For purposes of section 1082 of this title, the accumulated funding deficiency of a multiemployer plan for any plan year is the amount, determined as of the end of the plan year, equal to the excess (if any) of the total charges to the funding standard account of the plan for all plan years (beginning with the first plan year for which this part applies to the plan) over the total credits to such account for such years.
Each multiemployer plan to which this part applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided in this section.
For a plan year, the funding standard account shall be charged with the sum of-
For a plan year, the funding standard account shall be credited with the sum of-
In the case of any amount amortized under section 1082(b) of this title (as in effect on the day before August 17, 2006) over any period beginning with a plan year beginning before 2008, in lieu of the amortization described in paragraphs (2)(B) and (3)(B), such amount shall continue to be amortized under such section as so in effect.
Under regulations prescribed by the Secretary of the Treasury, amounts required to be amortized under paragraph (2) or paragraph (3), as the case may be-
The funding standard account (and items therein) shall be charged or credited (as determined under regulations prescribed by the Secretary of the Treasury) with interest at the appropriate rate consistent with the rate or rates of interest used under the plan to determine costs.
For purposes of this part-
Any amount received by a multiemployer plan in payment of all or part of an employer's withdrawal liability under part 1 of subtitle E of subchapter III shall be considered an amount contributed by the employer to or under the plan. The Secretary of the Treasury may prescribe by regulation additional charges and credits to a multiemployer plan's funding standard account to the extent necessary to prevent withdrawal liability payments from being unduly reflected as advance funding for plan liabilities.
If a multiemployer plan is not in reorganization in the plan year but was in reorganization in the immediately preceding plan year, any balance in the funding standard account at the close of such immediately preceding plan year-
The preceding sentence shall not apply to the extent of any accumulated funding deficiency under section 1423(a) 1 of this title as of the end of the last plan year that the plan was in reorganization.
Any amount paid by a plan during a plan year to the Pension Benefit Guaranty Corporation pursuant to section 1402 of this title or to a fund exempt under section 501(c)(22) of title 26 pursuant to section 1403 of this title shall reduce the amount of contributions considered received by the plan for the plan year.
Any amount paid by an employer pending a final determination of the employer's withdrawal liability under part 1 of subtitle E of subchapter III and subsequently refunded to the employer by the plan shall be charged to the funding standard account in accordance with regulations prescribed by the Secretary of the Treasury.
If an election is in effect under section 1082(b)(7)(F) of this title (as in effect on the day before August 17, 2006) for any plan year, the funding standard account shall be charged in the plan year to which the portion of the net experience loss deferred by such election was deferred with the amount so deferred (and paragraph (2)(B)(iii) shall not apply to the amount so charged).
Any amount of any financial assistance from the Pension Benefit Guaranty Corporation to any plan, and any repayment of such amount, shall be taken into account under this section and section 1082 of this title in such manner as is determined by the Secretary of the Treasury.
To the extent that any plan amendment increases the unfunded past service liability under the plan by reason of an increase in benefits which are not payable as a life annuity but are payable under the terms of the plan for a period that does not exceed 14 years from the effective date of the amendment, paragraph (2)(B)(ii) shall be applied separately with respect to such increase in unfunded past service liability by substituting the number of years of the period during which such benefits are payable for "15".
Notwithstanding any other provision of this subsection-
A multiemployer plan with respect to which the solvency test under subparagraph (C) is met may treat the portion of any experience loss or gain attributable to net investment losses incurred in either or both of the first two plan years ending after August 31, 2008, as an item separate from other experience losses, to be amortized in equal annual installments (until fully amortized) over the period-
If this subparagraph applies for any plan year-
For purposes of this subparagraph-
Net investment losses shall be determined in the manner prescribed by the Secretary of the Treasury on the basis of the difference between actual and expected returns (including any difference attributable to any criminally fraudulent investment arrangement).
The determination as to whether an arrangement is a criminally fraudulent investment arrangement shall be made under rules substantially similar to the rules prescribed by the Secretary of the Treasury for purposes of section 165 of title 26.
A multiemployer plan with respect to which the solvency test under subparagraph (C) is met may change its asset valuation method in a manner which-
If this subparagraph applies for any plan year-
If this subparagraph and subparagraph (A) both apply for any plan year, the plan shall treat any reduction in unfunded accrued liability resulting from the application of this subparagraph as a separate experience amortization base, to be amortized in equal annual installments (until fully amortized) over a period of 30 plan years rather than the period such liability would otherwise be amortized over.
The solvency test under this paragraph is met only if the plan actuary certifies that the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period, taking into account the changes in the funding standard account under this paragraph.
If subparagraph (A) or (B) apply to a multiemployer plan for any plan year, then, in addition to any other applicable restrictions on benefit increases, a plan amendment increasing benefits may not go into effect during either of the 2 plan years immediately following such plan year unless-
A plan sponsor of a plan to which this paragraph applies shall-
A multiemployer plan with respect to which the solvency test under subparagraph (C) is met as of February 29, 2020, may elect to apply this paragraph (without regard to whether such plan previously elected the application of this paragraph)-
The preceding sentence shall not apply to a plan to which special financial assistance is granted under section 1432 of this title. For purposes of the application of this subparagraph, the Secretary of the Treasury shall rely on the plan sponsor's calculations of plan losses unless such calculations are clearly erroneous.
For purposes of this part, normal costs, accrued liability, past service liabilities, and experience gains and losses shall be determined under the funding method used to determine costs under the plan.
For purposes of this part, the value of the plan's assets shall be determined on the basis of any reasonable actuarial method of valuation which takes into account fair market value and which is permitted under regulations prescribed by the Secretary of the Treasury.
The value of a bond or other evidence of indebtedness which is not in default as to principal or interest may, at the election of the plan administrator, be determined on an amortized basis running from initial cost at purchase to par value at maturity or earliest call date. Any election under this subparagraph shall be made at such time and in such manner as the Secretary of the Treasury shall by regulations provide, shall apply to all such evidences of indebtedness, and may be revoked only with the consent of such Secretary.
For purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods-
For purposes of this section, if-
results in an increase or decrease in accrued liability under a plan, such increase or decrease shall be treated as an experience loss or gain.
If, as of the close of a plan year, a plan would (without regard to this paragraph) have an accumulated funding deficiency in excess of the full funding limitation-
For purposes of paragraph (5), the term "full-funding limitation" means the excess (if any) of-
In no event shall the full-funding limitation determined under subparagraph (A) be less than the excess (if any) of-
For purposes of clause (i), assets shall not be reduced by any credit balance in the funding standard account.
For purposes of this paragraph, unless otherwise provided by the plan, the accrued liability under a multiemployer plan shall not include benefits which are not nonforfeitable under the plan after the termination of the plan (taking into consideration section 411(d)(3) of title 26).
For purposes of this paragraph-
The term "current liability" means all liabilities to employees and their beneficiaries under the plan.
For purposes of clause (i), any benefit contingent on an event other than-
shall not be taken into account until the event on which the benefit is contingent occurs.
The rate of interest used to determine current liability under this paragraph shall be the rate of interest determined under subparagraph (E).
In the case of plan years beginning before the first plan year to which the first tables prescribed under subclause (II) apply, the mortality table used in determining current liability under this paragraph shall be the table prescribed by the Secretary of the Treasury which is based on the prevailing commissioners' standard table (described in section 807(d)(5)(A) of title 26) 1 used to determine reserves for group annuity contracts issued on January 1, 1993.
The Secretary of the Treasury may by regulation prescribe for plan years beginning after December 31, 1999, mortality tables to be used in determining current liability under this subsection. Such tables shall be based upon the actual experience of pension plans and projected trends in such experience. In prescribing such tables, such Secretary shall take into account results of available independent studies of mortality of individuals covered by pension plans.
Notwithstanding clause (iv)-
The Secretary of the Treasury shall establish mortality tables which may be used (in lieu of the tables under clause (iv)) to determine current liability under this subsection for individuals who are entitled to benefits under the plan on account of disability. Such Secretary shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1995, and for individuals whose disabilities occur in plan years beginning on or after such date.
In the case of disabilities occurring in plan years beginning after December 31, 1994, the tables under subclause (I) shall apply only with respect to individuals described in such subclause who are disabled within the meaning of title II of the Social Security Act [42 U.S.C. 401 et seq.] and the regulations thereunder.
The Secretary of the Treasury shall periodically (at least every 5 years) review any tables in effect under this subparagraph and shall, to the extent such Secretary determines necessary, by regulation update the tables to reflect the actual experience of pension plans and projected trends in such experience.
For purposes of determining a plan's current liability for purposes of this paragraph-
If any rate of interest used under the plan under subsection (b)(6) to determine cost is not within the permissible range, the plan shall establish a new rate of interest within the permissible range.
For purposes of this subparagraph-
Except as provided in subclause (II), the term "permissible range" means a rate of interest which is not more than 5 percent above, and not more than 10 percent below, the weighted average of the rates of interest on 30-year Treasury securities during the 4-year period ending on the last day before the beginning of the plan year.
If the Secretary of the Treasury finds that the lowest rate of interest permissible under subclause (I) is unreasonably high, such Secretary may prescribe a lower rate of interest, except that such rate may not be less than 80 percent of the average rate determined under such subclause.
Notwithstanding paragraph (3)(A), the interest rate used under the plan shall be-
For purposes of this section, a determination of experience gains and losses and a valuation of the plan's liability shall be made not less frequently than once every year, except that such determination shall be made more frequently to the extent required in particular cases under regulations prescribed by the Secretary of the Treasury.
Except as provided in clause (ii), the valuation referred to in subparagraph (A) shall be made as of a date within the plan year to which the valuation refers or within one month prior to the beginning of such year.
The valuation referred to in subparagraph (A) may be made as of a date within the plan year prior to the year to which the valuation refers if, as of such date, the value of the assets of the plan are not less than 100 percent of the plan's current liability (as defined in paragraph (6)(D) without regard to clause (iv) thereof).
Information under clause (ii) shall, in accordance with regulations, be actuarially adjusted to reflect significant differences in participants.
A change in funding method to use a prior year valuation, as provided in clause (ii), may not be made unless as of the valuation date within the prior plan year, the value of the assets of the plan are not less than 125 percent of the plan's current liability (as defined in paragraph (6)(D) without regard to clause (iv) thereof).
For purposes of this section, any contributions for a plan year made by an employer after the last day of such plan year, but not later than two and one-half months after such day, shall be deemed to have been made on such last day. For purposes of this subparagraph, such two and one-half month period may be extended for not more than six months under regulations prescribed by the Secretary of the Treasury.
If the plan sponsor of a multiemployer plan-
the Secretary of the Treasury shall extend the amortization period for the period of time (not in excess of 5 years) specified in the application. Such extension shall be in addition to any extension under paragraph (2).
A certification with respect to a multiemployer plan is described in this subparagraph if the plan's actuary certifies that, based on reasonable assumptions-
If the plan sponsor of a multiemployer plan submits to the Secretary of the Treasury an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), the Secretary of the Treasury may extend the amortization period for a period of time (not in excess of 10 years reduced by the number of years of any extension under paragraph (1) with respect to such unfunded liability) if the Secretary of the Treasury makes the determination described in subparagraph (B). Such extension shall be in addition to any extension under paragraph (1).
The Secretary of the Treasury may grant an extension under subparagraph (A) if such Secretary determines that-
The Secretary of the Treasury shall act upon any application for an extension under this paragraph within 180 days of the submission of such application. If such Secretary rejects the application for an extension under this paragraph, such Secretary shall provide notice to the plan detailing the specific reasons for the rejection, including references to the criteria set forth above.
The Secretary of the Treasury shall, before granting an extension under this subsection, require each applicant to provide evidence satisfactory to such Secretary that the applicant has provided notice of the filing of the application for such extension to each affected party (as defined in section 1301(a)(21) of this title) with respect to the affected plan. Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under subchapter III and for benefit liabilities.
The Secretary of the Treasury shall consider any relevant information provided by a person to whom notice was given under paragraph (1).
1 See References in Text note below.
29 U.S.C. § 1084
EDITORIAL NOTES
REFERENCES IN TEXTSection 1423(a) of this title, referred to in subsec. (b)(7)(B), was repealed by Pub. L. 113-235, div. O, title I, §108(a)(1), Dec. 16, 2014, 128 Stat. 2786.The Social Security Act, referred to in subsec. (c)(4)(A), (6)(D)(v)(II), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, which is classified generally to chapter 7 (§301 et seq.) of Title 42, The Public Health and Welfare. Title II of the Act is classified generally to subchapter II (§401 et seq.) of chapter 7 of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. Section 807(d)(5) of title 26, referred to in subsec. (c)(6)(D)(iv)(I), was repealed by Pub. L. 115-97, title I, §13517(a)(2)(A), Dec. 22, 2017, 131 Stat. 2144.This chapter, referred to in subsec. (d)(2)(B)(i), was in the original "this Act", meaning Pub. L. 93-406 known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables.
PRIOR PROVISIONSA prior section 1084, Pub. L. 93-406, title I, §304, Sept. 2, 1974, 88 Stat. 873; Pub. L. 99-272, title XI, §§11015(b)(1)(B), 11016(c)(3), Apr. 7, 1986, 100 Stat. 267, 273; Pub. L. 100-203, title IX, §9306(c)(2)(B), Dec. 22, 1987, 101 Stat. 1330-355; Pub. L. 101-239, title VII, §§7891(a)(1), Dec. 19, 1989, 7894, Dec. 19, 1989, 103 Stat. 2445, 2449, related to extension of amortization periods, prior to repeal by Pub. L. 109-280, title I, §101(a), (d), Aug. 17, 2006, 120 Stat. 784, 789, applicable to plan years beginning after 2007.
AMENDMENTS2021-Subsec. (b)(8)(F). Pub. L. 117-2 added subpar. (F).2014-Subsec. (a). Pub. L. 113-235, §108(a)(3)(B), amended subsec. (a) generally. Prior to amendment, subsec. (a) related to accumulated funding deficiencies of multiemployer plans.Subsec. (d)(1)(C). Pub. L. 113-295 which directed substitution of "December 31, 2015" for "December 31, 2014", was not executed in view of the amendment by Pub. L. 113-235, §101(b)(1), which struck out subpar. (C). See note below. Pub. L. 113-235, §101(b)(1), struck out subpar. (C). Text read as follows: "The preceding provisions of this paragraph shall not apply with respect to any application submitted after December 31, 2014."2010-Subsec. (b)(8). Pub. L. 111-192 added par. (8).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117-2 effective as of the first day of the first plan year ending on or after February 29, 2020, with exceptions and restrictions, see section 9703(b) of Pub. L. 117-2 set out as an Effective Date note under section 431 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113-295 applicable to applications submitted under subsec. (d)(1)(C) of this section after Dec. 31, 2014, see section 171(c) of Pub. L. 113-295 set out as a note under section 431 of Title 26, Internal Revenue Code.Amendment by section 108(a)(3)(B) of Pub. L. 113-235 applicable with respect to plan years beginning after Dec. 31, 2014, see section 108(c) of Pub. L. 113-235 set out as an Effective Date of Repeal note under section 418 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111-192 effective as of the first day of the first plan year ending after Aug. 31, 2008, with certain exceptions, see section 211(b) of Pub. L. 111-192 set out as a note under section 431 of Title 26, Internal Revenue Code.
EFFECTIVE DATESection applicable to plan years beginning after 2007, with special rule for certain amortization extensions, see section 201(d) of Pub. L. 109-280 set out as an Effective Date of 2006 Amendment note under section 1081 of this title.
SHORTFALL FUNDING METHOD Pub. L. 109-280, title II, §201(b), Aug. 17, 2006, 120 Stat. 867, as amended by Pub. L. 110-458, title I, §102(a), Dec. 23, 2008, 122 Stat. 5100, provided that:"(1) IN GENERAL.-A multiemployer plan meeting the criteria of paragraph (2) may adopt, use, or cease using, the shortfall funding method and such adoption, use, or cessation of use of such method, shall be deemed approved by the Secretary of the Treasury under section 302(d)(1) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1082(d)(1)] and section 412(d)(1) of the Internal Revenue Code of 1986 [26 U.S.C. 412(d)(1)] ."(2) CRITERIA.-A multiemployer pension plan meets the criteria of this clause if-"(A) the plan has not adopted, or ceased using, the shortfall funding method during the 5-year period ending on the day before the date the plan is to use the method under paragraph (1); and"(B) the plan is not operating under an amortization period extension under section 304(d) of such Act [29 U.S.C. 1084(d)] and did not operate under such an extension during such 5-year period. "(3) SHORTFALL FUNDING METHOD DEFINED.-For purposes of this subsection, the term 'shortfall funding method' means the shortfall funding method described in Treasury Regulations section 1.412(c)(1)-2 (26 CFR 1.412(c)(1)-2) ."(4) BENEFIT RESTRICTIONS TO APPLY.-The benefit restrictions under section 302(c)(7) of such Act [29 U.S.C. 1082(c)(7)] and section 412(c)(7) of such Code [26 U.S.C. 412(c)(7)] shall apply during any period a multiemployer plan is on the shortfall funding method pursuant to this subsection."(5) USE OF SHORTFALL METHOD NOT TO PRECLUDE OTHER OPTIONS.-Nothing in this subsection shall be construed to affect a multiemployer plan's ability to adopt the shortfall funding method with the Secretary's permission under otherwise applicable regulations or to affect a multiemployer plan's right to change funding methods, with or without the Secretary's consent, as provided in applicable rules and regulations." [Pub. L. 109-280, §201(b), set out above, applicable to plan years beginning after 2007, with special rule for certain amortization extensions, see section 201(d) of Pub. L. 109-280 set out as an Effective Date of 2006 Amendment note under section 1081 of this title.]
SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION For applicability of this section to a multiemployer plan that is a party to an agreement that was approved by the Pension Benefit Guaranty Corporation prior to June 30, 2005, and that increases benefits and provides for certain withdrawal liability rules, see section 206 of Pub. L. 109-280 set out as a note under section 412 of Title 26, Internal Revenue Code.