29 U.S.C. § 1385 — Partial withdrawals
submitted 46 years ago by Pub. L. 93-406 to r/title-29-LABOR · 566 words · no verdicts yet
This section identifies when an employer partially withdraws from a pension plan. It defines a 70-percent contribution decline, describes a partial end to contribution duties, and permits special rules for retail-food plans and certain plans described in title 26.
(a) Determining factors. Unless this section says otherwise, an employer partially withdraws from a plan on the last day of a plan year* if that year has either (1) a 70-percent contribution decline or (2) a partial cessation of the employer’s duty to contribute.
(b) Criteria.
(1) (A) A plan year has a 70-percent contribution decline if, in each plan year of the three-year testing period, the employer’s contribution-base units are no more than 30 percent of its units in the high base year.
(B) The “3-year testing period” means the plan year and the two immediately preceding plan years. This section does not define “contribution base units.” The high-base-year number is the average number of the employer’s units in the two years with the highest numbers among the five plan years immediately before the testing period begins.
(2) (A) There is a partial cessation of the contribution duty if, during the year:
(i) the employer permanently stops having a duty to contribute under one or more, but fewer than all, collective bargaining agreements under which it had been required to contribute, while continuing the same type of work in that agreement’s jurisdiction or transferring that work to another location or to an entity it owns or controls; or
(ii) the employer permanently stops having a duty to contribute for work at one or more, but fewer than all, facilities, while continuing that type of work at the facility.
(B) Ending duties under one agreement is not a cessation merely because another agreement requiring contributions to the same plan replaces it.
(c) Retail food industry.
(1) If most covered employees work in retail food, the plan may be amended to apply this section by replacing “70 percent” with “35 percent” in subsections (a) and (b), and replacing “30 percent” with “65 percent” in subsection (b).
(2) Such an amendment must equitably reduce withdrawal liability if, during the two plan years after withdrawal, the plan’s contribution-base units exceed the number immediately after withdrawal.
(3) Section 1388 of this title does not apply to a plan amended under paragraph (1).
(d) Continued liability under an amended plan. A plan described in section 404(c) of title 26, or its continuation, may be amended to state other conditions, consistent with this chapter’s purposes, under which an employer is liable for partial withdrawal.
Except as otherwise provided in this section, there is a partial withdrawal by an employer from a plan on the last day of a plan year* if for such plan year—
there is a 70-percent contribution decline, or
there is a partial cessation of the employer’s contribution obligation.
For purposes of subsection (a)—
There is a 70-percent contribution decline for any plan year if during each plan year in the 3-year testing period the employer’s contribution base units do not exceed 30 percent of the employer’s contribution base units for the high base year.
For purposes of subparagraph (A)—
The term “3-year testing period” means the period consisting of the plan year and the immediately preceding 2 plan years.
The number of contribution base units for the high base year is the average number of such units for the 2 plan years for which the employer’s contribution base units were the highest within the 5 plan years immediately preceding the beginning of the 3-year testing period.
There is a partial cessation of the employer’s contribution obligation for the plan year if, during such year—
the employer permanently ceases to have an obligation to contribute* under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute under the plan but continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required or transfers such work to another location or to an entity or entities owned or controlled by the employer, or
an employer permanently ceases to have an obligation to contribute under the plan with respect to work performed at one or more but fewer than all of its facilities, but continues to perform work at the facility of the type for which the obligation to contribute ceased.
For purposes of subparagraph (A), a cessation of obligations under a collective bargaining agreement shall not be considered to have occurred solely because, with respect to the same plan, one agreement that requires contributions to the plan has been substituted for another agreement.
In the case of a plan in which a majority of the covered employees are employed in the retail food industry, the plan may be amended to provide that this section shall be applied with respect to such plan—
by substituting “35 percent” for “70 percent” in subsections (a) and (b), and
by substituting “65 percent” for “30 percent” in subsection (b).
Any amendment adopted under paragraph (1) shall provide rules for the equitable reduction of withdrawal liability in any case in which the number of the plan’s contribution base units, in the 2 plan years following the plan year of withdrawal of the employer, is higher than such number immediately after the withdrawal.
Section 1388 of this title shall not apply to a plan which has been amended under paragraph (1).
In the case of a plan described in section 404(c) of title 26, or a continuation thereof, the plan may be amended to provide rules setting forth other conditions consistent with the purposes of this chapter under which an employer has liability for partial withdrawal.
Source credit: (Pub. L. 93–406, title IV, § 4205, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1221; amended Pub. L. 101–239, title VII, § 7891(a)(1), Dec. 19, 1989, 103 Stat. 2445; Pub. L. 109–280, title II, § 204(b)(1), Aug. 17, 2006, 120 Stat. 887.)
- 1980Enacted · Pub. L. 93-406 · 94 Stat. 1221
- 1989Amended · Pub. L. 101-239 · 103 Stat. 2445
- 2006Amended · Pub. L. 109-280 · 120 Stat. 887
A history note hasn’t been published yet. The record shows enactment by Pub. L. 93-406 on 1980-09-26.
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