§1403 Withdrawal liability payment fund

Summary

Plan sponsors of multiemployer plans may set up or join a withdrawal liability payment fund. That fund is a trust organized under section 501(c)(22) of title 26. It must cover a substantial share of eligible plan participants, be paid into by the participating plans, and be run by a board of trustees with equal employer and employee representation. If an employer leaves a participating plan, the fund must pay the plan the employer’s unattributable withdrawal liability, any withdrawal payments that would have been due but for sections 1388, 1389, 1399, or 1405 of this title, and amounts the plan cannot collect. The fund may also pay the employer’s attributable liability if it pays both attributable and unattributable parts in one payment and then takes over the plan’s legal rights against the employer. “Attributable liability” means the amount by which vested benefits earned from that employer exceed the plan assets assigned to that employer. “Unattributable liability” is the remaining withdrawal liability. Trust money can only be used to pay those liabilities and reasonable administrative costs. Payments from a plan to the fund count as plan administrative expenses under sections 1103(c)(1) and 1104(a)(1)(A)(ii) of this title, and payments from the fund to a plan count as necessary plan services under section 1108(b)(2) of this title or section 4975(d)(2) of title 26. Only amounts the fund pays under the unattributable-liability rule (subsection (c)(1)(A)) are credited against an employer’s withdrawal liability unless the plan says otherwise; fund payments are treated by the plan as withdrawal liability payments. Amounts a plan pays into the fund reduce the amount treated as contributed to the plan for funding rules. The fund is subrogated to the plan’s rights against the withdrawing employer for payments made under (c)(1)(A) to the extent not credited under (d)(1)(A) and for payments made under (c)(1)(C). Fund fiduciaries must follow the federal fiduciary standards in this chapter and the fund’s governing documents, and federal standards override state fiduciary law for these funds. No fund payments are allowed if the withdrawn employees remain represented by the same union. Employers may still buy insurance. The corporation may issue rules consistent with this section to govern these funds, except as to section 1402.