[Federal Register Volume 80, Number 170 (Wednesday, September 2, 2015)]
[Rules and Regulations]
[Pages 52972-52976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21766]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9735]
RIN 1545-BM89


Administration of Multiemployer Plan Participant Vote on an 
Approved Suspension of Benefits Under MPRA

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

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SUMMARY: The Multiemployer Pension Reform Act of 2014 (MPRA) pertains 
to multiemployer plans that are projected to have insufficient funds, 
at some point in the future, to pay the full plan benefits to which 
individuals will be entitled (referred to as plans in ``critical and 
declining status''). The sponsor of such a plan is permitted to reduce 
the pension benefits payable to plan participants and beneficiaries if 
certain conditions are satisfied (referred to as a ``suspension of 
benefits''). A suspension of benefits is not permitted to take effect 
prior to a vote of the participants of the

[[Page 52973]]

plan with respect to the suspension. This document contains temporary 
regulations that provide guidance relating to the administration of 
that vote. These temporary regulations affect active, retired, and 
deferred vested participants and beneficiaries of multiemployer plans 
that are in critical and declining status as well as employers 
contributing to, and sponsors and administrators of, those plans. The 
text of these temporary regulations also serves as the text of the 
proposed regulations set forth in the notice of proposed rulemaking 
(REG-123640-15) on this subject in the Proposed Rules section of this 
issue of the Federal Register.

DATES: Effective date: These temporary regulations are effective on 
September 2, 2015.
    Applicability date: These temporary regulations apply on and after 
June 17, 2015, and expire on June 15, 2018.

FOR FURTHER INFORMATION CONTACT: The Department of the Treasury MPRA 
guidance information line at (202) 622-1559 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    These temporary regulations are being issued without prior notice 
and public procedure pursuant to the Administrative Procedure Act (5 
U.S.C. 553). The collection of information contained in these 
regulations has been reviewed and approved by the Office of Management 
and Budget under control number 1545-2260.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    For further information concerning this collection of information, 
and where to submit comments on the collection of information and the 
accuracy of the estimated burden, and suggestions for reducing this 
burden, please refer to the preamble to the cross-referenced notice of 
proposed rulemaking on this subject in the Proposed Rules section in 
this issue of the Federal Register.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    Section 432(e)(9) of the Internal Revenue Code (Code), as amended 
by the Multiemployer Pension Reform Act of 2014 (MPRA), permits plan 
sponsors of certain multiemployer plans to reduce the plan benefits 
payable to participants and beneficiaries (referred to as a 
``suspension of benefits'') if specified conditions are satisfied. One 
key condition is that any such plan must be projected to have 
insufficient funds, at some point in the future, to pay the full 
benefits to which individuals will be entitled under the plan (referred 
to as a plan in ``critical and declining status'').
    Under section 432(e)(9)(H), no suspension of benefits may take 
effect prior to a vote of the participants of the plan with respect to 
the suspension. Section 432(e)(9)(H) requires that the vote be 
administered by the Secretary of the Treasury, in consultation with the 
Pension Benefit Guaranty Corporation and the Secretary of Labor 
(generally referred to in this preamble as the Treasury Department, 
PBGC, and Labor Department, respectively), within 30 days after 
approval of a suspension application. The plan sponsor is required to 
provide a ballot for a vote (subject to approval by the Treasury 
Department, in consultation with the PBGC and the Labor Department). 
The statute specifies information that the ballot must contain, 
including a statement in opposition to the proposed suspension that is 
compiled from comments received on the application.
    On June 19, 2015, the Treasury Department and the Internal Revenue 
Service published temporary regulations (TD 9723) under section 
432(e)(9) in the Federal Register (80 FR 35207) (June 2015 temporary 
regulations). The June 2015 temporary regulations provide general 
guidance regarding section 432(e)(9) and outline the requirements for a 
plan sponsor of a plan that is in critical and declining status to 
apply for a suspension of benefits and for the Treasury Department to 
begin processing such an application. A notice of proposed rulemaking 
cross-referencing the temporary regulations (REG-102648-15) was also 
published in the same issue of the Federal Register (80 FR 35262). Both 
the June 2015 temporary regulations and the related proposed 
regulations reflect consideration of comments received in response to 
the Request for Information on Suspensions of Benefits under the 
Multiemployer Pension Reform Act of 2014 published in the Federal 
Register on February 18, 2015 (80 FR 8578) (February 2015 request for 
information).
    The June 2015 temporary regulations and the related proposed 
regulations set forth many of the rules relating to the participant 
vote under section 432(e)(9)(H). However, neither the June 2015 
temporary regulations nor the related proposed regulations provide 
detailed guidance on how the Treasury Department would administer the 
vote.

Explanation of Provisions

Overview

    These temporary regulations provide guidance relating to the 
administration of the participant vote required under section 
432(e)(9)(H). These temporary regulations reflect consideration of 
comments received in response to the February 2015 request for 
information. The Treasury Department consulted with the PBGC and the 
Labor Department on these temporary regulations.
    A participant vote requires the completion of three steps. First, a 
package of ballot materials is distributed to eligible voters. Second, 
the eligible voters cast their votes and the votes are collected and 
tabulated. Third, the Treasury Department (in consultation with the 
PBGC and the Labor Department) determines whether a majority of the 
eligible voters has voted to reject the proposed suspension. The June 
2015 temporary regulations define eligible voters as all plan 
participants and all beneficiaries of deceased participants.
    Under these temporary regulations, the Treasury Department is 
permitted to designate a service provider or service providers to 
facilitate the administration of the vote. The service provider may 
assist in the steps of distributing the ballot package to eligible 
voters and collecting and tabulating the votes. These temporary 
regulations provide that if a service provider is designated to collect 
and tabulate votes, then the service provider will provide the Treasury 
Department with the report of the results of the vote, which includes a 
breakdown of the number of eligible voters who voted, the number of 
eligible voters who voted in support of and to reject the suspension, 
and certain other information. The Treasury Department will use that 
information to determine (in consultation with the PBGC and the Labor 
Department) whether a majority of eligible voters has voted to reject 
the suspension.

Distribution of the Ballot Package

    These temporary regulations provide that the ballot package sent to 
eligible voters includes the approved ballot and a unique identifier 
for each eligible voter. The unique identifier, which is assigned by 
the Treasury Department or a designated service provider, is intended 
to ensure the validity of the

[[Page 52974]]

vote while maintaining the eligible voters' privacy in the voting 
process.
    These temporary regulations provide guidance on the plan sponsor's 
statutory requirement to provide a ballot. Because the ballot for each 
eligible voter is accompanied by a unique identifier, the plan sponsor 
cannot itself distribute the ballot. Instead, the plan sponsor is 
responsible for furnishing a list of eligible voters so that the ballot 
can be distributed on the plan sponsor's behalf. The list must include 
the last known mailing address for each eligible voter (except for 
those eligible voters for whom the last known mailing address is known 
to be incorrect). The plan sponsor must also provide a list of eligible 
voters whom the plan sponsor has been unable to locate using reasonable 
efforts. In addition, the plan sponsor must furnish current electronic 
mailing addresses for certain eligible voters, who are identified 
below. The plan sponsor must also furnish the individualized estimates 
provided to eligible voters as part of the earlier notices described in 
section 432(e)(9)(F) (or, if an individualized estimate is no longer 
accurate for an eligible voter, a corrected version of that estimate) 
so that an individualized estimate can be included with the ballot for 
each eligible voter. These materials must be provided no later than 7 
days after the date the Treasury Department has approved an application 
for a suspension of benefits.
    Under these temporary regulations, the plan sponsor is responsible 
for paying all costs associated with the ballot package, including 
postage. This is because the section 432(e)(9)(H)(iii) requirement that 
the plan sponsor provide a ballot means that the plan sponsor is 
responsible for the cost of providing the ballot package to eligible 
voters, including the costs associated with printing, assembling and 
mailing those ballot packages.
    These temporary regulations provide that ballot packages will be 
distributed to eligible voters by first-class U.S. mail. A supplemental 
copy of the mailed ballot package may also be sent by an electronic 
communication to an eligible voter who has consented to receive 
electronic notifications. For example, if the ballot sent by first-
class U.S. mail is not received, a supplemental ballot may be provided 
by electronic mail.
    These temporary regulations provide additional detail on the plan 
sponsor's duty to communicate with eligible voters. As part of this 
communication requirement, these temporary regulations provide that the 
plan sponsor must notify certain eligible voters (using an electronic 
communication) that the ballot package is being mailed by first-class 
U.S. mail. The eligible voters who must be notified under this rule are 
those who received the notice of the proposed suspension under section 
432(e)(9)(F) in electronic form and those who regularly receive plan-
related electronic communications from the plan sponsor.\1\ This 
notification must be sent promptly after the plan sponsor is informed 
of the ballot distribution date. This notification in electronic form 
ensures that those eligible voters who ordinarily expect to receive 
communications from the plan sponsor in electronic form are aware that 
a ballot package will arrive via first-class U.S. mail. Under these 
temporary regulations, this notification is sent by the plan sponsor, 
rather than a service provider, so that the communication comes from a 
familiar source, which would make it less likely that the communication 
is delivered to a ``spam'' or ``junk'' mail folder.
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    \1\ The plan sponsor is also permitted to send this notification 
to any other eligible voters for whom the plan sponsor has an 
electronic mailing address.
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    The plan sponsor will have previously made reasonable efforts to 
contact individuals whose mailed initial notices were returned as 
undeliverable, and the mailing addresses for the ballot packages that 
are furnished by the plan sponsor will reflect updates as a result of 
those reasonable efforts. These temporary regulations require the plan 
sponsor to make similar reasonable efforts to locate eligible voters 
after being notified that their ballots were returned as undeliverable.

Voting by Eligible Voters and Collection and Tabulation of Votes

    In accordance with section 432(e)(9)(H)(ii), these temporary 
regulations require that the Treasury Department (in consultation with 
the PBGC and the Labor Department) administer the participant vote no 
later than 30 days following the date of approval of an application for 
a suspension of benefits. These temporary regulations interpret the 
term ``administer a vote'' to mean that the voting period must begin 
(but need not end) within the 30-day timeframe. As a result, these 
temporary regulations require that ballot packages be distributed no 
later than 30 days after the application has been approved and specify 
that the voting period begins on the ballot distribution date. Although 
the temporary regulations allow for distribution of ballot packages up 
to 30 days following approval of an application for suspension of 
benefits, it is generally expected that ballot packages will be 
distributed well before that deadline.
    These temporary regulations specify that the voting period 
generally will remain open until the 30th day following the date the 
Treasury Department approves the application for a suspension of 
benefits. However, the voting period will not close earlier than 21 
days after the ballot distribution date. In addition, the Treasury 
Department (in consultation with the PBGC and the Labor Department) is 
permitted to specify a later end to the voting period in appropriate 
circumstances. For example, an extension might be appropriate if, near 
the end of the original voting period, there are significant technical 
difficulties with respect to the collection of votes and those 
technical difficulties are not resolved in time to provide eligible 
voters with sufficient time to cast their votes.
    These temporary regulations specify that votes must be collected 
and tabulated using an automated voting system under which each 
eligible voter must furnish a unique identifier in order to cast a 
vote. Such a system will be designed to record votes both 
electronically (through a Web site) and telephonically (through a toll-
free number that will accommodate a touch-tone or interactive voice 
response). This will permit any voter who lacks internet access or, for 
any reason, is not comfortable voting via a Web site, to cast a vote 
using a toll-free number. It is expected that the system will provide 
reasonable support to facilitate eligible voters' use of the system's 
electronic and telephonic features. These temporary regulations clarify 
that votes are permitted to be cast using only these methods and that 
responses returned by any other means are invalid.
    The temporary regulations do not provide for the collection of 
votes using paper ballots because casting votes using a Web site or a 
telephonic system will be convenient for participants and will save 
time and money while providing reliable results. Providing a third 
voting option by also permitting votes to be cast using paper ballots 
would require additional time, in order for ballots to be returned by 
mail and authenticated and counted by hand. Voting by marking and 
mailing back paper ballots would also entail significant additional 
costs to process (such as employing additional personnel for processing 
and providing return postage and envelopes). The temporary regulations 
therefore reflect the conclusion that the most efficient and fairest 
approach to implementing the statutory provisions on

[[Page 52975]]

administration of the vote on an approved suspension of benefits is to 
provide eligible voters with sufficient time to carefully consider the 
information furnished to them before casting their votes while seeking 
to avoid unnecessary time and expense processing those votes once they 
have been cast. The automated methods of voting, collecting, and 
tabulating votes set forth in these temporary regulations also have 
been used by pension plans for other types of elections that involve 
voting by plan participants (including retirees).

Determination That a Majority of Eligible Voters Has Voted to Reject 
the Suspension

    Within 7 days after the end of the voting period, these temporary 
regulations provide that the Treasury Department (in consultation with 
the PBGC and the Labor Department) will either certify that a majority 
of all eligible voters has voted to reject the suspension or, if a 
majority of eligible voters did not vote to reject the suspension, 
issue a final authorization to suspend. These temporary regulations 
permit the Treasury Department (in consultation with the PBGC and the 
Labor Department) to establish necessary policies and procedures to 
facilitate the vote. These policies and procedures may include, but are 
not limited to, establishing a process for an eligible voter to 
challenge the vote. It is expected that the Treasury Department will 
resolve any challenges before the conclusion of the 7-day period 
following the end of the voting period.

Items Related to the Contents of the Ballot

    Under these temporary regulations, the statement in opposition to 
the proposed suspension that is compiled from comments received on the 
application will be prepared by the Labor Department. Under these 
temporary regulations, this statement in opposition must be written in 
a manner that is readily understandable to the average plan 
participant. It is intended that the statement in opposition will be 
written in a manner to ensure parity with the statement in support of 
the suspension. If there are no comments in opposition to the proposed 
suspension, then the statement in opposition will indicate that there 
were no such comments.
    These temporary regulations provide that a model ballot may be 
published in the form of a revenue procedure, notice, or other guidance 
published in the Internal Revenue Bulletin.

Effective/Applicability Date

    As with the previously published temporary regulations, these 
regulations apply on and after June 17, 2015, and expire on June 15, 
2018.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these regulations. For the applicability of the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) please refer to the Special Analyses section 
of the preamble to the cross-referenced notice of proposed rulemaking 
published in the Proposed Rules section in this issue of the Federal 
Register. Pursuant to section 7805(f) of the Code, these regulations 
have been submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on their impact on small business.

Contact Information

    For general questions regarding these temporary regulations, please 
contact the Department of the Treasury MPRA guidance information line 
at (202) 622-1559 (not a toll-free number). For information regarding a 
specific application for a suspension of benefits, please contact the 
Department of the Treasury at (202) 622-1534 (not a toll-free number).

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 1.432(e)(9)-1T(h) is amended by revising paragraph 
(h)(2) and adding paragraphs (h)(3)(iv) and (v) and (h)(7) and (8) to 
read as follows:


Sec.  1.432(e)(9)-1T  Benefit suspensions for multiemployer plans in 
critical and declining status (temporary).

* * * * *
    (h) * * *
    (2) Participant vote--(i) In general. The participant vote 
described in paragraph (h)(1)(i) of this section requires completion of 
the following steps--
    (A) Distribution of the ballot package described in paragraph 
(h)(2)(iii) of this section to the eligible voters;
    (B) Voting by eligible voters and collection and tabulation of the 
votes, as described in paragraph (h)(2)(iv) of this section; and
    (C) Determination of whether a majority of the eligible voters has 
voted to reject the suspension, as described in paragraph (h)(2)(v) of 
this section.
    (ii) Designation of service provider for limited functions. The 
Secretary of the Treasury is permitted to designate one or more service 
providers to perform, under the supervision of the Secretary, any of 
the functions described in paragraphs (h)(2)(i)(A) and (B) of this 
section. If the Secretary designates a service provider to perform 
these functions then the service provider will provide the Secretary 
with a written report of the results of the vote, including (as 
applicable)--
    (A) The number of ballot packages distributed to eligible voters;
    (B) The number of eligible voters to whom ballot packages have not 
been provided (because the individuals could not be located);
    (C) The number of eligible voters who voted (specifying the number 
of affirmative votes and the number of negative votes cast); and
    (D) Any other information that the Secretary requires.
    (iii) Distribution of the ballot package to the eligible voters--
(A) Ballot package. The ballot package distributed to each eligible 
voter shall consist of--
    (1) A ballot, approved under paragraph (h)(3)(iii) of this section, 
which contains the items described in section 432(e)(9)(H)(iii) and 
paragraph (h)(3)(i) of this section; and
    (2) A unique identifier assigned to the eligible voter for use in 
voting.
    (B) Plan sponsor responsibilities--(1) In general. This paragraph 
(h)(2)(iii)(B) sets forth the responsibilities of the plan sponsor with 
respect to the distribution of the ballot package to the eligible 
voters.
    (2) Furnish information regarding eligible voters. No later than 7 
days following the date the Secretary of the Treasury has approved an 
application for a suspension of benefits under paragraph (g) of this 
section, the plan sponsor must furnish the following--
    (i) A list of all eligible voters;
    (ii) For each eligible voter, the last known mailing address (or, 
if the plan sponsor has been unable to locate that individual using the 
standards that apply for purposes of paragraph (f)(1)(i)

[[Page 52976]]

of this section, an indication that the individual could not be located 
through reasonable efforts);
    (iii) Current electronic mailing addresses for those eligible 
voters identified in paragraph (h)(2)(iii)(B)(4) of this section; and
    (iv) The individualized estimates provided to eligible voters as 
part of the earlier notices described in section 432(e)(9)(F) (or, if 
an individualized estimate is no longer accurate for an eligible voter, 
a corrected version of that estimate).
    (3) Communicate with eligible voters. In accordance with section 
432(e)(9)(H)(iv) and paragraph (h)(1)(ii) of this section, the plan 
sponsor is responsible for communicating with eligible voters, which 
includes--
    (i) Notifying the eligible voters described in paragraph 
(h)(2)(iii)(B)(4) of this section that a ballot package is being 
distributed by first-class U.S. mail; and
    (ii) Making reasonable efforts (using the standards that apply for 
purposes of paragraph (f)(1)(i) of this section) as necessary to locate 
eligible voters for whom the plan sponsor has received notification 
that the mailed ballot packages are returned as undeliverable so that 
ballot packages can be sent to those eligible voters.
    (4) Eligible voters to receive electronic notification. Those 
eligible voters whom the plan sponsor must notify electronically are--
    (i) Eligible voters who previously received the notice described in 
paragraph (f) of this section in electronic form (as permitted under 
paragraph (f)(3)(ii) of this section), and
    (ii) Any other eligible voters who regularly receive plan-related 
communications from the plan sponsor in electronic form.
    (5) Method of notifying certain eligible voters. The notification 
described in paragraph (h)(2)(iii)(B)(3)(i) of this section for an 
eligible voter must be made using the electronic form normally used to 
send plan-related communications to that voter (or the form used to 
provide the notice in paragraph (f) of this section, if different). The 
plan sponsor must send this notification promptly after being informed 
of the ballot distribution date (within the meaning of paragraph 
(h)(2)(iii)(D) of this section) and the notification must include the 
ballot distribution date.
    (6) Pay costs associated with distribution. The plan sponsor is 
responsible for paying all costs associated with printing, assembling, 
and distributing the ballot package, including postage.
    (C) Required method of distributing ballot package. Ballot packages 
must be distributed to eligible voters by first-class U.S. mail. A 
supplemental copy of the mailed ballot package may also be sent by an 
electronic communication to an eligible voter who has consented to 
receive electronic communications.
    (D) Timing. Ballot packages will be distributed to eligible voters 
no later than 30 days after the Secretary of the Treasury has approved 
an application for a suspension of benefits under paragraph (g) of this 
section. The date on which the ballot packages are mailed to the 
eligible voters is referred to as the ballot distribution date.
    (iv) Collection and tabulation of votes cast by eligible voters--
(A) Voting period. The voting period begins on the ballot distribution 
date. The voting period generally remains open until the 30th day 
following the date the Secretary of the Treasury has approved an 
application for a suspension of benefits under paragraph (g) of this 
section. However, the voting period will not close earlier than 21 days 
after the ballot distribution date. In addition, the Secretary (in 
consultation with the PBGC and the Secretary of Labor) may specify a 
later date to end the voting period in appropriate circumstances.
    (B) Required use of automated voting system. Votes must be cast 
using an automated voting system that meets the requirements of 
paragraph (h)(2)(iv)(C) of this section. Votes cast by any other method 
are invalid.
    (C) Automated voting system. An automated voting system meets the 
requirements of this paragraph (h)(2)(iv)(C) only if the system--
    (1) Collects votes cast by eligible voters both electronically 
(through a Web site) and telephonically (through a toll-free number 
using a touch-tone or interactive voice response); and
    (2) Accepts only votes cast during the voting period by an eligible 
voter who provides the eligible voter's unique identifier described in 
paragraph (h)(2)(iii)(A)(2) of this section.
    (D) Policies and procedures. The Secretary of the Treasury (in 
consultation with the PBGC and the Secretary of Labor) may establish 
such policies and procedures as may be necessary to facilitate the 
administration of the vote under this paragraph (h)(2). These policies 
and procedures may include, but are not limited to, establishing a 
process for an eligible voter to challenge the vote.
    (v) Determination of whether a majority of the eligible voters has 
voted to reject the suspension. Within 7 calendar days after the end of 
the voting period, the Secretary of the Treasury (in consultation with 
the PBGC and the Secretary of Labor) will--
    (A) Certify that a majority of all eligible voters has voted to 
reject the suspension that was approved under paragraph (g) of this 
section, or
    (B) Issue a final authorization to suspend as described in 
paragraph (h)(6) of this section.
* * * * *
    (3) * * *
    (iv) Statement in opposition to the proposed suspension. The 
statement in opposition to the proposed suspension that is prepared 
from comments received on the application, as required under section 
432(e)(9)(H)(iii)(II), will be compiled by the Secretary of Labor and 
will be written in accordance with the rules of paragraph (h)(3)(ii) of 
this section. If no comments in opposition are received, the statement 
in opposition to the proposed suspension will include a statement 
indicating that there were no such comments.
    (v) Model ballot. A model ballot may be published in the form of a 
revenue procedure, notice, or other guidance published in the Internal 
Revenue Bulletin.
* * * * *
    (7) Effective/applicability date. Paragraph (h)(2) and paragraphs 
(h)(3)(iv) and (v) of this section apply on and after June 17, 2015.
    (8) Expiration date. The applicability of paragraph (h)(2) and 
paragraphs (h)(3)(iv) and (v) of this section expires on June 15, 2018.
* * * * *

John M. Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: August 25, 2015.

Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-21766 Filed 8-31-15; 11:15 am]
 BILLING CODE 4830-01-P