount in excess of $4,000,000, if the em- ployer’s liquidation or dissolution value is more than $4,000,000, but not more than $6,000,000; $2,100,000, plus 45 percent of the amount in excess of $6,000,000, if the em- ployer’s liquidation or dissolution value is more than $6,000,000, but not more than $7,000,000; $2,550,000, plus 50 percent of the amount in excess of $7,000,000, if the em- ployer’s liquidation or dissolution value is more than $7,000,000, but not more than $8,000,000; $3,050,000, plus 60 percent of the amount in excess of $8,000,000, if the em- ployer’s liquidation or dissolution value is more than $8,000,000, but not more than $9,000,000; $3,650,000, plus 70 percent of the amount in excess of $9,000,000, if the em- ployer’s liquidation or dissolution value is more than $9,000,000, but not more than $10,000,000; and $4,350,000, plus 80 percent of the amount in excess of $10,000,000, if the employer’s liquidation or dissolution value is more than $10,000,000. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–280, title II, § 204(a)(3), Aug. 17, 2006, 120 Stat. 887, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to sales occurring on or after January 1, 2007.’’ PART 2—MERGER OR TRANSFER OF PLAN ASSETS OR LIABILITIES § 1411. Mergers and transfers between multiem- ployer plans (a) Authority of plan sponsor Unless otherwise provided in regulations pre- scribed by the corporation, a plan sponsor may not cause a multiemployer plan to merge with one or more multiemployer plans, or engage in a transfer of assets and liabilities to or from an- other multiemployer plan, unless such merger or transfer satisfies the requirements of sub- section (b). (b) Criteria A merger or transfer satisfies the require- ments of this section if— (1) in accordance with regulations of the cor- poration, the plan sponsor of a multiemployer plan notifies the corporation of a merger with or transfer of plan assets or liabilities to an- other multiemployer plan at least 120 days be- fore the effective date of the merger or trans- fer; (2) no participant’s or beneficiary’s accrued benefit will be lower immediately after the ef- fective date of the merger or transfer than the benefit immediately before that date; (3) the benefits of participants and bene- ficiaries are not reasonably expected to be subject to suspension under section 1426 of this title; and (4) an actuarial valuation of the assets and liabilities of each of the affected plans has been performed during the plan year preceding the effective date of the merger or transfer, based upon the most recent data available as of the day before the start of that plan year, or other valuation of such assets and liabil- ities performed under such standards and pro- cedures as the corporation may prescribe by regulation. (c) Actions not deemed violation of section 1106(a) or (b)(2) of this title The merger of multiemployer plans or the transfer of assets or liabilities between multi-