(a) Amendment of multiemployer plan in reorganization to reduce or eliminate accrued benefits attributable to employer contributions ineligible for guarantee of corporation; adjustment of vested benefits charge to reflect plan amendment
1054 of this title, a multiemployer plan in reorganization may be amended in accordance with this section, to reduce or eliminate accrued benefits attributable to employer contributions which, under section
1322a(b) of this title, are not eligible for the corporation’s guarantee. The preceding sentence shall only apply to accrued benefits under plan amendments (or plans) adopted after March 26, 1980, or under collective bargaining agreements entered into after March 26, 1980.
(2)In determining the minimum contribution requirement with respect to a plan for a plan year under section
1423(b) of this title, the vested benefits charge may be adjusted to reflect a plan amendment reducing benefits under this section or section
412(c)(8) of title
26, but only if the amendment is adopted and effective no later than 21/2 months after the end of the plan year, or within such extended period as the Secretary of the Treasury may prescribe by regulation under section
412(c)(10) of title
(b) Reduction of accrued benefits; notice by plan sponsors to plan participants and beneficiaries
(1)Accrued benefits may not be reduced under this section unless—
(A)notice has been given, at least 6 months before the first day of the plan year in which the amendment reducing benefits is adopted, to—
(i)plan participants and beneficiaries,
(ii)each employer who has an obligation to contribute (within the meaning of section
1392(a) of this title) under the plan, and
(iii)each employee organization which, for purposes of collective bargaining, represents plan participants employed by such an employer,
that the plan is in reorganization and that, if contributions under the plan are not increased, accrued benefits under the plan will be reduced or an excise tax will be imposed on employers;
(B)in accordance with regulations prescribed by the Secretary of the Treasury—
(i)any category of accrued benefits is not reduced with respect to inactive participants to a greater extent proportionally than such category of accrued benefits is reduced with respect to active participants,
(ii)benefits attributable to employer contributions other than accrued benefits and the rate of future benefit accruals are reduced at least to an extent equal to the reduction in accrued benefits of inactive participants, and
(iii)in any case in which the accrued benefit of a participant or beneficiary is reduced by changing the benefit form or the requirements which the participant or beneficiary must satisfy to be entitled to the benefit, such reduction is not applicable to—
(I)any participant or beneficiary in pay status on the effective date of the amendment, or the beneficiary of such a participant, or
(II)any participant who has attained normal retirement age, or who is within 5 years of attaining normal retirement age, on the effective date of the amendment, or the beneficiary of any such participant; and
(C)the rate of employer contributions for the plan year in which the amendment becomes effective and for all succeeding plan years in which the plan is in reorganization equals or exceeds the greater of—
(i)the rate of employer contributions, calculated without regard to the amendment, for the plan year in which the amendment becomes effective, or
(ii)the rate of employer contributions for the plan year preceding the plan year in which the amendment becomes effective.
(2)The plan sponsors shall include in any notice required to be sent to plan participants and beneficiaries under paragraph (1) information as to the rights and remedies of plan participants and beneficiaries as well as how to contact the Department of Labor for further information and assistance where appropriate.
(c) Recoupment by plan of excess benefit payment
A plan may not recoup a benefit payment which is in excess of the amount payable under the plan because of an amendment retroactively reducing accrued benefits under this section.
(d) Amendment of plan to increase or restore accrued benefits previously reduced or rate of future benefit accruals; conditions, applicable factors, etc.
(A)A plan which has been amended to reduce accrued benefits under this section may be amended to increase or restore accrued benefits, or the rate of future benefit accruals, only if the plan is amended to restore levels of previously reduced accrued benefits of inactive participants and of participants who are within 5 years of attaining normal retirement age to at least the same extent as any such increase in accrued benefits or in the rate of future benefit accruals.
(B)For purposes of this subsection, in the case of a plan which has been amended under this section to reduce accrued benefits—
(i)an increase in a benefit, or in the rate of future benefit accruals, shall be considered a benefit increase to the extent that the benefit, or the accrual rate, is thereby increased above the highest benefit level, or accrual rate, which was in effect under the terms of the plan before the effective date of the amendment reducing accrued benefits, and
(ii)an increase in a benefit, or in the rate of future benefit accruals, shall be considered a benefit restoration to the extent that the benefit, or the accrual rate, is not thereby increased above the highest benefit level, or accrual rate, which was in effect under the terms of the plan immediately before the effective date of the amendment reducing accrued benefits.
(2)If a plan is amended to partially restore previously reduced accrued benefit levels, or the rate of future benefit accruals, the benefits of inactive participants shall be restored in at least the same proportions as other accrued benefits which are restored.
(3)No benefit increase under a plan may take effect in a plan year in which an amendment reducing accrued benefits under the plan, in accordance with this section, is adopted or first becomes effective.
(4)A plan is not required to make retroactive benefit payments with respect to that portion of an accrued benefit which was reduced and subsequently restored under this section.
(e) “Inactive participant” defined
For purposes of this section, “inactive participant” means a person not in covered service under the plan who is in pay status under the plan or who has a nonforfeitable benefit under the plan.
(f) Promulgation of rules; contents, etc.
The Secretary of the Treasury may prescribe rules under which, notwithstanding any other provision of this section, accrued benefit reductions or benefit increases for different participant groups may be varied equitably to reflect variations in contribution rates and other relevant factors reflecting differences in negotiated levels of financial support for plan benefit obligations.
412, referred to in subsec. (a)(2), was amended generally by Pub. L. 109–280, title I, § 111(a),Aug. 17, 2006, 120 Stat. 820, and as so amended, no longer contains a subsec. (c)(8) or (10).
1989—Subsec. (a)(2). Pub. L. 101–239substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.
Effective Date of 1989 Amendment
Amendment by Pub. L. 101–239effective, 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) ofPub. L. 101–239, set out as a note under section
1002 of this title.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.
Description of Change
Statutes at Large
LII has no control over and does not endorse any external Internet site that contains links to or references LII.