§1412 Transfers Between a Multiemployer Plan and a Single-employer Plan

Summary

Allows a multiemployer pension plan to move or merge assets or obligations with a single-employer plan, but sets rules to protect workers and the Pension Benefit Guaranty Corporation (PBGC). No person’s earned benefit can be reduced when the transfer or merger takes effect. If a multiemployer plan shifts liabilities to a single-employer plan and that single-employer plan ends within 60 months, the multiemployer plan may owe the PBGC money. The amount owed is the smaller of (1) the single-employer plan’s shortfall minus 30 percent of the employer’s net worth (measured under the law), or (2) the value, on the transfer date, of the transferred unfunded benefits that PBGC guarantees under section 1322. The multiemployer plan is not liable if, within 180 days after the PBGC gets an application and required information, the PBGC either decides the deal adequately protects participants and the PBGC or makes no decision about that adequacy. If the transferred liabilities came from a single-employer plan that earlier merged into the multiemployer plan, there is no PBGC liability if the moved liabilities don’t exceed what had accrued before the merger and the assets moved match what the single employer would have had if it had kept a separate plan and paid no new benefits after the merger. PBGC may agree on fair ways to collect any liability. Benefits in the receiving single-employer plan are guaranteed under section 1322 as of the transfer date if it is a successor plan. The receiving plan sponsor must agree to the transfer (except in the special merger case where the employer’s prior agreement is enough). PBGC can make extra rules, must approve transfers from plans in reorganization unless it says otherwise, and can set conditions to prevent added risk to PBGC for transfers tied to certain terminations.