26 U.S. Code § 418 - Reorganization status
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(a) General rule
A multiemployer plan is in reorganization for a plan year if the plan’s reorganization index for that year is greater than zero.
(b) Reorganization index
For purposes of this subpart—
(1) In general
A plan’s reorganization index for any plan year is the excess of—
(2) Net charge to funding standard account
The net charge to the funding standard account for any plan year is the excess (if any) of—
(3) Vested benefits charge
The vested benefits charge for any plan year is the amount which would be necessary to amortize the plan’s unfunded vested benefits as of the end of the base plan year in equal annual installments—
(4) Determination of vested benefits charge
(A) In general
The vested benefits charge for a plan year shall be based on an actuarial valuation of the plan as of the end of the base plan year, adjusted to reflect—
(I) decrease of 5 percent or more in the value of plan assets, or increase of 5 percent or more in the number of persons in pay status, during the period beginning on the first day of the plan year following the base plan year and ending on the adjustment date, or
(ii) any change in benefits under the plan which is not otherwise taken into account under this subparagraph and which is pursuant to any amendment—
(B) Certain changes in benefit levels
(i) In general In determining the vested benefits charge for a plan year following a plan year in which the plan was not in reorganization, any change in benefits which—
(I) results from the changing of a group of participants from one benefit level to another benefit level under a schedule of plan benefits as a result of changes in a collective bargaining agreement, orshall not be taken into account except to the extent provided in regulations prescribed by the Secretary.
(ii) Plan in reorganization Except as otherwise determined by the Secretary, in determining the vested benefits charge for any plan year following any plan year in which the plan was in reorganization, any change in benefits— shall, for purposes of subparagraph (A)(ii), be treated as a change in benefits pursuant to an amendment to a plan.
(5) Base plan year
(A) In general
The base plan year for any plan year is—
(i) if there is a relevant collective bargaining agreement, the last plan year ending at least 6 months before the relevant effective date, or
(B) Relevant collective bargaining agreement
A relevant collective bargaining agreement is a collective bargaining agreement—
(C) Relevant effective date
The relevant effective date is the earliest of the effective dates for the relevant collective bargaining agreements.
(6) Person in pay status
The term “person in pay status” means—
(A) a participant or beneficiary on the last day of the base plan year who, at any time during such year, was paid an early, late, normal, or disability retirement benefit (or a death benefit related to a retirement benefit), and
(7) Other definitions and special rules
(A) Unfunded vested benefits
The term “unfunded vested benefits” means, in connection with a plan, an amount (determined in accordance with regulations prescribed by the Secretary) equal to—
(B) Vested benefits
The term “vested benefits” means any nonforfeitable benefit (within the meaning of section 4001(a)(8) of the Employee Retirement Income Security Act of 1974).
(C) Allocation of assets
In determining the plan’s unfunded vested benefits, plan assets shall first be allocated to the vested benefits attributable to persons in pay status.
(D) Treatment of certain benefit reductions
The vested benefits charge shall be determined without regard to reductions in accrued benefits under section 418D which are first effective in the plan year.
(c) Prohibition of nonannuity payments
Except as provided in regulations prescribed by the Pension Benefit Guaranty Corporation, while a plan is in reorganization a benefit with respect to a participant (other than a death benefit) which is attributable to employer contributions and which has a value of more than $1,750 may not be paid in a form other than an annuity which (by itself or in combination with social security, railroad retirement, or workers’ compensation benefits) provides substantially level payments over the life of the participant.
(d) Terminated plans
Any multiemployer plan which terminates under section 4041A(a)(2) of the Employee Retirement Income Security Act of 1974 shall not be considered in reorganization after the last day of the plan year in which the plan is treated as having terminated.
 See References in Text note below.
Source(Added Pub. L. 96–364, title II, § 202(a),Sept. 26, 1980, 94 Stat. 1271.)
References in Text
Section 412, referred to in subsec. (b)(2), was amended generally by Pub. L. 109–280, title I, § 111(a),Aug. 17, 2006, 120 Stat. 820, and as so amended, section 412 (b)(3) no longer contains a subpar. (B) and section 412 (b)(2) no longer relates to charges to the funding standard account.
Section 4001(a)(8) of the Employee Retirement Income Security Act of 1974, referred to in subsec. (b)(7)(B), is classified to section 1301 (a)(8) of Title 29, Labor.
Section 4041A(a)(2) of the Employee Retirement Income Security Act of 1974, referred to in subsec. (d), is classified to section 1341a (a)(2) of Title 29.
“(a) Except as otherwise provided in this section, the amendments made by this title [amending sections 401, 404, 411 to 414, 4971, and 4975 of this title] shall take effect on the date of the enactment of this Act [Sept. 26, 1980].
“(b) Subpart C of part I of subchapter D of chapter 1 of such Code (as added by this Act) [sections 418 to 418E of this title] shall take effect, with respect to each plan, on the first day of the first plan year beginning on or after the earlier of—
“(1) the date on which the last collective-bargaining agreement providing for employer contributions under the plan, which was in effect on the date of the enactment of this Act [Sept. 26, 1980], expires, without regard to extensions agreed to after such date of enactment, or
“(2) 3 years after the date of the enactment of this Act [Sept. 26, 1980].
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