§1399 Notice, Collection, Etc., of Withdrawal Liability

Summary

Plan sponsors must tell an employer, as soon as possible after the employer fully or partly leaves a multiemployer plan, how much the employer owes and the payment schedule, and must demand payment. If the plan sponsor asks the employer for information in writing, the employer must give it within 30 days. After getting the notice of liability, the employer has 90 days to ask the plan sponsor to review specific issues, point out any errors, and give more information. The plan sponsor must look into what the employer raises and then tell the employer its decision, the reasons, and any change to the amount or schedule. The employer must pay the amount the plan calculates. That amount is spread into level yearly payments using the plan’s actuarial assumptions and figured as if the first payment were on the first day of the plan year after the withdrawal. If the amortization would be more than 20 years, payments are limited to 20 years. Each yearly payment is normally the product of (a) the average yearly contribution units from the three best years in a 10-year look-back period and (b) the highest contribution rate the employer had in the 10-year look-back; there are limited older-year and partial-withdrawal exceptions. Payments must begin no later than 60 days after the demand, even if a review is requested. Each yearly payment is split into four equal quarterly installments (or other plan intervals). Late payments earn interest from the due date until paid. An employer may prepay without penalty, but a later finding of a mass withdrawal can reopen the employer’s full liability. If a default occurs, the plan sponsor may demand the whole unpaid amount plus interest from the due date of the first missed payment. “Default” means failing to pay and not curing within 60 days after written notice, or other plan events showing the employer likely cannot pay. Interest rates follow prevailing market rates under applicable regulations. Plans may adopt other rules for satisfying withdrawal liability if they follow this law and the corporation’s regulations. Payments stop for a terminated plan when the plan’s assets (not counting withdrawal claims) cover all plan obligations as determined by the corporation.