§1389 De Minimis Rule

Summary

Lowers the unpaid pension amount an employer must pay when it leaves a multiemployer pension plan. The reduction equals the smaller of ¾ of 1 percent of the plan’s unfunded vested obligations (measured at the end of the plan year before the leave) or $50,000. That reduction is further reduced if the employer’s original unpaid amount (without this rule) is more than $100,000. A plan can be changed so the employer’s cut can be bigger: up to either the amount above or a second cap that is the smaller of ¾ of 1 percent of plan obligations or $100,000 (but lowered if the employer’s original liability is over $150,000). The rule does not apply if substantially all employers leave in the same plan year, or if they leave under a common agreement over one or more years. If substantially all employers leave within 3 plan years, any employer who left in that time is assumed to have left under an agreement unless it proves otherwise by showing it is more likely than not.