[Federal Register Volume 59, Number 41 (Wednesday, March 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4692]


[[Page Unknown]]

[Federal Register: March 2, 1994]


=======================================================================
-----------------------------------------------------------------------

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 2647

RIN 1212-AA38

 

Reduction or Waiver of Complete Withdrawal Liability

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This amendment to the Pension Benefit Guaranty Corporation's 
regulation on Reduction or Waiver of Complete Withdrawal Liability (29 
CFR part 2647) establishes procedures under which covered multiemployer 
pension plans may adopt rules, subject to PBGC approval, for the 
reduction or waiver of complete withdrawal liability, and establishes 
standards for PBGC approval of such rules. The Employee Retirement 
Income Security Act of 1974 directs the PBGC to prescribe such 
procedures and standards. The amendment allows covered multiemployer 
pension plans to develop their own rules for the reduction or waiver of 
complete withdrawal liability, and also provides less restrictive time 
limits on employer' applications to plans for abatement of complete 
withdrawal liability.

EFFECTIVE DATE: April 1, 1994.

FOR FURTHER INFORMATION CONTACT: Ralph L. Landy, Attorney, Office of 
the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026; (202) 326-4127 (202-326-4179 
for TTY and TDD). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Background

    Section 4203 of the Employee Retirement Income Security Act of 
1974, as amended (``ERISA'' or ``the Act''), sets forth the 
circumstances under which an employer is deemed to have completely 
withdrawn from a covered multiemployer pension plan. The amount of 
complete withdrawal liability is calculated under section 4211. Section 
4207(a) requires the PBGC to provide by regulation for the reduction or 
waiver of complete withdrawal liability in the event that an employer 
that has withdrawn from a plan subsequently resumes covered operations 
under the plan or renews an obligation to contribute under the plan, to 
the extent that the PBGC determines that reduction or waiver of 
complete withdrawal liability is consistent with the purposes of ERISA. 
Section 4207(b) requires the PBGC to prescribe by regulation a 
procedure and standards for the amendment of plans to provide 
alternative rules for the reduction or waiver of complete withdrawal 
liability in the event that an employer that has withdrawn from a plan 
subsequently resumes covered operations under the plan or renews an 
obligation to contribute under the plan, to the extent such rules are 
consistent with the purposes of ERISA.
    The PBGC's regulation on Reduction or Waiver of Complete Withdrawal 
Liability (29 CFR part 2647; see also 29 CFR 2640.6) provides rules 
requiring pension plans to reduce or waive complete withdrawal 
liability under ERISA section 4207(a). However, the regulation has not 
heretofore provided a procedure for pension plans to adopt alternative 
rules for reduction or waiver of complete withdrawal liability under 
ERISA section 4207(b).
    When the PBGC originally proposed the regulation on Reduction or 
Waiver of Complete Withdrawal Liability, the PBGC was not prepared to 
propose rules under section 4207(b). The PBGC believed at that time, 
however, that ``it is important to provide the relief contemplated 
under section 4207(a).'' (49 FR 8036.) Consequently, the PBGC decided 
to propose and issue rules under section 4207(a) at that time and to 
promulgate rules under section 4207(b) at a later date.
    On October 23, 1992, the PBGC published (at 57 FR 48348) a proposed 
amendment to the regulation on Reduction or Waiver Of Complete 
Withdrawal Liability. The provisions of the proposed amendment included 
a procedure for pension plans to adopt alternative rules for reduction 
or waiver of complete withdrawal liability, requirements for a plan 
sponsor to submit a written request for PBGC approval of a plan 
amendment adopting rules for the reduction or waiver of complete 
withdrawal liability, a description of the information to be submitted 
to the PBGC for its review of the request, the standards for PBGC 
approval of the request, a safe harbor period of at least fifteen days 
from the date of resuming covered operations for an employer resuming 
covered operations to file its application for abatement of complete 
withdrawal liability, and an editorial change to expand the purpose of 
part 2647 to cover both section 4207(a) and section 4207(b) of ERISA. 
All of these provisions were discussed in the preamble to the proposed 
amendment. No written comments were received on the proposal, and the 
PBGC is adopting the amendment as proposed.

Compliance With Rulemaking Guidelines

    The PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866 because it will not have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency; materially 
alter the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or raise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in Executive Order 
12866.
    Under section 605(b) of the Regulatory Flexibility Act, the PBGC 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. Pension plans with fewer than 
100 participants have traditionally been treated as small plans. This 
rule affects only multiemployer plans covered by the PBGC. Defining 
``small plans'' as those with under 100 participants, they represent 
less than 6 percent of all multiemployer plans covered by the PBGC (118 
out of 2000). Approximately 500,000 employers contribute to 
multiemployer plans, most of them small employers (under 100 
employees). The PBGC estimates that fewer than 10,000 (2 percent) of 
these employers are required to pay complete withdrawal liability in 
any year, and an even smaller percentage subsequently resume their 
participation under a plan and thereby become subject to these rules. 
Therefore, the PBGC waives compliance with sections 603 and 604 of the 
Regulatory Flexibility Act.

Paperwork Reduction Act

    The collection of information requirements contained in this rule 
(viz., in Sec. 2647.9) have been reviewed and approved by the Office of 
Management and Budget under section 3504(h) of the Paperwork Reduction 
Act of 1980 under control number 1212-0044. The PBGC estimates that not 
more than ten plans per year will make submissions under Sec. 2647.9 
and that each submission will take one-quarter hour to prepare and 
submit. The total estimated annual burden resulting from this 
collection of information is thus not more than two and one-half hours. 
Comments concerning the accuracy of this burden estimate and any 
suggestions for reducing the burden should be directed to the Office of 
the General Counsel of the Pension Benefit Guaranty Corporation at the 
address set forth above and to the Office of Management and Budget, 
Office of Information and Regulatory Affairs, Attention: Desk Officer 
for Pension Benefit Guaranty Corporation, Washington, DC 20503.

List of Subjects in 29 CFR Part 2647

    Employee benefit plans, Pension Benefit Guaranty Corporation, 
Reporting and recordkeeping requirements.
    In consideration of the foregoing, the PBGC amends 29 CFR part 2647 
as follows:

PART 2647--REDUCTION OR WAIVER OF COMPLETE WITHDRAWAL LIABILITY

    1. The authority for part 2647 is revised to read as follows:

    Authority: 29 U.S.C. 1302(b)(3) and 1387.

    2. Section 2647.1 is amended by adding a sentence to the end of 
paragraph (a) to read as follows:


Sec. 2647.1  Purpose and scope.

    (a) Purpose. * * * This part also provides procedures, pursuant to 
section 4207(b) of the Act, for plan sponsors of multiemployer plans to 
apply to PBGC for approval of plan amendments that provide for the 
reduction or waiver of complete withdrawal liability under conditions 
other than those specified in section 4207(a) of the Act and this part.
* * * * *
    3. Section 2647.2 is amended by revising the second and fourth 
sentences of paragraph (a) to read as follows:


Sec. 2647.2  Abatement.

    (a) General. * * * Applications shall be filed by the date of the 
first scheduled withdrawal liability payment falling due after the 
employer resumes covered operations or, if later, the fifteenth 
calendar day after the employer resumes covered operations. * * * Upon 
receiving an application for abatement, the plan sponsor shall 
determine, in accordance with paragraph (b) of this section, whether 
the employer satisfies the requirements for abatement of its complete 
withdrawal liability under Sec. 2647.4, Sec. 2647.8, or a plan 
amendment which has been approved by PBGC pursuant to Sec. 2647.9.
     * * *
* * * * *
    4. Section 2647.9 is added to read as follows:


Sec. 2647.9  Plan rules for abatement.

    (a) General rule. Subject to the approval of the PBGC, a plan may, 
by amendment, adopt rules for the reduction or waiver of complete 
withdrawal liability under conditions other than those specified in 
Secs. 2647.4 and 2647.8(c) and (d), provided that such conditions 
relate to events occurring or factors existing subsequent to a complete 
withdrawal year. The request for PBGC approval shall be filed after the 
amendment is adopted. A plan amendment under this section may not be 
put into effect until it is approved by the PBGC. However, an amendment 
that is approved by the PBGC may apply retroactively to the date of the 
adoption of the amendment. PBGC approval shall also be required for any 
subsequent modification of the amendment, other than repeal of the 
amendment. Sections 2647.5, 2647.6, and 2647.7 shall apply to all 
subsequent partial withdrawals after a reduction or waiver of complete 
withdrawal liability under a plan amendment approved by the PBGC 
pursuant to this section.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be addressed to the Case 
Operations and Compliance Department, Pension Benefit Guaranty 
Corporation, 1200 K Street, NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment 
is being submitted and the telephone number of the plan sponsor or its 
duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to 
the plan sponsor by the Internal Revenue Service and the three-digit 
Plan Identification Number (PN) assigned to the plan by the plan 
sponsor, and, if different, the EIN and PN last filed with the PBGC. If 
no EIN or PN has been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) The date on which the amendment was adopted;
    (ii) The proposed effective date; and
    (iii) The full text of the rules on the reduction or waiver of 
complete withdrawal liability.
    (4) A copy of the most recent actuarial valuation report of the 
plan.
    (5) A statement certifying that notice of the adoption of the 
amendment and of the request for approval filed under this section has 
been given to all employers that have an obligation to contribute under 
the plan and to all employee organizations representing employees 
covered under the plan.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information that it believes it pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information that the PBGC 
determines it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan 
amendment authorized by paragraph (a) of this section if it determines 
that the rules therein are consistent with the purposes of the Act. An 
abatement rule is not consistent with the purposes of the Act if--
    (1) Implementation of the rule would be adverse to the interest of 
plan participants and beneficiaries; or
    (2) The rule would increase the PBGC's risk of loss with respect to 
the plan.

    Issued at Washington, DC, on this 17th day of February 1994.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
    Issued pursuant to a resolution of the Board of Directors 
approving, and authorizing its chairman to issue, this final rule.
Carol Connor Flowe,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 94-4692 Filed 3-1-94; 8:45 am]
BILLING CODE 7708-01-M