Opinion letters database

PBGC insures benefits that accrue after employee layoff up to the date of termination.

Discussion of conditions under which PBGC would allow a company to restore its pension plan after plan administrator filed a Notice of Intent to Terminate.

Disputes over a demand for payment of withdrawal liability are resolved through arbitration under § 4219(b)(2) and 4221.

PBGC requests a written explanation of major Plan investment decisions made since its termination, as PBGC considers entering into an agreement with employer to restore the Plan to its earlier status.

Legal and actuarial fees arising from plan termination can be paid with plan assets only if it is consistent with the plan's terms. Plan assets should not be used to pay expenses incurred primarily for the benefit of the employer and not plan.

PBGC is not subject to state court divorce action, as there is no provision in ERISA for the state court's exercise of subject matter jurisdiction over PBGC. PBGC’s authority is limited by the terms of Title IV, and therefore PBGC cannot submit to the state court's jurisdiction.

In a sale of assets where the buyer continues to contribute to the plan, a withdrawal may be avoided if the seller and buyer comply with the terms of § 4204, but the seller's reliance on § 4218 is misplaced.

Discusses rights and dispute procedure when withdrawal liability is assessed.

ERISA has no special rules regarding shareholder or officer liability. The issue is usually determined by State law, which generally provides that shareholders are not liable for the debts of a corporation.

Discussion of who constitutes an "employer" for purposes of assessing liability and whether a sale of assets has occurred under Multiemployer Pension Plan Amendments Act of 1980.

Plan maintained in Puerto is not exempt from Title IV coverage because virtually all Puerto Rican residents born in Puerto Rico after 1899 are U.S. citizens.

Discussion of whether a partial withdrawal occurs under § 4205(a)(2) when an employer sells some of its facilities, covered under a collective bargaining agreement, but continues to perform work at other facilities covered by the same agreement under which contributions are required to a multiemployer pension plan.

Discussion of the presumptive method of allocation under § 4211 (b)(1) where relationship between plan assets and liabilities fluctuates.

Discussion of meaning of the term "facility" as used in § 4217; how employer contributions to a multiemployer pension plan, allocable to work performed at stores which closed prior to April 29, 1980, would be treated under § 4217.

Discussion of procedure for selecting arbitrator for arbitration over withdrawal liability in the absence of PBGC regulation.

Advice regarding pursuit of termination liability for proposed sale of subsidiary in a controlled group to unrelated buyer where subsidiary is the sole employer contributing to defined benefit plan and Plan assets are sufficient to fund all guaranteed benefits.

Plan was terminated in conjunction with the establishment of a defined contribution plan. PBGC will consider the election by every participant to receive distribution in the form of payments over a five-year term to the individual's account in the defined contribution plan to be a distribution of all plan assets for purposes of Title IV.

Whether certain events which may occur as a result of collective bargaining between an employer and union would constitute a partial or complete withdrawal. An employer that temporarily ceases contributions during a labor dispute will not be considered to have withdrawn. However, this could change if the employer is determined to have permanently stopped contributions.

Employer is not subject to a demand for immediate payment of the entire amount of withdrawal liability, for failure to make withdrawal liability payments during both the period before arbitration is requested and the period between the request for arbitration and the arbitrator's final decision. Interest will continue to accrue on late payments from due date until payment made.

Financial information submitted in conjunction with request for deferred payment should include estimate of the employer's net worth. PBGC may determine on a case by case basis to process a deferred payment request even though some information, such as a net worth estimate, is not provided. Such a determination could only be made after PBGC evaluated financial information that is provided.

Plan administrator filed notice proposing that PBGC agree to a plan termination date that occurred before the notice was filed. PBGC regulations provide late filing of a notice of intent to terminate constitutes a violation of ERISA. PBGC concluded a retroactive termination date not justified.

Whether PBGC will seek appointment as trustee of a multiemployer plan upon termination is determined by the facts and circumstances, and insufficient facts were presented. Discussion of post termination administration of a plan if PBGC does not become trustee, including limitations on using liquid assets to purchase annuity contracts.. Proposal for plan to adopt a rule under §§ 4219(c)(7) and 4224 by which all employers' withdrawal liability payment schedules would be for the same period of time is not permissible under those sections.

PBGC couldn't accept a proposal concerning deferred payment terms under § 4062 as it would have been inconsistent with regulation (i.e., on interest rate on employer liability and eligibility for deferred payment terms).

Clarification that in the application of the partial withdrawal rule in Section 4205(b)(2)(A)(ii) of ERISA, the term "facility" ordinarily refers to a discrete geographic location.

General interpretation of the law in response to an inquiry concerning whether certain types of labor disputes involving an employer's employees would constitute a withdrawal from a multiemployer plan (such as a strike or a lockout as a result of a strike against another employer; an "offensive" lockout by an employer after an impasse; or an illegal strike by the union with employees being discharged or permanently replaced).