§1441 Benefits Under Certain Terminated Plans

Summary

Plan sponsors must cut benefits and can pause some payments for certain terminated multiemployer pension plans when section 1341a(d) applies. The plan must have, in writing, a yearly calculation of the value of earned benefits and the plan’s assets at the end of the plan year when the rule first applies and every year after. Plan assets include unpaid withdrawal liability claims. If earned benefits are worth more than the assets, the sponsor must change the plan to reduce benefits just enough so the assets will cover promised benefits, and the change must be certified under rules the corporation sets. Any cut can only be as large as needed, must not cut benefits guaranteed under section 1322a(b), must follow reorganization rules unless the corporation sets other rules, and must take effect no later than 6 months after the plan year when the shortfall is found. Definitions: nonforfeitable benefits = benefits already earned; plan assets = what the plan owns (including withdrawal claims); “resource benefit level” and “available resources” = terms defined in section 1426(b). If a plan is insolvent (amended as allowed and still short of funds to pay benefits), non-basic payments may be suspended so total payments equal at least the resource benefit level or basic benefits. The sponsor has duties like those for insolvent reorganizing plans, and the corporation must require notices and may limit retroactive payments as described in section 1426(c)(4) and (5) for the year this rule first applied and each year after.