§1388 Reduction of Partial Withdrawal Liability

Summary

An employer that partly stops paying into a multiemployer plan can stop making extra partial-withdrawal payments if certain work levels return. If, for any two plan years in a row after the year the employer partially withdrew, the employer still has to contribute at least 90% of the units it had in its highest year, then the employer no longer must make partial-withdrawal payments for plan years that start after the second of those two years (late payments still must be paid). If in a year the employer’s units reach at least the same number as its highest year (without the 90% test), the plan can let the employer post a bond instead of paying up to 50% of that year’s required payment. If the plan later finds the employer has no more liability, the bond is canceled. If the plan finds the employer is still liable, the bond is paid to the plan, the employer must pay any unpaid balance right away, and must keep making scheduled payments. If for two years after the withdrawal the employer’s units each year are more than 30% of its high base year and the total units for all employers in each of those years are at least 90% of what they were in the withdrawal year, then the employer also stops owing partial-withdrawal payments after the second year. If in a following year the employer’s units are 110% (or another allowed percent) or more of the withdrawal year, that year’s payment is cut back pro rata under the corporation’s rules. For the building and construction trades, an employer is liable only if it continues to contribute for no more than an insubstantial part of its work in that craft and area. For the entertainment industry, liability exists only as the corporation’s rules say. The corporation may make rules to reduce or remove partial-withdrawal liability, but only for changes tied to the same operations or collective bargaining agreement that caused the withdrawal; plans may adopt similar rules if the corporation approves. Definitions: "partial withdrawal year" — the plan year when the employer partially withdrew; "high base year" — the employer’s highest-contribution year used for comparison; "contribution base units" — the units the plan uses to measure required contributions.