Regulations: “Suspension of benefits” votes, plans with insufficient funds

“Suspension of benefits” votes, insufficient funds

The Treasury Department and IRS today released for publication in the Federal Register temporary regulations (T.D. 9735), and by cross-reference, proposed regulations (REG-123640-15) that set forth rules relating to multiemployer plans that are projected to have insufficient funds, at some point in the future, to pay the full plan benefits that plan participants would otherwise be entitled—referred to as plans in “critical and declining status.” The sponsor of a critical and declining status plan is permitted to reduce the pension benefits payable to plan participants and beneficiaries—known as a “suspension of benefits”—if certain conditions are satisfied. However, a suspension of benefits is not permitted to take effect before there is a vote by the plan participants with respect to the suspension. Today’s regulations provide rules relating to this vote.


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The temporary regulations [PDF 221 KB] specify that a participant vote requires the completion of three steps:

  • First, a package of ballot materials is distributed to eligible voters.
  • Second, the eligible voters cast their votes and the votes, and the votes are collected and tabulated.
  • Third, Treasury (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension. 

The temporary regulations provide guidance regarding the statement in opposition to the proposed suspension and allow for the publication of the model ballot.

The related proposed regulations [PDF 223 KB] provide that comments and requests for a public hearing must be received by a date that is 60 days after September 2, 2015 (the date when these regulations will appear in the Federal Register).

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