§1441 Benefits under certain terminated plans

Summary

Plan sponsors must cut benefits and stop some payments for a terminated multiemployer plan when the special rule in 1341a(d) applies. Each plan year, at the end of the year, the plan must put in writing the value of earned (nonforfeitable) benefits and the value of the plan’s assets using rules the corporation sets. Plan assets include outstanding claims for withdrawal liability. If the value of earned benefits is higher than assets, the sponsor must change the plan to reduce benefits only as much as needed so assets can cover all owed earned benefits. Cuts cannot touch benefits that the federal guarantee covers, must follow the rules for benefit cuts in reorganizing plans unless the corporation provides other rules, and must take effect no later than 6 months after the end of the year when the shortfall is found. If the plan is still insolvent after those cuts, any payments that are not basic benefits must be suspended so total payments equal at least the resource benefit level or the basic benefit level, unless the corporation allows a different approach. The sponsor gets the same powers and duties it would have in a reorganization, the corporation will set rules and required notices to participants, and suspended payments generally do not have to be paid back except where specific insolvency-year rules apply.