[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]
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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.
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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withdrawn from a covered multiemployer pension plan.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that has withdrawn from a plan subsequently resumes covered operations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
