§1341a Termination of multiemployer plans

Summary

Explains when a multiemployer pension plan ends and what must happen next. A plan ends if after September 26, 1980 it is changed so workers get no credit for service after a set date, or if every employer leaves or stops paying, or if the plan is changed into a different kind of plan under the law. If the end is from a plan change, the end date is the later of when the change was adopted or when it takes effect. If the end is because employers left or stopped paying, the end date is the earlier of when the last employer left or the first day of the first plan year with no required employer contributions. After an employer-exit end, the plan must pay only benefits that were vested by the end date. Employer-paid benefits (not death benefits) generally must be paid as annuities unless all vested benefits are fully paid from plan assets. The plan sponsor must also cut or suspend payments as allowed by law. For plan-change ends, each employer’s contribution rate after the end must be at least the highest rate the employer paid in the five plan years before the end, unless the corporation approves a lower rate because the plan is or will be fully funded. The plan sponsor may allow lump-sum payments up to $1,750 instead of an annuity. The corporation can approve other lump sums and can set reporting and administration rules to protect participants and limit the corporation’s risk.