§1386 Adjustment for Partial Withdrawal; Determination of Amount; Reduction for Partial Withdrawal Liability; Procedures Applicable

Summary

Calculates how much an employer must pay when it partly leaves a multiemployer pension plan, before applying other rules in sections 1399(c)(1) and 1405. First find the amount the employer would owe if it had fully withdrawn using the rules in section 1391 (and any adjustment under section 1389). Use the date of the partial withdrawal, except when the partial withdrawal is from a 70-percent drop in contributions — then use the last day of the first plan year in the 3-year testing period. Multiply that full-withdrawal amount by 1 minus a ratio: the employer’s contribution base units for the plan year after the withdrawal divided by the average of its contribution base units for the 5 prior plan years (or the 5 years before the testing period for a 70-percent case). If the employer already had partial-withdrawal liability from an earlier year, any later withdrawal charge is reduced by the earlier amount (after any abatements). The corporation must create rules to adjust that reduction for later changes in unfunded vested benefits, changes in contribution base units, and other factors so the later liability fairly reflects the employer’s share.