§1413 Partitions of eligible multiemployer plans

Summary

If a plan sponsor asks for a partition, the corporation can order one if certain rules are met. The corporation must decide within 270 days after the application is filed or completed, under its regulations. The plan sponsor must tell participants and beneficiaries about the application within 30 days in the way the corporation requires. To be eligible, the plan must be in critical and declining status; the corporation must find the sponsor tried all reasonable steps to avoid insolvency, including the maximum benefit suspensions under section 1085(e)(9); the corporation must expect the partition will cut its long-term loss and be needed to keep the plan solvent; it must certify to Congress that helping this plan won’t hurt its ability to meet other obligations (including plans that are insolvent or likely to be within 10 years); and the cost must come only from the fund for basic guaranteed benefits. A partition order moves just enough of the plan’s liabilities to a new successor plan (covered by section 1322a) to keep the original plan solvent. The same sponsor and administrator stay in charge. If an employer withdraws within 10 years, withdrawal liability is figured for both plans; after 10 years it is figured only for the original plan (see section 1381). The original plan must pay each transferred participant each month the difference between what the plan would have paid (including suspensions and later amendments) and the guaranteed amount under section 1322a. If the plan gives benefit increases after the partition, the original plan must pay the corporation each year for 10 years the smaller of the increase’s value or the new plan’s total benefit payments. The original plan must also pay the corporation’s premiums for transferred participants for 10 years. Within 14 days after the partition order, the corporation must notify the Committee on Education and the Workforce of the House of Representatives; the Committee on Ways and Means of the House of Representatives; the Committee on Finance of the Senate; the Committee on Health, Education, Labor, and Pensions of the Senate; and any affected participants or beneficiaries.