Opinion letters database

Failure to make a larger contribution did not result in a termination for Title IV purposes. Where the plan continues operating, participants keep accruing benefits, and the employer intends to meet funding requirements, the plan is not considered terminated.

The sale of the company and adoption of the pension plan by the buyers did not constitute a plan termination, and the plan had sufficient assets at closing to cover guaranteed benefits. Consequently, if the plan terminates in the future, the sellers would not be liable to PBGC for any shortfall.

A participant’s eligibility for disability benefits depends on proving that the disability occurred before the plan’s termination date. While the SSA’s determination is considered, PBGC will independently evaluate all evidence to determine the correct disability onset date.

Categorization of plan

PBGC determined that the pension fund functioned as a single plan, not separate plans, based on its governing documents and how assets were managed collectively for all participants. Because of this, one employer’s withdrawal did not trigger a plan termination. Both plan terms and actual operations showed assets were pooled and used to pay benefits across all participating employers.

Proposed sale of assets and businesses and whether any member of the controlled group would not be liable to PBGC upon a subsequent plan termination.

An employer that purchased assets of another company and rehired most of its employees was not treated as a successor corporation where it did not assume or continue the seller's plans and disclaimed liability for them.

Under facts, acceptable termination date and PBGC would not void the notice because of termination date error.

Determining and distributing excess assets.

Plan language providing that the employer may receive surplus assets upon termination after all liabilities are satisfied satisfies section 4044(d)(1)(C) and permits reversion of residual assets to the employer.

Church plan status is determined by the IRS, but until the plan receives an IRS ruling on its status, the plan should pay premiums to avoid penalties and interest.

PBGC will determine the exact amount of plan asset insufficiency; the employer is liable for the shortfall between plan assets and guaranteed benefits, subject to a cap of 30% of the employer’s net worth.

Funds contributed to a plan whether paid directly by the local union maintaining it or indirectly through deductions from membership dues are employer contributions. Therefore, the section 4021(b)(5) exclusion does not apply and the plan is covered.

Because the plan is not terminating, the withdrawal of certain employers does not trigger termination rules under ERISA. Returning employee contributions (with interest) to affected participants is permitted and does not violate Title IV. PBGC also found no basis to treat the withdrawals as a partial termination or to take further action.

Participation in a plan maintained by more than one employer, some of which are not governmental entities, precludes the application of the governmental plan exclusion of section 4021(b)(2).

Because the employer's principal business is installing cathodic protection systems rather than preforming professional services, it is not a professional service employer under section 4021(c)(2).

Because the plan's benefit increases were effectuated through the execution of collective bargaining agreements -- rather than separate action by the Board of Trustees-- PBGC looks to the adoption and effective dates of those agreements in applying the five-year phase-in rule under section 4022(b)(8).

Plan isn't excluded from coverage; Under ERISA, vested benefits are generally guaranteed by PBGC even if the plan includes provisions limiting payouts to available assets. If the plan is terminated, employer liability will be allocated among contributing employers.

A plan maintained by a licensed clinical laboratory bio-analyst is a professional service employer plan.

A profit-sharing benefit merged into a defined benefit plan is a nonforfeitable, guaranteed pension benefit, and must be included in the section 4044 allocation upon termination because it qualifies as a pension benefit related to an annuity. If the plan is insufficient, PBGC will guarantee and pay the benefit as an annuity and it may not be paid in a lump sum.

PBGC rejected the proposal to allocate post-termination increases in plan asset value to participants with guaranteed benefits or to pay those benefits in lump sums, concluding that undersection 4044 any post-termination asset gains in an insufficient plan must be credited to PBGC, not participants.

Because the trust document authorizes payment of professional fees and expenses, the trustee's reasonable termination-related fees may be paid from trust assets under section 4044.

A group annuity contract owned by a pension plan is the plan asset under Title IV, not the assets held by the insurer under the contract. Because the contract language makes the insurer’s annuity obligations revocable at plan termination, the full value of amounts held under the contract (less administrative expenses) would be included in the contract’s value and allocated under section 044 to pay all plan participants’ benefits.

PBGC is precluded from guaranteeing benefits upon termination of plan.

Where proposed language in CBA will not affect Title IV coverage, it will not prevent PBGC claim for employer liability.