§204. Withdrawal liability reforms

Pension Protection Act of 2006

Title II Funding rules for Multiemployer Defined Benefit Plans and Related Provisions

Subtitle A Amendments to Employee Retirement Income Security Act of 1974

§201. Funding rules for multiemployer defined benefit plans

§202. Additional funding rules for multiemployer plans in endangered or critical status

(a) UPDATE OF RULES RELATING TO LIMITATIONS ON WITHDRAWAL LIABILITY.-

(a)(1) INCREASE IN LIMITS.-Section 4225(a )(2) of such Act (29 U.S.C. 1405(a)(2)) is amended by striking the table contained therein and inserting the following new table:

(a)(2) PLANS USING ATTRIBUTABLE METHOD.-Section 4225(a )(1)(B) of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as follows:

"(B) in the case of a plan using the attributable method of allocating withdrawal liability, the unfunded vested benefits attributable to employees of the employer.".

(a)(3) EFFECTIVE DATE.- The amendments made by this subsection shall apply to sales occurring on or after January 1, 2007.

( b) WITHDRAWAL LIABILITY CONTINUES IF WORK CONTRACTED OUT.-

(b)(1) IN GENERAL.-Clause ( i) of section 4205(b )(2)(A) of such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting "or to an entity or entities owned or controlled by the employer " after "to another location".

(b)(2) EFFECTIVE DATE.- The amendment made by this subsection shall apply with respect to work transferred on or after the date of the enactment of this Act.

(c) APPLICATION OF RULES TO PLANS PRIMARILY COVERING EMPLOYEES IN THE BUILDING AND CONSTRUCTION INDUSTRY.-

(c)(1) IN GENERAL.-Section 4210(b) of such Act (29 U.S.C. 1390(b)) is amended-

(c)(1)(A) by striking paragraph (1); and

(c)(1)(B) by redesignating paragraphs (2) through (4) as paragraphs (1) through (3), respectively.

(c)(2) FRESH START OPTION.-Section 4211(c )(5) of such Act (29 U.S.C. 1391(c)(5)) is amended by adding at the end the following new subparagraph:

"(E) FRESH START OPTION.-Notwithstanding paragraph (1), a plan may be amended to provide that the withdrawal liability method described in subsection (b) shall be applied by substituting the plan year which is specified in the amendment and for which the plan has no unfunded vested benefits for the plan year ending before September 26, 1980.".

(c)(3) EFFECTIVE DATE.- The amendments made by this subsection shall apply with respect to plan withdrawals occurring on or after January 1, 2007.

(d) PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION PLAN WITHDRAWAL LIABILITY.-

(d)(1) IN GENERAL.-Section 4221 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end the following:

"(g) PROCEDURES APPLICABLE TO CERTAIN DISPUTES.-

"(1) IN GENERAL.-If-

"(A) a plan sponsor of a plan determines that-

"( i) a complete or partial withdrawal of an employer has occurred, or

"(ii) an employer is liable for withdrawal liability payments with respect to such complete or partial withdrawal, and

"(B) such determination is based in whole or in part on a finding by the plan sponsor under section 4212(c) that a principal purpose of any transaction which occurred after December 31, 1998, and at least 5 years (2 years in the case of a small employer) before the date of the complete or partial withdrawal was to evade or avoid withdrawal liability under this subtitle,

then the person against which the withdrawal liability is assessed based solely on the application of section 4212(c) may elect to use the special rule under paragraph (2) in applying subsection (d) of this section and section 4219(c) to such person.

"(2) SPECIAL RULE.-Notwithstanding subsection (d) and section 4219(c), if an electing person contests the plan sponsor's determination with respect to withdrawal liability payments under paragraph (1) through an arbitration proceeding pursuant to subsection (a), through an action brought in a court of competent jurisdiction for review of such an arbitration decision, or as otherwise permitted by law, the electing person shall not be obligated to make the withdrawal liability payments until a final decision in the arbitration proceeding, or in court, upholds the plan sponsor's determination, but only if the electing person-

"(A) provides notice to the plan sponsor of its election to apply the special rule in this paragraph within 90 days after the plan sponsor notifies the electing person of its liability by reason of the application of section 4212(c); and

"(B) if a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute has not been rendered within 12 months from the date of such notice, the electing person provides to the plan, effective as of the first day following the 12-month period, a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of this Act, or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the sum of the withdrawal liability payments that would otherwise be due under subsection (d) and section 4219(c) for the 12-month period beginning with the first anniversary of such notice. Such bond or escrow shall remain in effect until there is a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute, at which time such bond or escrow shall be paid to the plan if such final decision upholds the plan sponsor's determination.

"(3) DEFINITION OF SMALL EMPLOYER.- For purposes of this subsection-

"(A) IN GENERAL.-The term 'small employer' means any employer which, for the calendar year in which the transaction referred to in paragraph (1 )(B) occurred and for each of the 3 preceding years, on average-

"( i) employs not more than 500 employees, and

"(ii) is required to make contributions to the plan for not more than 250 employees.

"(B) CONTROLLED GROUP.-Any group treated as a single employer under subsection (b)(1) of section 4001, without regard to any transaction that was a basis for the plan's finding under section 4212, shall be treated as a single employer for purposes of this subparagraph.

"(4) ADDITIONAL SECURITY PENDING RESOLUTION OF DISPUTE .- If a withdrawal liability dispute to which this subsection applies is not concluded by 12 months after the electing person posts the bond or escrow described in paragraph (2), the electing person shall, at the start of each succeeding 12-month period, provide an additional bond or amount held in escrow equal to the sum of the withdrawal liability payments that would otherwise be payable to the plan during that period.

"(5) The liability of the party furnishing a bond or escrow under this subsection shall be reduced, upon the payment of the bond or escrow to the plan, by the amount thereof. ".

(d)(2) EFFECTIVE DATE.-The amendments made by this subsection shall apply to any person that receives a notification under section 4219(b )(1) of the Employee Retirement Income Security Act of 1974 on or after the date of enactment of this Act with respect to a transaction that occurred after December 31, 1998.

§205. Prohibition on retaliation against employers exercising their rights to petition the federal government