29 U.S.C. § 1403 — Withdrawal liability payment fund

Page 718 TITLE 29—LABOR § 1403 1 So in original. Probably should be followed by ‘‘and’’. § 1403. Withdrawal liability payment fund (a) Establishment of or participation in fund by plan sponsors The plan sponsors of multiemployer plans may establish or participate in a withdrawal liability payment fund. (b) Definitions For purposes of this section, the term ‘‘with- drawal liability payment fund’’, and the term ‘‘fund’’, mean a trust which— (1) is established and maintained under sec- tion 501(c)(22) of title 26, (2) maintains agreements which cover a sub- stantial portion of the participants who are in multiemployer plans which (under the rules of the trust instrument) are eligible to partici- pate in the fund, (3) is funded by amounts paid by the plans which participate in the fund, and (4) is administered by a Board of Trustees, and in the administration of the fund there is equal representation of— (A) trustees representing employers who are obligated to contribute to the plans par- ticipating in the fund, and (B) trustees representing employees who are participants in plans which participate in the fund. (c) Payments to plan; amount, criteria, etc. (1) If an employer withdraws from a plan which participates in a withdrawal liability pay- ment fund, then, to the extent provided in the trust, the fund shall pay to that plan— (A) the employer’s unattributable liability, (B) the employer’s withdrawal liability pay- ments which would have been due but for sec- tion 1388, 1389, 1399, or 1405 of this title,1 (C) the employer’s withdrawal liability pay- ments to the extent they are uncollectible. (2) The fund may provide for the payment of the employer’s attributable liability if the fund— (A) provides for the payment of both the at- tributable and the unattributable liability of the employer in a single payment, and (B) is subrogated to all rights of the plan against the employer. (3) For purposes of this section, the term— (A) ‘‘attributable liability’’ means the ex- cess, if any, determined under the provisions of a plan not inconsistent with regulations of the corporation, of— (i) the value of vested benefits accrued as a result of service with the employer, over (ii) the value of plan assets attributed to the employer, and (B) ‘‘unattributable liability’’ means the ex- cess of withdrawal liability over attributable liability. Such terms may be further defined, and the manner in which they shall be applied may be prescribed, by the corporation by regulation. (4)(A) The trust of a fund shall be maintained for the exclusive purpose of paying— (i) any amount described in paragraph (1) and paragraph (2), and (ii) reasonable and necessary administrative expenses in connection with the establishment and operation of the trust and the processing of claims against the fund. (B) The amounts paid by a plan to a fund shall be deemed a reasonable expense of admin- istering the plan under sections 1103(c)(1) and 1104(a)(1)(A)(ii) of this title, and the payments made by a fund to a participating plan shall be deemed services necessary for the operation of the plan within the meaning of section 1108(b)(2) of this title or within the meaning of section 4975(d)(2) of title 26. (d) Application of payments by plan (1) For purposes of this part— (A) only amounts paid by the fund to a plan under subsection (c)(1)(A) shall be credited to withdrawal liability otherwise payable by the employer, unless the plan otherwise provides, and (B) any amounts paid by the fund under sub- section (c) to a plan shall be treated by the plan as a payment of withdrawal liability to such plan. (2) For purposes of applying provisions relat- ing to the funding standard accounts (and min- imum contribution requirements), amounts paid from the plan to the fund shall be applied to re- duce the amount treated as contributed to the plan. (e) Subrogation of fund to rights of plan The fund shall be subrogated to the rights of the plan against the employer that has with- drawn from the plan for amounts paid by a fund to a plan under— (1) subsection (c)(1)(A), to the extent not credited under subsection (d)(1)(A), and (2) subsection (c)(1)(C). (f) Discharge of rights of fiduciary of fund; stand- ards applicable, etc. Notwithstanding any other provision of this chapter, a fiduciary of the fund shall discharge the fiduciary’s duties with respect to the fund in accordance with the standards for fiduciaries prescribed by this chapter (to the extent not in- consistent with the purposes of this section), and in accordance with the documents and in- struments governing the fund insofar as such documents and instruments are consistent with the provisions of this chapter (to the extent not inconsistent with the purposes of this section). The provisions of the preceding sentence shall supersede any and all State laws relating to fi- duciaries insofar as they may now or hereafter relate to a fund to which this section applies. (g) Prohibition on payments from fund to plan where certain labor negotiations involve em- ployer withdrawn or partially withdrawn from plan and continuity of labor organiza- tion representing employees continues No payments shall be made from a fund to a plan on the occasion of a withdrawal or partial withdrawal of an employer from such plan if the employees representing the withdrawn contribu- tion base units continue, after such withdrawal, to be represented under section 159 of this title (or other applicable labor laws) in negotiations 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—