§1341a Termination of Multiemployer Plans

Summary

Ends a multiemployer retirement plan when one of three things happens: an amendment adopted after September 26, 1980, stops giving credit for work after a set date; every employer leaves or all employers stop having to contribute; or an amendment makes the plan become the kind described in section 1321(b)(1). If the plan ends because of an amendment, the termination date is the later of when the amendment was adopted or when it takes effect. If it ends because all employers left or stopped contributing, the termination date is the earlier of the last employer’s withdrawal date or the first day of the first plan year when no employer contributions were required. The group that runs the plan must limit payments to benefits already earned and that cannot be taken away as of the termination date. For plans ending when all employers leave, employer-paid benefits (except death benefits) must be paid as annuities unless the plan’s assets are fully distributed. For plans ending by amendment, each employer’s contribution rate for plan years on or after termination must be at least the highest rate the employer paid in the 5 previous plan years, unless the corporation approves a lower rate because the plan is or will be fully funded. The plan sponsor may pay a participant’s entire earned employer-funded benefit (except death benefits) in a lump sum instead of an annuity if it is worth $1,750 or less. The corporation may allow other lump sums or larger lump sums if it finds no harm to participants or to the corporation, and it may set reporting and administration rules to protect participants and prevent unreasonable loss.