§1389 De Minimis Rule

Summary

When an employer leaves a multiemployer pension plan, the amount they owe for unfunded vested benefits is cut by the smaller of 3/4 of 1 percent of the plan’s unfunded vested obligations (measured at the end of the prior plan year) or $50,000, unless the plan has been changed. A plan can be changed so the cut can be larger—up to either that basic cut or, when larger, up to $100,000 (still limited by the 3/4 of 1 percent figure). The cut rule does not apply if almost all employers leave in the same plan year, or if almost all leave over one or more plan years under a withdrawal agreement. If almost all employers leave within 3 plan years, any employer who left in that time is assumed to have left under such an agreement unless they prove otherwise by showing it is more likely than not they did not.