Sec. 3. Partitions of eligible multiemployer plans
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Section 4233 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1413 ), as amended by section 122 of the Multiemployer Pension Reform Act of 2014 (division O of Public Law 113–235 ), is amended to read as follows: Upon the application by the plan sponsor of an eligible multiemployer plan for a partition of the plan, the corporation may order a partition of the plan in accordance with this section. The corporation shall make a determination regarding the application, in accordance with regulations promulgated by the corporation, not later than 270 days after— the date such application was filed; or if later, the date such application was completed.
At least 14 days before submitting an application for partition of a plan under paragraph (1), the plan sponsor of the plan shall notify all participants and beneficiaries of such application, in the form and manner prescribed by regulations issued by the corporation. For purposes of this section, a multiemployer plan is an eligible multiemployer plan if— the plan is in critical status and is projected to become insolvent within the meaning of section 4245— during the current plan year or any of the 14 succeeding plan years; or during the current plan year or any of the 19 succeeding plan years, if the plan has a ratio of inactive participants to active participants that exceeds 2 to 1 and the funded percentage of the plan is less than 80 percent; the corporation determines, after consultation with the Participant and Plan Sponsor Advocate selected under section 4004, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures described in section 432(e)(3)(A) of the Internal Revenue Code of 1986, and has made (or is making) benefit adjustments under section 432(e)(8) of such Code to reduce the risk of insolvency; 20 percent or more of the amount by which the liabilities of the plan exceed the value of plan assets is attributable to the service of participants whose employers— withdrew from the plan prior to the date of enactment of the Keep Our Pension Promises Act ; and failed to pay (or are delinquent with respect to paying) the full amount of the employer's withdrawal liability under section 4201(b)(1) or as otherwise determined under an agreement with the plan; the corporation reasonably expects that— a partition of the plan will reduce the corporation’s expected long-term loss with respect to the plan; and a partition of the plan is necessary for the plan to remain or become solvent; and the corporation certifies to Congress that after partition the corporation will continue to have the ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years).
A partition under this section shall consist of a transfer to the plan created by the partition order of benefits to which eligible participants and beneficiaries were entitled under the plan that was partitioned, in an amount not to exceed the amount that would be guaranteed under section 4022A if the plan were insolvent as of the date of the partition order. The corporation's partition order shall provide for an annual transfer by the corporation to the plan created by the partition order of an amount equal to the yearly benefits that would be guaranteed under section 4022A to the eligible participants and beneficiaries if the plan were insolvent as of the date of the partition order.
Where practicable, the initial transfer in accordance with paragraph
(2)shall be completed at least 60 days prior to the plan year that immediately follows the partition start date. The partition order shall require that the initial transfer be sufficient to satisfy the guaranteed benefits in the first plan year of the partitioned plan. Subsequent transfers in accordance with paragraph
(2)shall be completed at least 60 days prior to the first day of each succeeding plan year. The plan created by the partition order is a successor plan to which section 4022A applies. At the discretion of the plan sponsor, the plan created by the partition order may remain a part of the plan that was partitioned or be maintained as a separate plan. The plan sponsor and the administrator of an eligible multiemployer plan prior to the partition shall be the plan sponsor and the administrator, respectively, of the plan created by the partition order, and shall adopt reasonable procedures to reduce administrative expenses and to coordinate benefit payments and communications with the participants and beneficiaries in the plan created by the partition order. Benefit payments equal to the amount of an eligible participant or beneficiary's guaranteed benefits shall be paid to such participant or beneficiary and may be— paid separately by the plan created by the partition order; or paid in a single, monthly payment by the plan that was partitioned. In the event an employer withdraws from the plan that was partitioned, withdrawal liability shall be computed under section 4201 with respect to both the plan that was partitioned and the plan created by the partition order. In addition to the payment of guaranteed benefits under subsection (d)(2)(B), each eligible participant or beneficiary of the plan created by the partition order shall receive a monthly benefit for each month the benefit is in pay status in an amount that— the corporation, in consultation with the Participant and Plan Sponsor Advocate, determines to be fair to the plan, the participant or beneficiary, the employers, and the corporation; and is at least equal to the lesser of— the monthly nonforfeitable benefit for such participant or beneficiary payable under the plan that was partitioned; or 80 percent of the maximum benefit commencing at age 65 guaranteed under section 4022(a) for participants and beneficiaries in terminated single employer plans, unreduced for early retirement. Such monthly benefit may be combined with the monthly payment under subsection (d)(2)(B)(ii). The corporation shall establish a legacy fund for the purposes of funding the administrative and benefit costs to the corporation arising from partitions under this section, as described in paragraph (2). Any administrative and benefit costs to the corporation arising from a partition ordered under this section in excess of amounts available in such legacy fund shall be paid from the fund for basic benefits guaranteed for multiemployer plans. Only one partition order shall be issued with respect to each eligible multiemployer plan. For purposes of this subsection, the term eligible participant or beneficiary means a participant or beneficiary of an eligible multiemployer plan that is partitioned in accordance with a petition order under this section, and who is an employee or beneficiary of an employee of an employer that is described in subsection (b)(3). Not later than 14 days after the issuance of a partition order under this section, the corporation shall provide notice of such order to the Committee on Finance of the Senate, the Committee on Health, Education, Labor, and Pensions of the Senate, the Committee on Education and the Workforce of the House of Representatives, the Committee on Ways and Means of the House of Representatives, and to all eligible participants or beneficiaries whose guaranteed benefits will be paid directly or indirectly by the plan created by the partition order. . The amendments made by subsection
(a)shall apply with respect to plan years beginning after the date of enactment of this Act. The Secretary of the Treasury shall from time to time transfer from the general fund of the Treasury to the legacy fund established under section 4233(f)(1) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1413(f)(1) ) (as amended by subsection (a)) amounts equal to the increase in revenues to the Treasury by reason of the amendments made by sections 6 and 7 of this Act. Section 4005 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1305 ) is amended by adding at the end the following: An eighth fund is established under section 4233(f) and credited with the amounts described in section 3(c) of the Keep Our Pension Promises Act . Notwithstanding subsection (g), the corporation may transfer amounts into the legacy fund established under section 4233(f)(1) from other funds established under this section, as the corporation determines appropriate. .
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