§1384 — Title 29 Labor | U.S. Code

§1384 Sale of assets

Title 29 › Chapter CHAPTER 18— - EMPLOYEE RETIREMENT INCOME SECURITY PROGRAM › Subchapter SUBCHAPTER III— - PLAN TERMINATION INSURANCE › Subtitle Subtitle E— - Special Provisions for Multiemployer Plans › Part part 1— - employer withdrawals › § 1384

Last updated Apr 6, 2026|Official source

Summary

A sale of a business’s assets to an unrelated buyer will not automatically count as the seller leaving a multiemployer pension plan if the buyer agrees to take on roughly the same number of contribution base units and follows specific protections for 5 plan years. The buyer must give the plan either a corporate surety bond that meets section 1112 rules or money held in an escrow account the plan accepts. That bond or escrow must equal the larger of (a) the seller’s average yearly required contribution for the three plan years before the sale, or (b) the seller’s required contribution in the last plan year before the sale. The sale contract must say that if the buyer withdraws during those 5 plan years and does not pay the plan, the seller is secondarily responsible. If the buyer withdraws before the end of the fifth plan year and fails to pay, the plan can collect. If the seller distributes most or all of its assets or is liquidated during the 5 years, the seller must post a bond or escrow equal to the present value of the withdrawal liability it would have had. If only part of the assets are distributed, a bond or escrow is required as the corporation’s rules say. Once a bond or escrow is paid to the plan, the payer’s liability is reduced by that amount. For liability calculations, the buyer’s responsibility is figured as if it had been required to make the seller’s contributions for the sale year and the four plan years before the sale. If the plan is in reorganization in the year of sale, the buyer must post bond or escrow equal to 200 percent of the amount described above. The corporation can change or waive the bond and contract requirements by rule or on a case-by-case basis, but it must publish notice, tell interested people, and allow them to comment. “Unrelated party” means a buyer or seller who is not related in the ways listed in section 267(b) of title 26 or in similar corporation rules.

Title 29, §1384

Labor — Source: USLM XML via OLRC

(a)(1)A complete or partial withdrawal of an employer (hereinafter in this section referred to as the “seller”) under this section does not occur solely because, as a result of a bona fide, arm’s-length sale of assets to an unrelated party (hereinafter in this section referred to as the “purchaser”), the seller ceases covered operations or ceases to have an obligation to contribute for such operations, if—

(A)the purchaser has an obligation to contribute to the plan with respect to the operations for substantially the same number of contribution base units for which the seller had an obligation to contribute to the plan;

(B)the purchaser provides to the plan for a period of 5 plan years commencing with the first plan year beginning after the sale of assets, a bond issued by a corporate surety company that is an acceptable surety for purposes of section 1112 of this title, or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the greater of—

(i)the average annual contribution required to be made by the seller with respect to the operations under the plan for the 3 plan years preceding the plan year in which the sale of the employer’s assets occurs, or

(ii)the annual contribution that the seller was required to make with respect to the operations under the plan for the last plan year before the plan year in which the sale of the assets occurs,

(C)the contract for sale provides that, if the purchaser withdraws in a complete withdrawal, or a partial withdrawal with respect to operations, during such first 5 plan years, the seller is secondarily liable for any withdrawal liability it would have had to the plan with respect to the operations (but for this section) if the liability of the purchaser with respect to the plan is not paid.

(2)If the purchaser—

(A)withdraws before the last day of the fifth plan year beginning after the sale, and

(B)fails to make any withdrawal liability payment when due,

(3)(A)If all, or substantially all, of the seller’s assets are distributed, or if the seller is liquidated before the end of the 5 plan year period described in paragraph (1)(C), then the seller shall provide a bond or amount in escrow equal to the present value of the withdrawal liability the seller would have had but for this subsection.

(B)If only a portion of the seller’s assets are distributed during such period, then a bond or escrow shall be required, in accordance with regulations prescribed by the corporation, in a manner consistent with subparagraph (A).

(4)The liability of the party furnishing a bond or escrow under this subsection shall be reduced, upon payment of the bond or escrow to the plan, by the amount thereof.

(b)(1)For the purposes of this part, the liability of the purchaser shall be determined as if the purchaser had been required to contribute to the plan in the year of the sale and the 4 plan years preceding the sale the amount the seller was required to contribute for such operations for such 5 plan years.

(2)If the plan is in reorganization in the plan year in which the sale of assets occurs, the purchaser shall furnish a bond or escrow in an amount equal to 200 percent of the amount described in subsection (a)(1)(B).

(c)The corporation may by regulation vary the standards in subparagraphs (B) and (C) of subsection (a)(1) if the variance would more effectively or equitably carry out the purposes of this subchapter. Before it promulgates such regulations, the corporation may grant individual or class variances or exemptions from the requirements of such subparagraphs if the particular case warrants it. Before granting such an individual or class variance or exemption, the corporation—

(1)shall publish notice in the Federal Register of the pendency of the variance or exemption,

(2)shall require that adequate notice be given to interested persons, and

(3)shall afford interested persons an opportunity to present their views.

(d)For purposes of this section, the term “unrelated party” means a purchaser or seller who does not bear a relationship to the seller or purchaser, as the case may be, that is described in section 267(b) of title 26, or that is described in regulations prescribed by the corporation applying principles similar to the principles of such section.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1989—Subsec. (d). Pub. L. 101–239 substituted “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.

Statutory Notes and Related Subsidiaries

Effective Date

of 1989 AmendmentAmendment by Pub. L. 101–239 effective, 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) of Pub. L. 101–239, set out as a note under section 1002 of this title.