The Department of Labor released Nov. 30 a model notice which may
be used by employee benefit plans that elect to be treated as
multiemployer plans under the Employee Retirement Income Security
Act.
The Pension Protection Act of 2006, Section 1106, amended ERISA
(added subparagraph (G) to Section 3(37)) and the Internal Revenue
Code (added paragraph (6) to Section 414(f)) to permit certain plans
that elected to be single-employer plans to revoke that election.
To be treated as a multiemployer plan, the plan must notify
participants and other interested parties no later than 30 days before
the election, the notice said. The model notice must describe, among
other things, the principal differences between ERISA's guarantee
programs and benefit restrictions for single-employer and
multiemployer plans, it said.
ERISA Section 3(37)(G)(V)(II) requires the Secretary of Labor to
prescribe a model notice for this purpose within 180 days of the date
of enactment of the PPA, the notice said.
Plan administrators may use the model notice to fulfill their
notice obligations when making an election, the notice said. Elections
must be made with the Pension Benefit Guaranty Corporation within one
year after the enactment of the PPA. President Bush signed the Pension
Protection Act of 2006 (H.R. 4; Pub. L. No. 109-280) into law Aug. 17,
2006 (159 PBD, 8/18/06; 33 BPR 1985, 8/22/06).
However, plans cannot make this election and use the model notice
until PBGC establishes procedures for doing so, DOL said.
The model notice will be published in the Dec. 1Federal
Register, a department news release
said.
Eligible Plan.
According to the notice, an eligible plan is:
• a
plan that either is maintained pursuant to one or more collective
bargaining agreements and to which more than one employer is required
to contribute, or
• is
described as having been established in Chicago on Aug. 12, 1881, and
among other things, is sponsored by an organization described in tax
code Section 501(c)(5), list of exempt organizations, and exempt from
tax under Section 501(a), exemption from tax on corporations, certain
trusts, etc.
Any election under Section 3(37)(G) is effective starting with the
first plan year ending after Aug. 17, 2006, the notice
said.
Model Notice.
At least 30 days before the election is made, the plan must notify
each plan participant and beneficiary, each labor organization
representing such participants or beneficiaries, and each employer
that has an obligation to contribute to the plan, the notice said.
The notice must describe the differences between the guarantees and
benefit restrictions under both a single-employer plan and a
multiemployer plan, along with such other information the
administrator chooses to include, the notice said.
The model notice includes a table breaking out PBGC guaranteed
benefits for both single-employer plans and multiemployer plans, the
statutory guarantee limitations for each, and benefit increase by plan
amendment.
The department will consider that plan administrators who use the
model notice to notify participants, beneficiaries, labor
organizations, and employers of their plan's change of status no later
than 30 days before an election is made to have satisfied their
obligations under Section
3(37)(G)(v)(I).
PBGC Consultations.
The department has consulted with PBGC in connection with the
development of the model notice, the notice said. PBGC has advised
that it will establish procedures and provide guidance for making the
election provided for in Section 3(37)(G).
The department noted that no election under Section 3(37)(G) is
effective unless it is made pursuant to the PBGC's procedures,
including certification by the plan administrator that it has complied
with the notice requirements, the notice said.
In this regard, Section 3(37)(G)(v)(III) provides the secretary of
labor with authority to assess civil penalties for a failure to
provide such notice, the notice said.
By Michael W. Wyand
A copy of the model notice will be available
on the department's Web site at
http://www.dol.gov/ebsa.