29 U.S.C. § 1388 — Reduction of partial withdrawal liability

Page 704 TITLE 29—LABOR § 1387 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1391 of this title, and adjusted under section 1389 of this title if appropriate, determined as if the employer had withdrawn from the plan in a complete withdrawal— (A) on the date of the partial withdrawal, or (B) in the case of a partial withdrawal de- scribed in section 1385(a)(1) of this title (re- lating 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 employ- er’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 aver- age of the employer’s contribution base units for— (i) except as provided in clause (ii), the 5 plan years immediately preceding the plan year in which the partial withdrawal oc- curs, or (ii) in the case of a partial withdrawal described in section 1385(a)(1) of this title (relating to 70-percent contribution de- cline), the 5 plan years immediately pre- ceding the beginning of the 3-year testing period. (b)(1) In the case of an employer that has with- drawal liability for a partial withdrawal from a plan, any withdrawal liability of that employer for a partial or complete withdrawal from that plan in a subsequent plan year shall be reduced by the amount of any partial withdrawal liabil- ity (reduced by any abatement or reduction of such liability) of the employer with respect to the plan for a previous plan year. (2) The corporation shall prescribe such regu- lations as may be necessary to provide for prop- er adjustments in the reduction provided by paragraph (1) for— (A) changes in unfunded vested benefits aris- ing after the close of the prior year for which partial withdrawal liability was determined, (B) changes in contribution base units occur- ring after the close of the prior year for which partial withdrawal liability was determined, and (C) any other factors for which it determines adjustment to be appropriate, so that the liability for any complete or partial withdrawal in any subsequent year (after the ap- plication of the reduction) properly reflects the employer’s share of liability with respect to the plan. (Pub. L. 93–406, title IV, § 4206, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1222.) § 1387. Reduction or waiver of complete with- drawal liability; procedures and standards applicable (a) The corporation shall provide by regula- tion for the reduction or waiver of liability for a complete withdrawal in the event that an em- ployer who has withdrawn from a plan subse- quently resumes covered operations under the plan or renews an obligation to contribute under the plan, to the extent that the corporation de- termines that reduction or waiver of withdrawal liability is consistent with the purposes of this chapter. (b) The corporation shall prescribe by regula- tion a procedure and standards for the amend- ment of plans to provide alternative rules for the reduction or waiver of liability for a com- plete withdrawal in the event that an employer who has withdrawn from the plan subsequently resumes covered operations or renews an obliga- tion to contribute under the plan. The rules may apply only to the extent that the rules are con- sistent with the purposes of this chapter. (Pub. L. 93–406, title IV, § 4207, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1223.) 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. § 1388. Reduction of partial withdrawal liability (a) Obligation of employer for payments for par- tial withdrawal for plan years beginning after the second consecutive plan year fol- lowing the partial withdrawal year; criteria applicable; furnishing of bond in lieu of pay- ment of partial withdrawal liability (1) If, for any 2 consecutive plan years fol- lowing the plan year in which an employer has partially withdrawn from a plan under section 1385(a)(1) of this title (referred to elsewhere in this section as the ‘‘partial withdrawal year’’), the number of contribution base units with re- spect to which the employer has an obligation to contribute under the plan for each such year is not less than 90 percent of the total number of contribution base units with respect to which the employer had an obligation to contribute under the plan for the high base year (within the meaning of section 1385(b)(1)(B)(ii) of this title), then the employer shall have no obligation to make payments with respect to such partial withdrawal (other than delinquent payments) for plan years beginning after the second con- secutive plan year following the partial with- drawal year. (2)(A) For any plan year for which the number of contribution base units with respect to which an employer who has partially withdrawn under section 1385(a)(1) of this title has an obligation to contribute under the plan equals or exceeds the number of units for the highest year deter- mined under paragraph (1) without regard to ‘‘90 percent of’’, the employer may furnish (in lieu of payment of the partial withdrawal liability de- termined under section 1386 of this title) a bond to the plan in the amount determined by the plan sponsor (not exceeding 50 percent of the an- nual payment otherwise required). Page 705 TITLE 29—LABOR § 1389 1 So in original. Probably should be ‘‘title),’’. 2 See References in Text note below. (B) If the plan sponsor determines under para- graph (1) that the employer has no further li- ability to the plan for the partial withdrawal, then the bond shall be cancelled. (C) If the plan sponsor determines under para- graph (1) that the employer continues to have li- ability to the plan for the partial withdrawal, then— (i) the bond shall be paid to the plan, (ii) the employer shall immediately be liable for the outstanding amount of liability due with respect to the plan year for which the bond was posted, and (iii) the employer shall continue to make the partial withdrawal liability payments as they are due. (b) Obligation of employer for payments for par- tial withdrawal for plan years beginning after the second consecutive plan year; other criteria applicable If— (1) for any 2 consecutive plan years following a partial withdrawal under section 1385(a)(1) of this title, the number of contribution base units with respect to which the employer has an obligation to contribute for each such year exceeds 30 percent of the total number of con- tribution base units with respect to which the employer had an obligation to contribute for the high base year (within the meaning of sec- tion 1385(b)(1)(B)(ii) of this title,1 and (2) the total number of contribution base units with respect to which all employers under the plan have obligations to contribute in each of such 2 consecutive years is not less than 90 percent of the total number of con- tribution base units for which all employers had obligations to contribute in the partial withdrawal plan year; then, the employer shall have no obligation to make payments with respect to such partial withdrawal (other than delinquent payments) for plan years beginning after the second such consecutive plan year. (c) Pro rata reduction of amount of partial with- drawal liability payment of employer for plan year following partial withdrawal year In any case in which, in any plan year fol- lowing a partial withdrawal under section 1385(a)(1) of this title, the number of contribu- tion base units with respect to which the em- ployer has an obligation to contribute for such year equals or exceeds 110 percent (or such other percentage as the plan may provide by amend- ment and which is not prohibited under regula- tions prescribed by the corporation) of the num- ber of contribution base units with respect to which the employer had an obligation to con- tribute in the partial withdrawal year, then the amount of the employer’s partial withdrawal li- ability payment for such year shall be reduced pro rata, in accordance with regulations pre- scribed by the corporation. (d) Building and construction industry; enter- tainment industry (1) An employer to whom section 1383(b) 2 of this title (relating to the building and construc- tion industry) applies is liable for a partial with- drawal only if the employer’s obligation to con- tribute under the plan is continued for no more than an insubstantial portion of its work in the craft and area jurisdiction of the collective bar- gaining agreement of the type for which con- tributions are required. (2) An employer to whom section 1383(c) 2 of this title (relating to the entertainment indus- try) applies shall have no liability for a partial withdrawal except under the conditions and to the extent prescribed by the corporation by reg- ulation. (e) Reduction or elimination of partial with- drawal liability under any conditions; cri- teria; procedures applicable (1) The corporation may prescribe regulations providing for the reduction or elimination of partial withdrawal liability under any condi- tions with respect to which the corporation de- termines that reduction or elimination of par- tial withdrawal liability is consistent with the purposes of this chapter. (2) Under such regulations, reduction of with- drawal liability shall be provided only with re- spect to subsequent changes in the employer’s contributions for the same operations, or under the same collective bargaining agreement, that gave rise to the partial withdrawal, and changes in the employer’s contribution base units with respect to other facilities or other collective bargaining agreements shall not be taken into account. (3) The corporation shall prescribe by regula- tion a procedure by which a plan may by amend- ment adopt rules for the reduction or elimi- nation of partial withdrawal liability under any other conditions, subject to the approval of the corporation based on its determination that adoption of such rules by the plan is consistent with the purposes of this chapter. (Pub. L. 93–406, title IV, § 4208, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1224.) Editorial Notes REFERENCES IN TEXT ‘‘Section 1383(b) of this title’’ and ‘‘section 1383(c) of this title’’, referred to in subsec. (d), were in the origi- nal ‘‘section 4202(b)’’ and ‘‘section 4202(c)’’, respec- tively, meaning section 4202(b) and section 4202(c) of the Employee Retirement Income Security Act of 1974 and were editorially translated as the probable intent of Congress in view of section 4202 of the Employee Re- tirement Income Security Act of 1974, which is classi- fied to section 1382 of this title, not having subsection designations and the subject matter of section 4203 of the Act which is classified to section 1383 of this title. This chapter, referred to in subsec. (e)(1), (3), 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. § 1389. De minimis rule (a) Reduction of unfunded vested benefits allo- cable to employer withdrawn from plan Except in the case of a plan amended under subsection (b), the amount of the unfunded vest-