§1441 Benefits Under Certain Terminated Plans

Summary

Plan sponsors must reduce benefits and stop some benefit payments for certain terminated multiemployer pension plans when section 1341a(d) applies. The sponsor must put in writing the value of the plan’s guaranteed (nonforfeitable) benefits and the value of the plan’s assets at the end of the plan year when section 1341a(d) first applies and at the end of each plan year after that. Plan assets count claims for withdrawal liability. If the written values show guaranteed benefits are worth more than the assets, the sponsor must change the plan to cut benefits only as much as needed so the plan’s assets can cover its obligations. Cuts cannot reduce benefits that the Pension Benefit Guaranty Corporation guarantees under section 1322a(b). The cuts must follow the reorganization rules in section 1425 unless the Corporation makes different rules, and they must take effect no later than 6 months after the end of the plan year when the shortfall was found. When a plan is insolvent (meaning it has been amended as allowed and still does not have enough resources to pay benefits when due), the sponsor must suspend any benefit payments that are not “basic benefits” if total payments exceed the “resource benefit level,” unless the Corporation sets another method under section 1322a(g)(2). “Resource benefit level” and “available resources” have the meanings in section 1426(b). The sponsor gets the same powers and duties as sponsors of insolvent reorganization plans, with notice rules set by the Corporation. Plans generally do not have to pay back benefits that were suspended, except that the rules in section 1426(c)(4) and (5) apply for the plan year when section 1341a(d) first applied and for each year after, in the same way they apply to insolvent reorganization plans.