| |
| | 75-86 |
| | June 12, 1975 |
| | REFERENCE: |
| | 4041 Termination by Plan Administrator |
| | 4082(a) Effective Date; Special Rules. Effective Date of Title IV |
| | OPINION: |
| | This is in response to your letters concerning the termination of the above-captioned pension plan. You stated that * * * |
| | and * * * reached agreement on a new contract in August 1974, that the terms of the agreement were embodied in a |
| | Memorandum of Understanding executed on or about August 12, 1974, that the formal contract was executed shortly |
| | thereafter, and that the contract was effective as of may 21, 1974. Pursuant to the terms of the contract, the company's |
| | existing tax qualified defined benefit Pension plan was to be terminated on April 1, 1975 and the assets of the plan |
| | distributed to the participants in * * * accordance with the terms of the plan. The company would then adopt the provisions |
| | of the * * * Pension Fund (a multi-employer plan) and commence contributions to that plan. You stated in a phone |
| | conversation with * * * of this office on June 4, 1975 that the original plan was indeed being * * * terminated and assets |
| | were to be distributed to participants, and that the plan was not being merged into the * * * plan. You questioned whether, |
| | given the fact that the termination of the first plan was required under the terms of a collective bargaining agreement |
| | entered into prior to the enactment of the Employee Retirement Income Security Act of 1974 (the "Act"), the plan |
| | termination would be be subject to the provisions of sections 4041 and 4062 of the Act. |
| | It appears from the information you have provided us that the first plan is a covered plan under section 4021 of the Act. |
| | Therefore, its termination is subject to the provisions of section 4041 and, since it is a portenactment termination, section |
| | 4062. This is so despite the fact that the termination results from a contract entered into prior to the enactment of the Act. |
| | Pursuant to section 4082(a), the provisions of Title IV take effect on the date of enactment of the Act. There is no |
| | exception to this rule with respect to terminations which were planned or contractually agreed to prior to that date. |
| | Moreover, Title IV applies to the termination even though the employer is adopting a new pension plan. Thus, all |
| | terminations of covered plans on or after September 2, 1974 are subject to Title IV of the Act. |
| | Therefore, pursuant to section 4041, the plan administrator must file a notice of proposed termination with this Corporation, |
| | and the assets of the plan may not be distributed pursuant to the plan termination procedure until this Corporation issues |
| | the plan administrator a notice of sufficiency. |
| | Henry Rose |
| | General Counsel |