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

Summary

Allows moving assets or debts between a multiemployer pension plan and a single-employer plan, or merging them, if certain rules are met. A participant’s earned benefit cannot be smaller right after the move or merger than it was before. If a multiemployer plan moves liabilities to a single-employer plan and that single-employer plan ends within 60 months, the multiemployer plan may owe money to the corporation (PBGC). The amount owed is the smaller of (A) the single-employer plan’s asset shortfall minus 30 percent of the employer’s net worth (under sections 1362 or 1364), or (B) the value, on the transfer date, of the unfunded benefits that are guaranteed under section 1322. The multiemployer plan will not owe this amount if, within 180 days after the corporation gets an application from the plan sponsor, the corporation either says the parties and the corporation are adequately protected or does not make any decision within that 180 days (the clock stops if the corporation asks for more information). No liability also applies for certain transfers back to a single-employer plan that had merged into the multiemployer plan, if the transferred liabilities don’t exceed pre-merger liabilities and the assets transferred are basically equal to what the single-employer plan would have had if kept separate. The corporation can make fair arrangements to settle any liability. Benefits in a single-employer plan that receives liabilities are guaranteed under section 1322 to the extent that section provides, and that plan is the successor plan. A transfer normally needs the agreement of the plan sponsor of the receiving single-employer plan, except for the special merger-related transfers described above where the employer’s prior agreement is enough. The corporation may set extra rules to protect participants and itself, must usually approve transfers from plans in reorganization, and can require protections for any transfers tied to a plan termination so the corporation’s risk does not increase.