§1412 Transfers between a multiemployer plan and a single-employer plan

Summary

Allows transfers of assets or debts between a multiemployer pension plan and a single-employer plan, or a merger of the two, if rules are followed. A person's earned benefit cannot be smaller right after the transfer or merger than it was before. If the single-employer plan ends within 60 months after the transfer, the multiemployer plan may have to pay the federal pension insurance corporation an amount equal to the smaller of two calculations: the single-employer plan’s funding shortfall reduced by 30 percent of the employer’s net worth, or the value of the transferred unfunded benefits that the corporation guarantees as of the transfer date. The multiemployer plan is not responsible if the corporation, within 180 days after getting an application and needed information, decides that participants and the corporation are adequately protected, or if the corporation does not decide in that time. There is also a special exception for transfers that return liabilities to the single-employer plan that once merged into the multiemployer plan, as long as the amounts moved match rules about pre‑merger liabilities and assets. The corporation can accept alternative payment arrangements to satisfy any responsibility. Benefits in the receiving single-employer plan are covered by the corporation’s guarantee to the extent the guarantee law allows, and the receiving plan is treated as the successor plan. Transfers generally need the receiving plan sponsor’s agreement, except the special merged-case where the employer’s prior agreement is enough. The corporation can make more rules to protect participants and itself, must usually approve transfers from plans in formal reorganization, and can require extra protections for transfers tied to certain plan terminations so they do not increase the corporation’s risk.