Suspension of benefits, critical and declining status | KPMG | GLOBAL

Suspension of benefits, “critical and declining status” defined benefit plan

Suspension of benefits, critical and declining status

The Treasury Department and IRS this afternoon released for publication in the Federal Register final regulations (T.D. 9765) as guidance concerning the requirements under section 432(e)(9) about a suspension of benefits under a multiemployer defined benefit plan that is in “critical and declining status.”


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A plan is in critical and declining status when it is projected to have insufficient funds, in a specific timeframe, to pay the full plan benefits to which individuals would be entitled. Under legislation enacted in 2014, the sponsor of a plan in critical and declining status is permitted to reduce the pension benefits payable to plan participants and beneficiaries if certain conditions and limitations are satisfied.

The final regulations [PDF 476 KB] adopt provisions that were contained in sets of proposed regulations in 2015, and remove corresponding temporary regulations. The final regulations do not contain final action on regulations proposed in February 2016.

The purpose of this release is to provide text of the final regulations.


In a related development, the IRS today released an advance version of Rev. Proc. 2016-27 [PDF 166 KB] that provides the revised procedures for applications for a suspension of benefits under a multiemployer defined benefit pension plan that is in critical and declining status under section 432(e)(9).

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