---
kind: "range"
citation: "29 U.S.C. §§ 1381–1399"
title: "29"
from: "1381"
to: "1399"
count: 19
release: "119-102"
url: "https://uscodex.org/usc/29/1381..1399"
---

# §1381. Withdrawal liability established; criteria and definitions

- (a) If an employer withdraws from a [multiemployer plan](/usc/29/1301.md?p=a-3) in a [complete withdrawal](#b-2) or a [partial withdrawal](#b-3), then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability.
- (b) For purposes of [subsection (a)](#a)—
  - (1) The withdrawal liability of an employer to a plan is the amount determined under [section 1391 of this title](/usc/29/1391.md) to be the allocable amount of [unfunded vested benefits](/usc/29/1393.md?p=c), adjusted—
    - (A) first, by any de minimis reduction applicable under [section 1389 of this title](/usc/29/1389.md),
    - (B) next, in the case of a [partial withdrawal](#b-3), in accordance with [section 1386 of this title](/usc/29/1386.md),
    - (C) then, to the extent necessary to reflect the limitation on annual payments under [section 1399(c)(1)(B) of this title](/usc/29/1399.md?p=c-1-B), and
    - (D) finally, in accordance with [section 1405 of this title](/usc/29/1405.md).
  - (2) The term “complete withdrawal” means a complete withdrawal described in [section 1383 of this title](/usc/29/1383.md).
  - (3) The term “partial withdrawal” means a partial withdrawal described in [section 1385 of this title](/usc/29/1385.md).

# §1382. Determination and collection of liability; notification of employer


When an employer withdraws from a [multiemployer plan](/usc/29/1301.md?p=a-3), the [plan sponsor](/usc/29/1301.md?p=a-10), in accordance with this part, shall—

- (1) determine the amount of the employer’s withdrawal liability,
- (2) notify the employer of the amount of the withdrawal liability, and
- (3) collect the amount of the withdrawal liability from the employer.

# §1383. Complete withdrawal

- (a) **Determinative factors—** For purposes of this part, a [complete withdrawal](/usc/29/1381.md?p=b-2) from a [multiemployer plan](/usc/29/1301.md?p=a-3) occurs when an employer—
  - (1) permanently ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan, or
  - (2) permanently ceases all covered operations under the plan.
- (b) **Building and construction industry—**
  - (1) Notwithstanding [subsection (a)](#a), in the case of an employer that has an [obligation to contribute](/usc/29/1392.md?p=a) under a plan for work performed in the building and construction industry, a [complete withdrawal](/usc/29/1381.md?p=b-2) occurs only as described in [paragraph (2)](#b-2), if—
    - (A) substantially all the employees with respect to whom the employer has an [obligation to contribute](/usc/29/1392.md?p=a) under the plan perform work in the building and construction industry, and
    - (B) the plan—
      - (i) primarily covers employees in the building and construction industry, or
      - (ii) is amended to provide that this subsection applies to employers described in this paragraph.
  - (2) A withdrawal occurs under this paragraph if—
    - (A) an employer ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan, and
    - (B) the employer—
      - (i) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required, or
      - (ii) resumes such work within 5 years after the date on which the [obligation to contribute](/usc/29/1392.md?p=a) under the plan ceases, and does not renew the obligation at the time of the resumption.
  - (3) In the case of a plan terminated by mass withdrawal (within the meaning of [section 1341a(a)(2) of this title](/usc/29/1341a.md?p=a-2)), [paragraph (2)](#b-2) shall be applied by substituting “3 years” for “5 years” in [subparagraph (B)(ii)](#b-2-B-ii).
- (c) **Entertainment industry—**
  - (1) Notwithstanding [subsection (a)](#a), in the case of an employer that has an [obligation to contribute](/usc/29/1392.md?p=a) under a plan for work performed in the [entertainment industry](#c-2), primarily on a temporary or project-by-project basis, if the plan primarily covers employees in the [entertainment industry](#c-2), a [complete withdrawal](/usc/29/1381.md?p=b-2) occurs only as described in [subsection (b)(2)](#b-2) applied by substituting “plan” for “collective bargaining agreement” in [subparagraph (B)(i)](#b-2-B-i) thereof.
  - (2) For purposes of this subsection, the term “entertainment industry” means—
    - (A) theater, motion picture (except to the extent provided in regulations prescribed by the corporation), radio, television, sound or visual recording, music, and dance, and
    - (B) such other entertainment activities as the corporation may determine to be appropriate.
  - (3) The corporation may by regulation exclude a group or class of employers described in the preceding sentence from the application of this subsection if the corporation determines that such exclusion is necessary—
    - (A) to protect the interest of the plan’s participants and beneficiaries, or
    - (B) to prevent a significant risk of loss to the corporation with respect to the plan.
  - (4) A plan may be amended to provide that this subsection shall not apply to a group or class of employers under the plan.
- (d) **Other determinative factors—**
  - (1) Notwithstanding [subsection (a)](#a), in the case of an employer who—
    - (A) has an [obligation to contribute](/usc/29/1392.md?p=a) under a plan described in [paragraph (2)](#d-2) primarily for work described in such paragraph, and
    - (B) does not continue to perform work within the jurisdiction of the plan,

    a [complete withdrawal](/usc/29/1381.md?p=b-2) occurs only as described in [paragraph (3)](#d-3).

  - (2) A plan is described in this paragraph if substantially all of the contributions required under the plan are made by employers primarily engaged in the long and short haul trucking industry, the household goods moving industry, or the public warehousing industry.
  - (3) A withdrawal occurs under this paragraph if—
    - (A) an employer permanently ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan or permanently ceases all covered operations under the plan, and
    - (B) either—
      - (i) the corporation determines that the plan has suffered substantial damage to its contribution base as a result of such cessation, or
      - (ii) the employer fails to furnish a bond issued by a corporate surety company that is an acceptable surety for purposes of [section 1112 of this title](/usc/29/1112.md), or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to 50 percent of the withdrawal liability of the employer.
  - (4) If, after an employer furnishes a bond or escrow to a plan under [paragraph (3)(B)(ii)](#d-3-B-ii), the corporation determines that the cessation of the employer’s [obligation to contribute](/usc/29/1392.md?p=a) under the plan (considered together with any cessations by other employers), or cessation of covered operations under the plan, has resulted in substantial damage to the contribution base of the plan, the employer shall be treated as having withdrawn from the plan on the date on which the [obligation to contribute](/usc/29/1392.md?p=a) or covered operations ceased, and such bond or escrow shall be paid to the plan. The corporation shall not make a determination under this paragraph more than 60 months after the date on which such [obligation to contribute](/usc/29/1392.md?p=a) or covered operations ceased.
  - (5) If the corporation determines that the employer has no further liability under the plan either—
    - (A) because it determines that the contribution base of the plan has not suffered substantial damage as a result of the cessation of the employer’s [obligation to contribute](/usc/29/1392.md?p=a) or cessation of covered operations (considered together with any cessation of contribution obligation, or of covered operations, with respect to other employers), or
    - (B) because it may not make a determination under [paragraph (4)](#d-4) because of the last sentence thereof,

    then the bond shall be cancelled or the escrow refunded.

  - (6) Nothing in this subsection shall be construed as a limitation on the amount of the withdrawal liability of any employer.
- (e) **Date of complete withdrawal—** For purposes of this part, the date of a [complete withdrawal](/usc/29/1381.md?p=b-2) is the date of the cessation of the [obligation to contribute](/usc/29/1392.md?p=a) or the cessation of covered operations.
- (f) **Special liability withdrawal rules for industries other than construction and entertainment industries; procedures applicable to amend plans—**
  - (1) The corporation may prescribe regulations under which plans in industries other than the construction or entertainment industries may be amended to provide for special withdrawal liability rules similar to the rules described in subsections [(b)](#b) and [(c)](#c).
  - (2) Regulations under [paragraph (1)](#f-1) shall permit use of special withdrawal liability rules—
    - (A) only in industries (or portions thereof) in which, as determined by the corporation, the characteristics that would make use of such rules appropriate are clearly shown, and
    - (B) only if the corporation determines, in each instance in which special withdrawal liability rules are permitted, that use of such rules will not pose a significant risk to the corporation under this subchapter.

# §1384. Sale of assets

- (a) **Complete or partial withdrawal not occurring as a result of sale and subsequent cessation of covered operations or cessation of obligation to contribute to covered operations; continuation of liability of seller—**
  - (1) A complete or [partial withdrawal](/usc/29/1381.md?p=b-3) of an employer (hereinafter in this section referred to as the “seller”) under this section does not occur solely because, as a result of a bona fide, arm’s-length sale of assets to an [unrelated party](#d) (hereinafter in this section referred to as the “purchaser”), the seller ceases covered operations or ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) for such operations, if—
    - (A) the purchaser has an [obligation to contribute](/usc/29/1392.md?p=a) to the plan with respect to the operations for substantially the same number of [contribution base units](/usc/29/1301.md?p=a-11) for which the seller had an [obligation to contribute](/usc/29/1392.md?p=a) to the plan;
    - (B) the purchaser provides to the plan for a period of 5 plan years commencing with the first plan year beginning after the sale of assets, a bond issued by a corporate surety company that is an acceptable surety for purposes of [section 1112 of this title](/usc/29/1112.md), or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the greater of—
      - (i) the average annual contribution required to be made by the seller with respect to the operations under the plan for the 3 plan years preceding the plan year in which the sale of the employer’s assets occurs, or
      - (ii) the annual contribution that the seller was required to make with respect to the operations under the plan for the last plan year before the plan year in which the sale of the assets occurs,

      which bond or escrow shall be paid to the plan if the purchaser withdraws from the plan, or fails to make a contribution to the plan when due, at any time during the first 5 plan years beginning after the sale; and

    - (C) the contract for sale provides that, if the purchaser withdraws in a [complete withdrawal](/usc/29/1381.md?p=b-2), or a [partial withdrawal](/usc/29/1381.md?p=b-3) with respect to operations, during such first 5 plan years, the seller is secondarily liable for any withdrawal liability it would have had to the plan with respect to the operations (but for this section) if the liability of the purchaser with respect to the plan is not paid.
  - (2) If the purchaser—
    - (A) withdraws before the last day of the fifth plan year beginning after the sale, and
    - (B) fails to make any withdrawal liability payment when due,

    then the seller shall pay to the plan an amount equal to the payment that would have been due from the seller but for this section.

  - (3)
    - (A) If all, or substantially all, of the seller’s assets are distributed, or if the seller is liquidated before the end of the 5 plan year period described in [paragraph (1)(C)](#a-1-C), then the seller shall provide a bond or amount in escrow equal to the present value of the withdrawal liability the seller would have had but for this subsection.
    - (B) If only a portion of the seller’s assets are distributed during such period, then a bond or escrow shall be required, in accordance with regulations prescribed by the corporation, in a manner consistent with [subparagraph (A)](#a-3-A).
  - (4) The liability of the party furnishing a bond or escrow under this subsection shall be reduced, upon payment of the bond or escrow to the plan, by the amount thereof.
- (b) **Liability of purchaser—**
  - (1) For the purposes of this part, the liability of the purchaser shall be determined as if the purchaser had been required to contribute to the plan in the year of the sale and the 4 plan years preceding the sale the amount the seller was required to contribute for such operations for such 5 plan years.
  - (2) If the plan is in reorganization in the plan year in which the sale of assets occurs, the purchaser shall furnish a bond or escrow in an amount equal to 200 percent of the amount described in [subsection (a)(1)(B)](#a-1-B).
- (c) **Variances or exemptions from continuation of liability of seller; procedures applicable—** The corporation may by regulation vary the standards in subparagraphs [(B)](#a-1-B) and [(C)](#a-1-C) of subsection (a)(1) if the variance would more effectively or equitably carry out the purposes of this subchapter. Before it promulgates such regulations, the corporation may grant individual or class variances or exemptions from the requirements of such subparagraphs if the particular case warrants it. Before granting such an individual or class variance or exemption, the corporation—
  - (1) shall publish notice in the Federal Register of the pendency of the variance or exemption,
  - (2) shall require that adequate notice be given to interested [persons](/usc/29/1301.md?p=a-20), and
  - (3) shall afford interested [persons](/usc/29/1301.md?p=a-20) an opportunity to present their views.
- (d) **“Unrelated party” defined—** For purposes of this section, the term “unrelated party” means a purchaser or seller who does not bear a relationship to the seller or purchaser, as the case may be, that is described in [section 267(b) of title 26](/usc/26/267.md?p=b), or that is described in regulations prescribed by the corporation applying principles similar to the principles of such section.

# §1385. Partial withdrawals

- (a) **Determinative factors—** Except as otherwise provided in this section, there is a [partial withdrawal](/usc/29/1381.md?p=b-3) by an employer from a plan on the last day of a plan year if for such plan year—
  - (1) there is a 70-percent contribution decline, or
  - (2) there is a partial cessation of the employer’s contribution obligation.
- (b) **Criteria applicable—** For purposes of [subsection (a)](#a)—
  - (1)
    - (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](/usc/29/1301.md?p=a-11) do not exceed 30 percent of the employer’s [contribution base units](/usc/29/1301.md?p=a-11) for the high base year.
    - (B) For purposes of [subparagraph (A)](#b-1-A)—
      - (i) The term “3-year testing period” means the period consisting of the plan year and the immediately preceding 2 plan years.
      - (ii) The number of [contribution base units](/usc/29/1301.md?p=a-11) 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](/usc/29/1301.md?p=a-11) were the highest within the 5 plan years immediately preceding the beginning of the 3-year testing period.
  - (2)
    - (A) There is a partial cessation of the employer’s contribution obligation for the plan year if, during such year—
      - (i) the employer permanently ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) 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
      - (ii) an employer permanently ceases to have an [obligation to contribute](/usc/29/1392.md?p=a) 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](/usc/29/1392.md?p=a) ceased.
    - (B) For purposes of [subparagraph (A)](#b-2-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.
- (c) **Retail food industry—**
  - (1) 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—
    - (A) by substituting “35 percent” for “70 percent” in subsections [(a)](#a) and [(b)](#b), and
    - (B) by substituting “65 percent” for “30 percent” in [subsection (b)](#b).
  - (2) Any amendment adopted under [paragraph (1)](#c-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](/usc/29/1301.md?p=a-11), in the 2 plan years following the plan year of withdrawal of the employer, is higher than such number immediately after the withdrawal.
  - (3) [Section 1388 of this title](/usc/29/1388.md) shall not apply to a plan which has been amended under [paragraph (1)](#c-1).
- (d) **Continuation of liability of employer for partial withdrawal under amended plan—** In the case of a plan described in [section 404(c) of title 26](/usc/26/404.md?p=c), 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](/usc/29/1381.md?p=b-3).

# §1386. Adjustment for partial withdrawal; determination of amount; reduction for partial withdrawal liability; procedures applicable

- (a) The amount of an employer’s liability for a [partial withdrawal](/usc/29/1381.md?p=b-3), before the application of sections [1399(c)(1)](/usc/29/1399.md?p=c-1) and [1405](/usc/29/1405.md) of this title, is equal to the product of—
  - (1) the amount determined under [section 1391 of this title](/usc/29/1391.md), and adjusted under [section 1389 of this title](/usc/29/1389.md) if appropriate, determined as if the employer had withdrawn from the plan in a [complete withdrawal](/usc/29/1381.md?p=b-2)—
    - (A) on the date of the [partial withdrawal](/usc/29/1381.md?p=b-3), or
    - (B) in the case of a [partial withdrawal](/usc/29/1381.md?p=b-3) described in [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1) (relating to 70-percent contribution decline), on the last day of the first plan year in the 3-year testing period,

    multiplied by

  - (2) a fraction which is 1 minus a fraction—
    - (A) the numerator of which is the employer’s [contribution base units](/usc/29/1301.md?p=a-11) for the plan year following the plan year in which the [partial withdrawal](/usc/29/1381.md?p=b-3) occurs, and
    - (B) the denominator of which is the average of the employer’s [contribution base units](/usc/29/1301.md?p=a-11) for—
      - (i) except as provided in [clause (ii)](#a-2-B-ii), the 5 plan years immediately preceding the plan year in which the [partial withdrawal](/usc/29/1381.md?p=b-3) occurs, or
      - (ii) in the case of a [partial withdrawal](/usc/29/1381.md?p=b-3) described in [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1) (relating to 70-percent contribution decline), the 5 plan years immediately preceding the beginning of the 3-year testing period.
- (b)
  - (1) In the case of an employer that has withdrawal liability for a [partial withdrawal](/usc/29/1381.md?p=b-3) from a plan, any withdrawal liability of that employer for a partial or [complete withdrawal](/usc/29/1381.md?p=b-2) from that plan in a subsequent plan year shall be reduced by the amount of any [partial withdrawal](/usc/29/1381.md?p=b-3) liability (reduced by any abatement or reduction of such liability) of the employer with respect to the plan for a previous plan year.
  - (2) The corporation shall prescribe such regulations as may be necessary to provide for proper adjustments in the reduction provided by [paragraph (1)](#b-1) for—
    - (A) changes in [unfunded vested benefits](/usc/29/1393.md?p=c) arising after the close of the prior year for which [partial withdrawal](/usc/29/1381.md?p=b-3) liability was determined,
    - (B) changes in [contribution base units](/usc/29/1301.md?p=a-11) occurring after the close of the prior year for which [partial withdrawal](/usc/29/1381.md?p=b-3) liability was determined, and
    - (C) any other factors for which it determines adjustment to be appropriate,

    so that the liability for any complete or [partial withdrawal](/usc/29/1381.md?p=b-3) in any subsequent year (after the application of the reduction) properly reflects the employer’s share of liability with respect to the plan.


# §1387. Reduction or waiver of complete withdrawal liability; procedures and standards applicable

- (a) The corporation shall provide by regulation for the reduction or waiver of liability for a [complete withdrawal](/usc/29/1381.md?p=b-2) in the event that an employer who has withdrawn from a plan subsequently resumes covered operations under the plan or renews an [obligation to contribute](/usc/29/1392.md?p=a) under the plan, to the extent that the corporation determines that reduction or waiver of withdrawal liability is consistent with the purposes of this chapter.
- (b) The corporation shall prescribe by regulation a procedure and standards for the amendment of plans to provide alternative rules for the reduction or waiver of liability for a [complete withdrawal](/usc/29/1381.md?p=b-2) in the event that an employer who has withdrawn from the plan subsequently resumes covered operations or renews an [obligation to contribute](/usc/29/1392.md?p=a) under the plan. The rules may apply only to the extent that the rules are consistent with the purposes of this chapter.

# §1388. Reduction of partial withdrawal liability

- (a) **Obligation of employer for payments for partial withdrawal for plan years beginning after the second consecutive plan year following the partial withdrawal year; criteria applicable; furnishing of bond in lieu of payment of partial withdrawal liability—**
  - (1) If, for any 2 consecutive plan years following the plan year in which an employer has partially withdrawn from a plan under [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1) (referred to elsewhere in this section as the “[partial withdrawal](/usc/29/1381.md?p=b-3) year”), the number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer has an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for each such year is not less than 90 percent of the total number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for the high base year (within the meaning of [section 1385(b)(1)(B)(ii) of this title](/usc/29/1385.md?p=b-1-B-ii)), then the employer shall have no obligation to make payments with respect to such [partial withdrawal](/usc/29/1381.md?p=b-3) (other than delinquent payments) for plan years beginning after the second consecutive plan year following the [partial withdrawal](/usc/29/1381.md?p=b-3) year.
  - (2)
    - (A) For any plan year for which the number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which an employer who has partially withdrawn under [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1) has an [obligation to contribute](/usc/29/1392.md?p=a) under the plan equals or exceeds the number of units for the highest year determined under [paragraph (1)](#a-1) without regard to “90 percent of”, the employer may furnish (in lieu of payment of the [partial withdrawal](/usc/29/1381.md?p=b-3) liability determined under [section 1386 of this title](/usc/29/1386.md)) a bond to the plan in the amount determined by the [plan sponsor](/usc/29/1301.md?p=a-10) (not exceeding 50 percent of the annual payment otherwise required).
    - (B) If the [plan sponsor](/usc/29/1301.md?p=a-10) determines under [paragraph (1)](#a-1) that the employer has no further liability to the plan for the [partial withdrawal](/usc/29/1381.md?p=b-3), then the bond shall be cancelled.
    - (C) If the [plan sponsor](/usc/29/1301.md?p=a-10) determines under [paragraph (1)](#a-1) that the employer continues to have liability to the plan for the [partial withdrawal](/usc/29/1381.md?p=b-3), then—
      - (i) the bond shall be paid to the plan,
      - (ii) the employer shall immediately be liable for the outstanding amount of liability due with respect to the plan year for which the bond was posted, and
      - (iii) the employer shall continue to make the [partial withdrawal](/usc/29/1381.md?p=b-3) liability payments as they are due.
- (b) **Obligation of employer for payments for partial withdrawal for plan years beginning after the second consecutive plan year; other criteria applicable—** If—
  - (1) for any 2 consecutive plan years following a [partial withdrawal](/usc/29/1381.md?p=b-3) under [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1), the number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer has an [obligation to contribute](/usc/29/1392.md?p=a) for each such year exceeds 30 percent of the total number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer had an [obligation to contribute](/usc/29/1392.md?p=a) for the high base year (within the meaning of [section 1385(b)(1)(B)(ii) of this title](/usc/29/1385.md?p=b-1-B-ii),[^1] and
  - (2) the total number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which all employers under the plan have obligations to contribute in each of such 2 consecutive years is not less than 90 percent of the total number of [contribution base units](/usc/29/1301.md?p=a-11) for which all employers had obligations to contribute in the [partial withdrawal](/usc/29/1381.md?p=b-3) plan year;

  then, the employer shall have no obligation to make payments with respect to such [partial withdrawal](/usc/29/1381.md?p=b-3) (other than delinquent payments) for plan years beginning after the second such consecutive plan year.

- (c) **Pro rata reduction of amount of partial withdrawal liability payment of employer for plan year following partial withdrawal year—** In any case in which, in any plan year following a [partial withdrawal](/usc/29/1381.md?p=b-3) under [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1), the number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer has an [obligation to contribute](/usc/29/1392.md?p=a) for such year equals or exceeds 110 percent (or such other percentage as the plan may provide by amendment and which is not prohibited under regulations prescribed by the corporation) of the number of [contribution base units](/usc/29/1301.md?p=a-11) with respect to which the employer had an [obligation to contribute](/usc/29/1392.md?p=a) in the [partial withdrawal](/usc/29/1381.md?p=b-3) year, then the amount of the employer’s [partial withdrawal](/usc/29/1381.md?p=b-3) liability payment for such year shall be reduced pro rata, in accordance with regulations prescribed by the corporation.
- (d) **Building and construction industry; entertainment industry—**
  - (1) An employer to whom [section 1383(b)](/usc/29/1383.md?p=b)[^2] of this title (relating to the building and construction industry) applies is liable for a [partial withdrawal](/usc/29/1381.md?p=b-3) only if the employer’s [obligation to contribute](/usc/29/1392.md?p=a) under the plan is continued for no more than an insubstantial portion of its work in the craft and area jurisdiction of the collective bargaining agreement of the type for which contributions are required.
  - (2) An employer to whom [section 1383(c)](/usc/29/1383.md?p=c)[^2] of this title (relating to the entertainment industry) applies shall have no liability for a [partial withdrawal](/usc/29/1381.md?p=b-3) except under the conditions and to the extent prescribed by the corporation by regulation.
- (e) **Reduction or elimination of partial withdrawal liability under any conditions; criteria; procedures applicable—**
  - (1) The corporation may prescribe regulations providing for the reduction or elimination of [partial withdrawal](/usc/29/1381.md?p=b-3) liability under any conditions with respect to which the corporation determines that reduction or elimination of [partial withdrawal](/usc/29/1381.md?p=b-3) liability is consistent with the purposes of this chapter.
  - (2) Under such regulations, reduction of withdrawal liability shall be provided only with respect to subsequent changes in the employer’s contributions for the same operations, or under the same collective bargaining agreement, that gave rise to the [partial withdrawal](/usc/29/1381.md?p=b-3), and changes in the employer’s [contribution base units](/usc/29/1301.md?p=a-11) with respect to other facilities or other collective bargaining agreements shall not be taken into account.
  - (3) The corporation shall prescribe by regulation a procedure by which a plan may by amendment adopt rules for the reduction or elimination of [partial withdrawal](/usc/29/1381.md?p=b-3) liability under any other conditions, subject to the approval of the corporation based on its determination that adoption of such rules by the plan is consistent with the purposes of this chapter.

# §1389. De minimis rule

- (a) **Reduction of unfunded vested benefits allocable to employer withdrawn from plan—** Except in the case of a plan amended under [subsection (b)](#b), the amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable under [section 1391 of this title](/usc/29/1391.md) to an employer who withdraws from a plan shall be reduced by the smaller of—
  - (1) ¾ of 1 percent of the plan’s unfunded vested obligations (determined as of the end of the plan year ending before the date of withdrawal), or
  - (2) $50,000,

  reduced by the amount, if any, by which the [unfunded vested benefits](/usc/29/1393.md?p=c) allowable to the employer, determined without regard to this subsection, exceeds $100,000.

- (b) **Amendment of plan for reduction of amount of unfunded vested benefits allocable to employer withdrawn from plan—** A plan may be amended to provide for the reduction of the amount determined under [section 1391 of this title](/usc/29/1391.md) by not more than the greater of—
  - (1) the amount determined under [subsection (a)](#a), or
  - (2) the lesser of—
    - (A) the amount determined under [subsection (a)(1)](#a-1), or
    - (B) $100,000,

  reduced by the amount, if any, by which the amount determined under [section 1391 of this title](/usc/29/1391.md) for the employer, determined without regard to this subsection, exceeds $150,000.

- (c) **Nonapplicability—** This section does not apply—
  - (1) to an employer who withdraws in a plan year in which substantially all employers withdraw from the plan, or
  - (2) in any case in which substantially all employers withdraw from the plan during a period of one or more plan years pursuant to an agreement or arrangement to withdraw, to an employer who withdraws pursuant to such agreement or arrangement.
- (d) **Presumption of employer withdrawal from plan pursuant to agreement or arrangement applicable in action or proceeding to determine or collect withdrawal liability—** In any action or proceeding to determine or collect withdrawal liability, if substantially all employers have withdrawn from a plan within a period of 3 plan years, an employer who has withdrawn from such plan during such period shall be presumed to have withdrawn from the plan pursuant to an agreement or arrangement, unless the employer proves otherwise by a preponderance of the evidence.

# §1390. Nonapplicability of withdrawal liability for certain temporary contribution obligation periods; exception

- (a) An employer who withdraws from a plan in complete or [partial withdrawal](/usc/29/1381.md?p=b-3) is not liable to the plan if the employer—
  - (1) first had an [obligation to contribute](/usc/29/1392.md?p=a) to the plan after September 26, 1980,
  - (2) had an [obligation to contribute](/usc/29/1392.md?p=a) to the plan for no more than the lesser of—
    - (A) 6 consecutive plan years preceding the date on which the employer withdraws, or
    - (B) the number of years required for vesting under the plan,
  - (3) was required to make contributions to the plan for each such plan year in an amount equal to less than 2 percent of the sum of all employer contributions made to the plan for each such year, and
  - (4) has never avoided withdrawal liability because of the application of this section with respect to the plan.
- (b) [Subsection (a)](#a) shall apply to an employer with respect to a plan only if—
  - (1) the plan is amended to provide that [subsection (a)](#a) applies;
  - (2) the plan provides, or is amended to provide, that the reduction under [section 411(a)(3)(E) of title 26](/usc/26/411.md?p=a-3-E) applies with respect to the employees of the employer; and
  - (3) the ratio of the assets of the plan for the plan year preceding the first plan year for which the employer was required to contribute to the plan to the benefit payments made during that plan year was at least 8 to 1.

# §1391. Methods for computing withdrawal liability

- (a) **Determination of amount of unfunded vested benefits allocable to employer withdrawn from plan—** The amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer that withdraws from a plan shall be determined in accordance with subsection [(b)](#b), [(c)](#c), or [(d)](#d) of this section.
- (b) **Factors determining computation of amount of unfunded vested benefits allocable to employer withdrawn from plan—**
  - (1) Except as provided in subsections [(c)](#c) and [(d)](#d), the amount of [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer that withdraws is the sum of—
    - (A) the employer’s proportional share of the unamortized amount of the change in the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) for plan years ending after September 25, 1980, as determined under [paragraph (2)](#b-2),
    - (B) the employer’s proportional share, if any, of the unamortized amount of the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) at the end of the plan year ending before September 26, 1980, as determined under [paragraph (3)](#b-3); and
    - (C) the employer’s proportional share of the unamortized amounts of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) (if any) as determined under [paragraph (4)](#b-4).

    If the sum of the amounts determined with respect to an employer under paragraphs [(2)](#b-2), [(3)](#b-3), and [(4)](#b-4) is negative, the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to the employer shall be zero.

  - (2)
    - (A) An employer’s proportional share of the unamortized amount of the change in the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) for plan years ending after September 25, 1980, is the sum of the employer’s proportional shares of the unamortized amount of the change in [unfunded vested benefits](/usc/29/1393.md?p=c) for each plan year in which the employer has an [obligation to contribute](/usc/29/1392.md?p=a) under the plan ending—
      - (i) after such date, and
      - (ii) before the plan year in which the withdrawal of the employer occurs.
    - (B) The change in a plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) for a plan year is the amount by which—
      - (i) the [unfunded vested benefits](/usc/29/1393.md?p=c) at the end of the plan year; exceeds
      - (ii) the sum of—
        - (I) the unamortized amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) for the last plan year ending before September 26, 1980, and
        - (II) the sum of the unamortized amounts of the change in [unfunded vested benefits](/usc/29/1393.md?p=c) for each plan year ending after September 25, 1980, and preceding the plan year for which the change is determined.
    - (C) The unamortized amount of the change in a plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) with respect to a plan year is the change in [unfunded vested benefits](/usc/29/1393.md?p=c) for the plan year, reduced by 5 percent of such change for each succeeding plan year.
    - (D) The unamortized amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) for the last plan year ending before September 26, 1980, is the amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) as of the end of that plan year reduced by 5 percent of such amount for each succeeding plan year.
    - (E) An employer’s proportional share of the unamortized amount of a change in [unfunded vested benefits](/usc/29/1393.md?p=c) is the product of—
      - (i) the unamortized amount of such change (as of the end of the plan year preceding the plan year in which the employer withdraws); multiplied by
      - (ii) a fraction—
        - (I) the numerator of which is the sum of the contributions required to be made under the plan by the employer for the year in which such change arose and for the 4 preceding plan years, and
        - (II) the denominator of which is the sum for the plan year in which such change arose and the 4 preceding plan years of all contributions made by employers who had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for the plan year in which such change arose reduced by the contributions made in such years by employers who had withdrawn from the plan in the year in which the change arose.
  - (3) An employer’s proportional share of the unamortized amount of the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) for the last plan year ending before September 26, 1980, is the product of—
    - (A) such unamortized amount; multiplied by—
    - (B) a fraction—
      - (i) the numerator of which is the sum of all contributions required to be made by the employer under the plan for the most recent 5 plan years ending before September 26, 1980, and
      - (ii) the denominator of which is the sum of all contributions made for the most recent 5 plan years ending before September 26, 1980, by all employers—
        - (I) who had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for the first plan year ending on or after such date, and
        - (II) who had not withdrawn from the plan before such date.
  - (4)
    - (A) An employer’s proportional share of the unamortized amount of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) is the sum of the employer’s proportional share of the unamortized amount of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) for each plan year ending before the plan year in which the employer withdrew from the plan.
    - (B) Except as otherwise provided in regulations prescribed by the corporation, the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) for a plan year is the sum of—
      - (i) any amount which the [plan sponsor](/usc/29/1301.md?p=a-10) determines in that plan year to be uncollectible for reasons arising out of cases or proceedings under [title 11](/usc/11.md), or similar proceedings.[^1]
      - (ii) any amount which the [plan sponsor](/usc/29/1301.md?p=a-10) determines in that plan year will not be assessed as a result of the operation of section [1389](/usc/29/1389.md), [1399(c)(1)(B)](/usc/29/1399.md?p=c-1-B), or [1405](/usc/29/1405.md) of this title against an employer to whom a notice described in [section 1399 of this title](/usc/29/1399.md) has been sent, and
      - (iii) any amount which the [plan sponsor](/usc/29/1301.md?p=a-10) determines to be uncollectible or unassessable in that plan year for other reasons under standards not inconsistent with regulations prescribed by the corporation.
    - (C) The unamortized amount of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) with respect to a plan year is the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) for the plan year, reduced by 5 percent of such reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) for each succeeding plan year.
    - (D) An employer’s proportional share of the unamortized amount of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) with respect to a plan year is the product of—
      - (i) the unamortized amount of the reallocated [unfunded vested benefits](/usc/29/1393.md?p=c) (as of the end of the plan year preceding the plan year in which the employer withdraws); multiplied by
      - (ii) the fraction defined in [paragraph (2)(E)(ii)](#b-2-E-ii).
- (c) **Amendment of multiemployer plan for determination respecting amount of unfunded vested benefits allocable to employer withdrawn from plan; factors determining computation of amount—**
  - (1) A [multiemployer plan](/usc/29/1301.md?p=a-3), other than a plan which primarily covers employees in the building and construction industry, may be amended to provide that the amount of [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer that withdraws from the plan is an amount determined under paragraph (2), (3), (4), or (5) of this subsection, rather than under subsection [(b)](#b) or [(d)](#d). A plan described in [section 1383(b)(1)(B)(i) of this title](/usc/29/1383.md?p=b-1-B-i) (relating to the building and construction industry) may be amended, to the extent provided in regulations prescribed by the corporation, to provide that the amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer not described in [section 1383(b)(1)(A) of this title](/usc/29/1383.md?p=b-1-A) shall be determined in a manner different from that provided in [subsection (b)](#b).
  - (2)
    - (A) The amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to any employer under this paragraph is the sum of the amounts determined under subparagraphs [(B)](#c-2-B) and [(C)](#c-2-C).
    - (B) The amount determined under this subparagraph is the product of—
      - (i) the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) as of the end of the last plan year ending before September 26, 1980, reduced as if those obligations were being fully amortized in level annual installments over 15 years beginning with the first plan year ending on or after such date; multiplied by
      - (ii) a fraction—
        - (I) the numerator of which is the sum of all contributions required to be made by the employer under the plan for the last 5 plan years ending before September 26, 1980, and
        - (II) the denominator of which is the sum of all contributions made for the last 5 plan years ending before September 26, 1980, by all employers who had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for the first plan year ending after September 25, 1980, and who had not withdrawn from the plan before such date.
    - (C) The amount determined under this subparagraph is the product of—
      - (i) an amount equal to—
        - (I) the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) as of the end of the plan year preceding the plan year in which the employer withdraws, less
        - (II) the sum of the value as of such date of all outstanding claims for withdrawal liability which can reasonably be expected to be collected, with respect to employers withdrawing before such plan year, and that portion of the amount determined under [subparagraph (B)(i)](#c-2-B-i) which is allocable to employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan in the plan year preceding the plan year in which the employer withdraws and who also had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for the first plan year ending after September 25, 1980; multiplied by
      - (ii) a fraction—
        - (I) the numerator of which is the total amount required to be contributed under the plan by the employer for the last 5 plan years ending before the date on which the employer withdraws, and
        - (II) the denominator of which is the total amount contributed under the plan by all employers for the last 5 plan years ending before the date on which the employer withdraws, increased by the amount of any employer contributions owed with respect to earlier periods which were collected in those plan years, and decreased by any amount contributed by an employer who withdrew from the plan under this part during those plan years.
    - (D) The corporation may by regulation permit adjustments in any denominator under this section, consistent with the purposes of this subchapter, where such adjustment would be appropriate to ease administrative burdens of [plan sponsors](/usc/29/1301.md?p=a-10) in calculating such denominators.
  - (3) The amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer under this paragraph is the product of—
    - (A) the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) as of the end of the plan year preceding the plan year in which the employer withdraws, less the value as of the end of such year of all outstanding claims for withdrawal liability which can reasonably be expected to be collected from employers withdrawing before such year; multiplied by
    - (B) a fraction—
      - (i) the numerator of which is the total amount required to be contributed by the employer under the plan for the last 5 plan years ending before the withdrawal, and
      - (ii) the denominator of which is the total amount contributed under the plan by all employers for the last 5 plan years ending before the withdrawal, increased by any employer contributions owed with respect to earlier periods which were collected in those plan years, and decreased by any amount contributed to the plan during those plan years by employers who withdrew from the plan under this section during those plan years.
  - (4)
    - (A) The amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer under this paragraph is equal to the sum of—
      - (i) the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) which are attributable to participants’ service with the employer (determined as of the end of the plan year preceding the plan year in which the employer withdraws), and
      - (ii) the employer’s proportional share of any [unfunded vested benefits](/usc/29/1393.md?p=c) which are not attributable to service with the employer or other employers who are obligated to contribute under the plan in the plan year preceding the plan year in which the employer withdraws (determined as of the end of the plan year preceding the plan year in which the employer withdraws).
    - (B) The plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) which are attributable to participants’ service with the employer is the amount equal to the value of [nonforfeitable benefits](/usc/29/1301.md?p=a-8) under the plan which are attributable to participants’ service with such employer (determined under plan rules not inconsistent with regulations of the corporation) decreased by the share of plan assets determined under [subparagraph (C)](#c-4-C) which is allocated to the employer as provided under [subparagraph (D)](#c-4-D).
    - (C) The value of plan assets determined under this subparagraph is the value of plan assets allocated to [nonforfeitable benefits](/usc/29/1301.md?p=a-8) which are attributable to service with the employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan in the plan year preceding the plan year in which the employer withdraws, which is determined by multiplying—
      - (i) the value of the plan assets as of the end of the plan year preceding the plan year in which the employer withdraws, by
      - (ii) a fraction—
        - (I) the numerator of which is the value of [nonforfeitable benefits](/usc/29/1301.md?p=a-8) which are attributable to service with such employers, and
        - (II) the denominator of which is the value of all [nonforfeitable benefits](/usc/29/1301.md?p=a-8) under the plan

        as of the end of the plan year.

    - (D) The share of plan assets, determined under [subparagraph (C)](#c-4-C), which is allocated to the employer shall be determined in accordance with one of the following methods which shall be adopted by the plan by amendment:
      - (i) by multiplying the value of plan assets determined under [subparagraph (C)](#c-4-C) by a fraction—
        - (I) the numerator of which is the value of the [nonforfeitable benefits](/usc/29/1301.md?p=a-8) which are attributable to service with the employer, and
        - (II) the denominator of which is the value of the [nonforfeitable benefits](/usc/29/1301.md?p=a-8) which are attributable to service with all employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan in the plan year preceding the plan year in which the employer withdraws;
      - (ii) by multiplying the value of plan assets determined under [subparagraph (C)](#c-4-C) by a fraction—
        - (I) the numerator of which is the sum of all contributions (accumulated with interest) which have been made to the plan by the employer for the plan year preceding the plan year in which the employer withdraws and all preceding plan years; and
        - (II) the denominator of which is the sum of all contributions (accumulated with interest) which have been made to the plan (for the plan year preceding the plan year in which the employer withdraws and all preceding plan years) by all employers who have an [obligation to contribute](/usc/29/1392.md?p=a) to the plan for the plan year preceding the plan year in which the employer withdraws; or
      - (iii) by multiplying the value of plan assets under [subparagraph (C)](#c-4-C) by a fraction—
        - (I) the numerator of which is the amount determined under clause (ii)(I) of this subparagraph, less the sum of benefit payments (accumulated with interest) made to participants (and their beneficiaries) for the plan years described in such [clause (ii)(I)](#c-4-D-ii-I) which are attributable to service with the employer; and
        - (II) the denominator of which is the amount determined under clause (ii)(II) of this subparagraph, reduced by the sum of benefit payments (accumulated with interest) made to participants (and their beneficiaries) for the plan years described in such [clause (ii)(II)](#c-4-D-ii-II) which are attributable to service with respect to the employers described in such [clause (ii)(II)](#c-4-D-ii-II).
    - (E) The amount of the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) for a plan year preceding the plan year in which an employer withdraws, which is not attributable to service with employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan in the plan year preceding the plan year in which such employer withdraws, is equal to—
      - (i) an amount equal to—
        - (I) the value of all [nonforfeitable benefits](/usc/29/1301.md?p=a-8) under the plan at the end of such plan year, reduced by
        - (II) the value of [nonforfeitable benefits](/usc/29/1301.md?p=a-8) under the plan at the end of such plan year which are attributable to participants’ service with employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan for such plan year; reduced by
      - (ii) an amount equal to—
        - (I) the value of the plan assets as of the end of such plan year, reduced by
        - (II) the value of plan assets as of the end of such plan year as determined under [subparagraph (C)](#c-4-C); reduced by
      - (iii) the value of all outstanding claims for withdrawal liability which can reasonably be expected to be collected with respect to employers withdrawing before the year preceding the plan year in which the employer withdraws.
    - (F) The employer’s proportional share described in [subparagraph (A)(ii)](#c-4-A-ii) for a plan year is the amount determined under [subparagraph (E)](#c-4-E) for the employer, but not in excess of an amount which bears the same ratio to the sum of the amounts determined under [subparagraph (E)](#c-4-E) for all employers under the plan as the amount determined under [subparagraph (C)](#c-4-C) for the employer bears to the sum of the amounts determined under [subparagraph (C)](#c-4-C) for all employers under the plan.
    - (G) The corporation may prescribe by regulation other methods which a plan may adopt for allocating assets to determine the amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) attributable to service with the employer and to determine the employer’s share of [unfunded vested benefits](/usc/29/1393.md?p=c) not attributable to service with employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan in the plan year in which the employer withdraws.
  - (5)
    - (A) The corporation shall prescribe by regulation a procedure by which a plan may, by amendment, adopt any other alternative method for determining an employer’s allocable share of [unfunded vested benefits](/usc/29/1393.md?p=c) under this section, subject to the approval of the corporation based on its determination that adoption of the method by the plan would not significantly increase the risk of loss to plan participants and beneficiaries or to the corporation.
    - (B) The corporation may prescribe by regulation standard approaches for alternative methods, other than those set forth in the preceding paragraphs of this subsection, which a plan may adopt under [subparagraph (A)](#c-5-A), for which the corporation may waive or modify the approval requirements of [subparagraph (A)](#c-5-A). Any alternative method shall provide for the allocation of substantially all of a plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) among employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan.
    - (C) Unless the corporation by regulation provides otherwise, a plan may be amended to provide that a period of more than 5 but not more than 10 plan years may be used for determining the numerator and denominator of any fraction which is used under any method authorized under this section for determining an employer’s allocable share of [unfunded vested benefits](/usc/29/1393.md?p=c) under this section.
    - (D) The corporation may by regulation permit adjustments in any denominator under this section, consistent with the purposes of this subchapter, where such adjustment would be appropriate to ease administrative burdens of [plan sponsors](/usc/29/1301.md?p=a-10) in calculating such denominators.
    - (E) **Fresh start option.—** Notwithstanding [paragraph (1)](#c-1), a plan may be amended to provide that the withdrawal liability method described in [subsection (b)](#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](/usc/29/1393.md?p=c) for the plan year ending before September 26, 1980.
- (d) **Method of calculating allocable share of employer of unfunded vested benefits set forth in subsection (c)(3); applicability of certain statutory provisions—**
  - (1) The method of calculating an employer’s allocable share of [unfunded vested benefits](/usc/29/1393.md?p=c) set forth in [subsection (c)(3)](#c-3) shall be the method for calculating an employer’s allocable share of [unfunded vested benefits](/usc/29/1393.md?p=c) under a plan to which [section 404(c) of title 26](/usc/26/404.md?p=c), or a continuation of such a plan, applies, unless the plan is amended to adopt another method authorized under subsection [(b)](#b) or [(c)](#c).
  - (2) Sections [1384](/usc/29/1384.md), [1389](/usc/29/1389.md), [1399(c)(1)(B)](/usc/29/1399.md?p=c-1-B), and [1405](/usc/29/1405.md) of this title shall not apply with respect to the withdrawal of an employer from a plan described in [paragraph (1)](#d-1) unless the plan is amended to provide that any of such sections apply.
- (e) **Reduction of liability of withdrawn employer in case of transfer of liabilities to another plan incident to withdrawal or partial withdrawal of employer—** In the case of a transfer of liabilities to another plan incident to an employer’s withdrawal or [partial withdrawal](/usc/29/1381.md?p=b-3), the withdrawn employer’s liability under this part shall be reduced in an amount equal to the value, as of the end of the last plan year ending on or before the date of the withdrawal, of the transferred [unfunded vested benefits](/usc/29/1393.md?p=c).
- (f) **Computations applicable in case of withdrawal following merger of multiemployer plans—** In the case of a withdrawal following a merger of [multiemployer plans](/usc/29/1301.md?p=a-3), subsection [(b)](#b), [(c)](#c), or [(d)](#d) shall be applied in accordance with regulations prescribed by the corporation; except that, if a withdrawal occurs in the first plan year beginning after a merger of [multiemployer plans](/usc/29/1301.md?p=a-3), the determination under this section shall be made as if each of the [multiemployer plans](/usc/29/1301.md?p=a-3) had remained separate plans.

# §1392. Obligation to contribute

- (a) **“Obligation to contribute” defined—** For purposes of this part, the term “obligation to contribute” means an obligation to contribute arising—
  - (1) under one or more collective bargaining (or related) agreements, or
  - (2) as a result of a duty under applicable labor-management relations law, but

  does not include an obligation to pay withdrawal liability under this section or to pay delinquent contributions.

- (b) **Payments of withdrawal liability not considered contributions—** Payments of withdrawal liability under this part shall not be considered contributions for purposes of this part.
- (c) **Transactions to evade or avoid liability—** If a principal purpose of any transaction is to evade or avoid liability under this part, this part shall be applied (and liability shall be determined and collected) without regard to such transaction.

# §1393. Actuarial assumptions

- (a) **Use by plan actuary in determining unfunded vested benefits of a plan for computing withdrawal liability of employer—** The corporation may prescribe by regulation actuarial assumptions which may be used by a plan actuary in determining the [unfunded vested benefits](#c) of a plan for purposes of determining an employer’s withdrawal liability under this part. Withdrawal liability under this part shall be determined by each plan on the basis of—
  - (1) actuarial assumptions and methods which, in the aggregate, are reasonable (taking into account the experience of the plan and reasonable expectations) and which, in combination, offer the actuary’s best estimate of anticipated experience under the plan, or
  - (2) actuarial assumptions and methods set forth in the corporation’s regulations for purposes of determining an employer’s withdrawal liability.
- (b) **Factors determinative of unfunded vested benefits of plan for computing withdrawal liability of employer—** In determining the [unfunded vested benefits](#c) of a plan for purposes of determining an employer’s withdrawal liability under this part, the plan actuary may—
  - (1) rely on the most recent complete actuarial valuation used for purposes of [section 412 of title 26](/usc/26/412.md) and reasonable estimates for the interim years of the [unfunded vested benefits](#c), and
  - (2) in the absence of complete data, rely on the data available or on data secured by a sampling which can reasonably be expected to be [representative](/usc/29/2101.md?p=a-4) of the status of the entire plan.
- (c) **Determination of amount of unfunded vested benefits—** For purposes of this part, the term “unfunded vested benefits” means with respect to a plan, an amount equal to—
  - (A) the value of [nonforfeitable benefits](/usc/29/1301.md?p=a-8) under the plan, less
  - (B) the value of the assets of the plan.

# §1394. Application of plan amendments; exception

- (a) No plan rule or amendment adopted after January 31, 1981, under section [1389](/usc/29/1389.md) or [1391(c)](/usc/29/1391.md?p=c) of this title may be applied without the employer’s consent with respect to liability for a withdrawal or [partial withdrawal](/usc/29/1381.md?p=b-3) which occurred before the date on which the rule or amendment was adopted.
- (b) All plan rules and amendments authorized under this part shall operate and be applied uniformly with respect to each employer, except that special provisions may be made to take into account the creditworthiness of an employer. The [plan sponsor](/usc/29/1301.md?p=a-10) shall give notice to all employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan and to all employee organizations representing employees covered under the plan of any plan rules or amendments adopted pursuant to this section.

# §1395. Plan notification to corporation of potentially significant withdrawals


The corporation may, by regulation, require the [plan sponsor](/usc/29/1301.md?p=a-10) of a [multiemployer plan](/usc/29/1301.md?p=a-3) to provide notice to the corporation when the withdrawal from the plan by any employer has resulted, or will result, in a significant reduction in the amount of aggregate contributions under the plan made by employers.


# §1396. Special rules for plans under section 404(c) of title 26

- (a) **Amount of withdrawal liability; determinative factors—** In the case of a plan described in [subsection (b)](#b)—
  - (1) if an employer withdraws prior to a termination described in [section 1341a(a)(2) of this title](/usc/29/1341a.md?p=a-2), the amount of withdrawal liability to be paid in any year by such employer shall be an amount equal to the greater of—
    - (A) the amount determined under [section 1399(c)(1)(C)(i) of this title](/usc/29/1399.md?p=c-1-C-i), or
    - (B) the product of—
      - (i) the number of [contribution base units](/usc/29/1301.md?p=a-11) for which the employer would have been required to make contributions for the prior plan year if the employer had not withdrawn, multiplied by
      - (ii) the contribution rate for the plan year which would be required to meet the amortization schedules contained in section 1423(d)(3)(B)(ii)[^1] of this title (determined without regard to any limitation on such rate otherwise provided by this subchapter)

    except that an employer shall not be required to pay an amount in excess of the withdrawal liability computed with interest; and

  - (2) the withdrawal liability of an employer who withdraws after December 31, 1983, as a result of a termination described in [section 1341a(a)(2) of this title](/usc/29/1341a.md?p=a-2) which is agreed to by the labor organization that appoints the employee [representative](/usc/29/2101.md?p=a-4) on the joint board of trustees which sponsors the plan, shall be determined under [subsection (c)](#c) if—
    - (A) as a result of prior employer withdrawals in any plan year commencing after January 1, 1980, the number of [contribution base units](/usc/29/1301.md?p=a-11) is reduced to less than 67 percent of the average number of such units for the calendar years 1974 through 1979; and
    - (B) at least 50 percent of the withdrawal liability attributable to the first 33 percent decline described in [subparagraph (A)](#a-2-A) has been determined by the [plan sponsor](/usc/29/1301.md?p=a-10) to be uncollectible within the meaning of regulations of the corporation of general applicability; and
    - (C) the rate of employer contributions under the plan for each plan year following the first plan year beginning after September 26, 1980 and preceding the termination date equals or exceeds the rate described in section 1423(d)(3)[^1] of this title.
- (b) **Covered plans—** A plan is described in this subsection if—
  - (1) it is a plan described in [section 404(c) of title 26](/usc/26/404.md?p=c) or a continuation thereof; and
  - (2) participation in the plan is substantially limited to individuals who retired prior to January 1, 1976.
- (c) **Amount of liability of employer; “a year of signatory service” defined—**
  - (1) The amount of an employer’s liability under this paragraph is the product of—
    - (A) the amount of the employer’s withdrawal liability determined without regard to this section, and
    - (B) the greater of 90 percent, or a fraction—
      - (i) the numerator of which is an amount equal to the portion of the plan’s [unfunded vested benefits](/usc/29/1393.md?p=c) that is attributable to plan participants who have a total of 10 or more years of signatory service, and
      - (ii) the denominator of which is an amount equal to the total [unfunded vested benefits](/usc/29/1393.md?p=c) of the plan.
  - (2) For purposes of [paragraph (1)](#c-1), the term “a year of signatory service” means a year during any portion of which a participant was employed for an employer who was obligated to contribute in that year, or who was subsequently obligated to contribute.

# §1397. Application of part in case of certain pre-1980 withdrawals; adjustment of covered plan

- (a) For the purpose of determining the amount of [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to an employer for a partial or [complete withdrawal](/usc/29/1381.md?p=b-2) from a plan which occurs after September 25, 1980, and for the purpose of determining whether there has been a [partial withdrawal](/usc/29/1381.md?p=b-3) after such date, the amount of contributions, and the number of [contribution base units](/usc/29/1301.md?p=a-11), of such employer properly allocable—
  - (1) to work performed under a collective bargaining agreement for which there was a permanent cessation of the [obligation to contribute](/usc/29/1392.md?p=a) before September 26, 1980, or
  - (2) to work performed at a facility at which all covered operations permanently ceased before September 26, 1980, or for which there was a permanent cessation of the [obligation to contribute](/usc/29/1392.md?p=a) before that date,

  shall not be taken into account.

- (b) A plan may, in a manner not inconsistent with regulations, which shall be prescribed by the corporation, adjust the amount of [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to other employers under a plan maintained by an employer described in [subsection (a)](#a).

# §1398. Withdrawal not to occur because of change in business form or suspension of contributions during labor dispute


Notwithstanding any other provision of this part, an employer shall not be considered to have withdrawn from a plan solely because—

- (1) an employer ceases to exist by reason of—
  - (A) a change in corporate structure described in [section 1369(b) of this title](/usc/29/1369.md?p=b), or
  - (B) a change to an unincorporated form of business enterprise,

  if the change causes no interruption in employer contributions or obligations to contribute under the plan, or

- (2) an employer suspends contributions under the plan during a labor dispute involving its employees.

For purposes of this part, a [successor](/usc/29/1301.md?p=a-14-C-ii-IV) or parent corporation or other entity resulting from any such change shall be considered the original employer.


# §1399. Notice, collection, etc., of withdrawal liability

- (a) **Furnishing of information by employer to plan sponsor—** An employer shall, within 30 days after a written request from the [plan sponsor](/usc/29/1301.md?p=a-10), furnish such information as the [plan sponsor](/usc/29/1301.md?p=a-10) reasonably determines to be necessary to enable the [plan sponsor](/usc/29/1301.md?p=a-10) to comply with the requirements of this part.
- (b) **Notification, demand for payment, and review upon complete or partial withdrawal by employer—**
  - (1) As soon as practicable after an employer’s complete or [partial withdrawal](/usc/29/1381.md?p=b-3), the [plan sponsor](/usc/29/1301.md?p=a-10) shall—
    - (A) notify the employer of—
      - (i) the amount of the liability, and
      - (ii) the schedule for liability payments, and
    - (B) demand payment in accordance with the schedule.
  - (2)
    - (A) No later than 90 days after the employer receives the notice described in [paragraph (1)](#b-1), the employer—
      - (i) may ask the [plan sponsor](/usc/29/1301.md?p=a-10) to review any specific matter relating to the determination of the employer’s liability and the schedule of payments,
      - (ii) may identify any inaccuracy in the determination of the amount of the [unfunded vested benefits](/usc/29/1393.md?p=c) allocable to the employer, and
      - (iii) may furnish any additional relevant information to the [plan sponsor](/usc/29/1301.md?p=a-10).
    - (B) After a reasonable review of any matter raised, the [plan sponsor](/usc/29/1301.md?p=a-10) shall notify the employer of—
      - (i) the [plan sponsor](/usc/29/1301.md?p=a-10)’s decision,
      - (ii) the basis for the decision, and
      - (iii) the reason for any change in the determination of the employer’s liability or schedule of liability payments.
- (c) **Payment requirements; amount, etc.**
  - (1)
    - (A)
      - (i) Except as provided in subparagraphs (B) and (D) of this paragraph and in paragraphs [(4)](#c-4) and [(5)](#c-5), an employer shall pay the amount determined under [section 1391 of this title](/usc/29/1391.md), adjusted if appropriate first under [section 1389 of this title](/usc/29/1389.md) and then under [section 1386 of this title](/usc/29/1386.md) over the period of years necessary to amortize the amount in level annual payments determined under [subparagraph (C)](#c-1-C), calculated as if the first payment were made on the first day of the plan year following the plan year in which the withdrawal occurs and as if each subsequent payment were made on the first day of each subsequent plan year. Actual payment shall commence in accordance with [paragraph (2)](#c-2).
      - (ii) The determination of the amortization period described in [clause (i)](#c-1-A-i) shall be based on the assumptions used for the most recent actuarial valuation for the plan.
    - (B) In any case in which the amortization period described in [subparagraph (A)](#c-1-A) exceeds 20 years, the employer’s liability shall be limited to the first 20 annual payments determined under [subparagraph (C)](#c-1-C).
    - (C)
      - (i) Except as provided in [subparagraph (E)](#c-1-E), the amount of each annual payment shall be the product of—
        - (I) the average annual number of [contribution base units](/usc/29/1301.md?p=a-11) for the period of 3 consecutive plan years, during the period of 10 consecutive plan years ending before the plan year in which the withdrawal occurs, in which the number of [contribution base units](/usc/29/1301.md?p=a-11) for which the employer had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan is the highest, and
        - (II) the highest contribution rate at which the employer had an [obligation to contribute](/usc/29/1392.md?p=a) under the plan during the 10 plan years ending with the plan year in which the withdrawal occurs.

        For purposes of the preceding sentence, a [partial withdrawal](/usc/29/1381.md?p=b-3) described in [section 1385(a)(1) of this title](/usc/29/1385.md?p=a-1) shall be deemed to occur on the last day of the first year of the 3-year testing period described in [section 1385(b)(1)(B)(i) of this title](/usc/29/1385.md?p=b-1-B-i).

      - (ii)
        - (I) A plan may be amended to provide that for any plan year ending before 1986 the amount of each annual payment shall be (in lieu of the amount determined under [clause (i)](#c-1-C-i)) the average of the required employer contributions under the plan for the period of 3 consecutive plan years (during the period of 10 consecutive plan years ending with the plan year preceding the plan year in which the withdrawal occurs) for which such [required contributions](#c-1-C-ii-V) were the highest.
        - (II) [Subparagraph (B)](#c-1-B) shall not apply to any plan year to which this clause applies.
        - (III) This clause shall not apply in the case of any withdrawal described in [subparagraph (D)](#c-1-D).
        - (IV) If under a plan this clause applies to any plan year but does not apply to the next plan year, this clause shall not apply to any plan year after such next plan year.
        - (V) For purposes of this clause, the term “required contributions” means, for any period, the amounts which the employer was obligated to contribute for such period (not taking into account any delinquent contribution for any other period).
      - (iii) A plan may be amended to provide that for the first plan year ending on or after September 26, 1980, the number “5” shall be substituted for the number “10” each place it appears in [clause (i)](#c-1-C-i) or [clause (ii)](#c-1-C-ii) (whichever is appropriate). If the plan is so amended, the number “5” shall be increased by one for each succeeding plan year until the number “10” is reached.
    - (D) In any case in which a [multiemployer plan](/usc/29/1301.md?p=a-3) terminates by the withdrawal of every employer from the plan, or in which substantially all the employers withdraw from a plan pursuant to an agreement or arrangement to withdraw from the plan—
      - (i) the liability of each such employer who has withdrawn shall be determined (or redetermined) under this paragraph without regard to [subparagraph (B)](#c-1-B), and
      - (ii) notwithstanding any other provision of this part, the total [unfunded vested benefits](/usc/29/1393.md?p=c) of the plan shall be fully allocated among all such employers in a manner not inconsistent with regulations which shall be prescribed by the corporation.

      Withdrawal by an employer from a plan, during a period of 3 consecutive plan years within which substantially all the employers who have an [obligation to contribute](/usc/29/1392.md?p=a) under the plan withdraw, shall be presumed to be a withdrawal pursuant to an agreement or arrangement, unless the employer proves otherwise by a preponderance of the evidence.

    - (E) In the case of a [partial withdrawal](/usc/29/1381.md?p=b-3) described in [section 1385(a) of this title](/usc/29/1385.md?p=a), the amount of each annual payment shall be the product of—
      - (i) the amount determined under [subparagraph (C)](#c-1-C) (determined without regard to this subparagraph), multiplied by
      - (ii) the fraction determined under [section 1386(a)(2) of this title](/usc/29/1386.md?p=a-2).
  - (2) Withdrawal liability shall be payable in accordance with the schedule set forth by the [plan sponsor](/usc/29/1301.md?p=a-10) under [subsection (b)(1)](#b-1) beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule.
  - (3) Each annual payment determined under [paragraph (1)(C)](#c-1-C) shall be payable in 4 equal installments due quarterly, or at other intervals specified by plan rules. If a payment is not made when due, interest on the payment shall accrue from the due date until the date on which the payment is made.
  - (4) The employer shall be entitled to prepay the outstanding amount of the unpaid annual withdrawal liability payments determined under [paragraph (1)(C)](#c-1-C), plus accrued interest, if any, in whole or in part, without penalty. If the prepayment is made pursuant to a withdrawal which is later determined to be part of a withdrawal described in [paragraph (1)(D)](#c-1-D), the withdrawal liability of the employer shall not be limited to the amount of the prepayment.
  - (5) In the event of a default, a [plan sponsor](/usc/29/1301.md?p=a-10) may require immediate payment of the outstanding amount of an employer’s withdrawal liability, plus accrued interest on the total outstanding liability from the due date of the first payment which was not timely made. For purposes of this section, the term “default” means—
    - (A) the failure of an employer to make, when due, any payment under this section, if the failure is not cured within 60 days after the employer receives written notification from the [plan sponsor](/usc/29/1301.md?p=a-10) of such failure, and
    - (B) any other event defined in rules adopted by the plan which indicates a substantial likelihood that an employer will be unable to pay its withdrawal liability.
  - (6) Except as provided in [paragraph (1)(A)(ii)](#c-1-A-ii), interest under this subsection shall be charged at rates based on prevailing market rates for comparable obligations, in accordance with regulations prescribed by the corporation.
  - (7) A [multiemployer plan](/usc/29/1301.md?p=a-3) may adopt rules for other terms and conditions for the satisfaction of an employer’s withdrawal liability if such rules—
    - (A) are consistent with this chapter, and
    - (B) are not inconsistent with regulations of the corporation.
  - (8) In the case of a terminated [multiemployer plan](/usc/29/1301.md?p=a-3), an employer’s obligation to make payments under this section ceases at the end of the plan year in which the assets of the plan (exclusive of withdrawal liability claims) are sufficient to meet all obligations of the plan, as determined by the corporation.
- (d) **Applicability of statutory prohibitions—** The prohibitions provided in [section 1106(a) of this title](/usc/29/1106.md?p=a) do not apply to any action required or permitted under this part or to any arrangement relating to withdrawal liability involving the plan.