PBGC Issues Proposal for Computing Withdrawal Liability Under Multiemployer Plans

The proposed amendments would affect the determination of a withdrawing employer's liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges or contribution increases that must be disregarded.

The Pension Benefit Guaranty Corporation (PBGC) issued a proposal to amend its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability.

The proposed amendments would implement statutory provisions affecting the determination of a withdrawing employer’s liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges or contribution increases that must be disregarded. The proposed amendments would also provide simplified withdrawal liability calculation methods.

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The proposed changes would provide guidance and simplified methods for a plan sponsor to:

  • Disregard reductions and suspensions of nonforfeitable benefits in determining the plan’s unfunded vested benefits for purposes of calculating withdrawal liability;
  • Disregard certain contribution increases if the plan is using the presumptive, modified presumptive, and rolling-5 methods for purposes of determining the allocation of unfunded vested benefits to an employer; and
  • Disregard certain contribution increases for purposes of determining an employer’s annual withdrawal liability payment.
The agency is requesting comments on its proposal be submitted on or before April 8.

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