80 FR 8578 - Request for Information on Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 80, Issue 32 (February 18, 2015)

The Department of the Treasury invites public comments with regard to future guidance required to implement provisions of the Multiemployer Pension Reform Act of 2014, Division O of the Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235 (MPRA). MPRA generally permits a sponsor of a multiemployer defined benefit plan that is in critical and declining status to suspend certain benefits following the provision of specified notice, consideration of public comments, approval of an application for suspension, and satisfaction of other specified conditions (including a participant vote).

[Federal Register Volume 80, Number 32 (Wednesday, February 18, 2015)]
[Proposed Rules]
[Pages 8578-8580]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-03290]


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

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-102648-15]
RIN 1545-BM66


Request for Information on Suspensions of Benefits Under the 
Multiemployer Pension Reform Act of 2014

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Request for information.

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

SUMMARY: The Department of the Treasury invites public comments with 
regard to future guidance required to implement provisions of the 
Multiemployer Pension Reform Act of 2014, Division O of the 
Consolidated and Further Continuing Appropriations Act, 2015, Public 
Law 113-235 (MPRA). MPRA generally permits a sponsor of a multiemployer 
defined benefit plan that is in critical and declining status to 
suspend certain benefits following the provision of specified notice, 
consideration of public comments, approval of an application for 
suspension, and satisfaction of other specified conditions (including a 
participant vote).

DATES: Comments must be received by April 6, 2015.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-102648-15), Room 
5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
102648-15), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW.,

[[Page 8579]]

Washington, DC, or sent electronically via the Federal eRulemaking 
Portal at http://www.regulations.gov (IRS REG-102648-15). All materials 
submitted will be shared with the Department of Labor and the Pension 
Benefit Guaranty Corporation, and will be available for public 
inspection and copying.

FOR FURTHER INFORMATION CONTACT: Concerning the request for 
information, Jamie Dvoretzky at (202) 317-4102; concerning submission 
of comments, Regina Johnson at (202) 317-6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Section 212 of the Pension Protection Act of 2006, Public Law 109-
280 (120 Stat. 780 (2006)) (PPA '06) added section 432 of the Internal 
Revenue Code (Code), which prescribes funding rules for certain 
multiemployer defined benefit plans in endangered and critical status 
and permits plans in critical status to be amended to reduce certain 
otherwise protected benefits (referred to as ``adjustable benefits''). 
Section 202 of PPA '06 amended section 305 of the Employee Retirement 
Income Security Act of 1974, Public Law 93-406 (88 Stat. 829 (1974)), 
as amended (ERISA), to prescribe parallel rules. PPA '06 provided that 
section 432 and ERISA section 305 would sunset for plan years beginning 
after December 31, 2014. However, section 101 of MPRA made them 
permanent, with certain modifications.
    Section 201 of MPRA amended Code section 432 to add a new status, 
called ``critical and declining status,'' for multiemployer defined 
benefit plans. Section 432(b)(6) provides that a plan in critical 
status is treated as being in critical and declining status if the plan 
satisfies the criteria for critical status, and in addition is 
projected to become insolvent within the meaning of section 418E during 
the current plan year or any of the 14 succeeding plan years (or 19 
succeeding plan years if the plan has a ratio of inactive participants 
to active participants that exceeds two to one or if the funded 
percentage of the plan is less than 80 percent).\1\
---------------------------------------------------------------------------

    \1\ Section 201(a) of MPRA makes parallel amendments to section 
305 of ERISA. Under section 101 of Reorganization Plan No. 4 of 1978 
(43 FR 47713), the Department of the Treasury has interpretive 
jurisdiction over the subject matter of this document for purposes 
of ERISA as well as the Code.
---------------------------------------------------------------------------

    Section 201 of MPRA also amended section 432(e)(9) to prescribe 
benefit suspension rules for multiemployer defined benefit plans in 
critical and declining status. Section 432(e)(9)(A) provides that 
notwithstanding section 411(d)(6) and subject to the requirements of 
section 432(e)(9)(B) through (I), the plan sponsor of a plan in 
critical and declining status may, by plan amendment, suspend benefits 
that the sponsor deems appropriate. Section 432(e)(9)(B) defines 
``suspension of benefits'' as the temporary or permanent reduction of 
any current or future payment obligation of the plan to any participant 
or beneficiary under the plan, whether or not in pay status at the time 
of the suspension of benefits, and sets forth other rules relating to 
suspensions. In the case of plans with 10,000 or more participants, 
section 432(e)(9)(B) requires the plan sponsor to select a plan 
participant in pay status (who may also be a plan trustee) to act as a 
retiree representative throughout the suspension approval process.
    Section 432(e)(9)(C) prescribes the conditions that must be 
satisfied before a plan sponsor may suspend benefits. For example, 
section 432(e)(9)(C)(i) provides that the plan actuary must certify, 
taking into account the proposed suspensions of benefits (and, if 
applicable, a proposed partition of the plan under section 4233 of 
ERISA), that the plan is projected to avoid insolvency within the 
meaning of section 418E, assuming the suspensions of benefits continue 
until the suspensions of benefits expire by their own terms or, if no 
such expiration is set, indefinitely. Section 432(e)(9)(D) contains 
limitations on the benefits that may be suspended. For example, section 
432(e)(9)(D)(ii) limits the applicability of a suspension in the case 
of a participant or beneficiary who has attained age 75 as of the 
effective date of the suspension and section 432(e)(9)(D)(iii) provides 
that no benefits based on disability (as defined under the plan) may be 
suspended.
    Section 432(e)(9)(E) prescribes rules relating to possible benefit 
improvements while a suspension of benefits is in effect. Section 
432(e)(9)(F) contains notice requirements associated with a suspension 
of benefits. These include the requirement under section 
432(e)(9)(F)(i) that no suspension of benefits may be made unless 
notice to specified parties of the proposed suspension has been given 
by the plan sponsor (in the form and manner to be prescribed in 
guidance) concurrently with an application for approval of the 
suspension. Section 432(e)(9)(G) describes the process for approval or 
rejection of a plan sponsor's application for a suspension of benefits, 
including that the Treasury Secretary, in consultation with the Pension 
Benefit Guaranty Corporation (PBGC) and the Secretary of Labor, shall 
approve an application upon finding that the plan is eligible for the 
suspension and has satisfied the criteria of section 432(e)(9)(C), (D), 
(E), and (F). As part of this process, section 432(e)(9)(G)(ii) 
requires the publication of a request for comments within 30 days after 
receipt of an application for suspension of benefits, and section 
432(e)(9)(G)(iii), (iv) and (v) prescribes rules for agency action and 
review of the application.
    Section 432(e)(9)(H) contains rules relating to the participant 
vote that is required before any suspension of benefits may take 
effect, with special rules for systemically important plans. The 
special rules include an opportunity for the Participant and Plan 
Sponsor Advocate selected under section 4004 of ERISA to submit 
recommendations with respect to a suspension in certain circumstances. 
Section 432(e)(9)(I) contains provisions relating to judicial review.
    An application for approval of a plan amendment to suspend benefits 
may be made in combination with an application to the PBGC for a 
partition of the plan, and a plan sponsor also may ask the PBGC for 
technical or financial assistance with a merger. The PBGC is issuing 
its own request for information to seek comment on the processes 
associated with applying for partition or merger assistance, including 
how such processes should be coordinated with the benefit suspension 
process. The agencies will coordinate on the development of processes 
that will apply to applications falling within their respective 
jurisdictions.

Request for Information

    Comments are requested on matters that may be addressed in future 
guidance implementing section 432(e)(9), and in particular on the 
following:
    1. How should future guidance address actuarial and other issues, 
including duration, related to the following certifications and 
determinations:
    a. The actuary's certification under section 432(b)(3) that a 
multiemployer plan is in critical and declining status;
    b. The actuary's section 432(e)(9)(C)(i) projection of continued 
solvency (taking into account the proposed suspension and, if 
applicable, a proposed partition under section 4233 of ERISA); and
    c. The plan sponsor's section 432(e)(9)(C)(ii) determination that 
the plan is projected to become insolvent unless benefits are 
suspended?
    2. For purposes of the section 432(e)(9)(D)(iii) limitation that a 
suspension is not permitted to apply to benefits based on disability 
(as defined

[[Page 8580]]

under the plan), how can a plan sponsor identify which benefits are 
based on disability?
    3. For participants who have not yet retired:
    a. What practical issues should be considered as a result of the 
fact that their benefits are not yet fixed (for example, their benefits 
could vary as a result of future accruals, when they decide to retire 
and which optional form of benefit they select)?
    b. What practical issues should be considered in the case of a 
suspension of benefits that is combined with a reduction of future 
accruals or a reduction of section 432(e)(8) adjustable benefits (such 
as subsidized early retirement factors) under a rehabilitation plan?
    4. For participants who have retired, what practical issues should 
be considered regarding the section 432(e)(9)(D)(ii) age limitations on 
suspensions, the application of the section 432(e)(9)(E) rules on 
benefit improvements, or other provisions?
    5. With respect to the section 432(e)(9)(F) requirement to provide 
notice of the proposed suspension to plan participants and 
beneficiaries concurrently with the submission of the application for 
approval:
    a. What suggestions do commenters have for the steps that are 
needed to satisfy the requirement to provide notice to the plan 
participants and beneficiaries ``who may be contacted by reasonable 
efforts,'' including the application of that requirement to terminated 
vested participants?
    b. What practical issues do plan sponsors anticipate in providing 
individual estimates of the effect of the proposed suspensions on each 
participant and beneficiary?
    c. If the suspension is combined with other reductions as described 
in request number 3.b, how will the notice of proposed suspension 
interact with the notices required for those other reductions?
    d. What issues arise in coordinating benefit protections that are 
measured as of the date of suspension (such as the restriction on 
suspensions that apply to a participant or beneficiary who has attained 
age 75 as of the effective date of the suspension) with the timing of 
the application, notice, and voting process?
    6. With respect to item 5, please provide any examples of notices 
of proposed suspension that commenters would like to be considered in 
the development of a model notice.
    7. What issues arise in connection with the section 
432(e)(9)(G)(ii) requirement to solicit comments on an application for 
suspension of benefits?
    a. Should the comments received from contributing employers, 
employee organizations, participants and beneficiaries, and other 
interested parties be made available to the public?
    b. How long should the comment period last?
    8. With respect to the section 432(e)(9)(H) participant vote, what 
issues arise in connection with:
    a. Preparing the ballot, including developing a statement in 
opposition to the suspension compiled from comments and obtaining 
approval of the ballot within the statutory time constraints for 
conducting a vote; and
    b. Conducting the vote and obtaining certification of the results 
of the vote?
    9. What other practical issues do commenters anticipate will arise 
in the course of implementing these provisions?

Timing of Applications and Notices

    Section 201(b)(7) of MPRA provides that, not later than 180 days 
after the date of the enactment of this Act, the Treasury Secretary, in 
consultation with the Pension Benefit Guaranty Corporation and the 
Secretary of Labor, shall publish appropriate guidance to implement 
section 432(e)(9). In addition, section 432(e)(9)(F)(i) provides that 
no suspension of benefits may be made unless notice of the proposed 
suspension has been given by the plan sponsor concurrently with an 
application for approval of the suspension, and section 
432(e)(9)(F)(iii)(I) provides that notice must be ``provided in a form 
and manner prescribed in guidance.'' Section 432(e)(9)(G)(i) provides 
that the Treasury Secretary, in consultation with the Pension Benefit 
Guaranty Corporation and the Secretary of Labor, shall approve an 
application for suspension upon finding that the plan has satisfied the 
criteria of section 432(e)(9)(C), (D), (E), and (F). Because 
appropriate guidance is required to implement section 432(e)(9), 
including the procedures for the plan sponsor to submit an application 
for approval of a suspension of benefits and provide concurrent notice, 
a plan sponsor should not submit an application for a suspension of 
benefits until a date specified in that future guidance.

    Dated: February 11, 2015.
David G. Clunie,
Executive Secretary, Department of the Treasury.
[FR Doc. 2015-03290 Filed 2-13-15; 11:15 am]
BILLING CODE 4830-01-P