On June 17, 2015, the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) released several regulatory measures implementing the multiemployer pension plan amendments that were enacted in December, 2014.

The IRS issued temporary and proposed regulations and Revenue Procedure 2015-34 to allow severely underfunded multiemployer pension plans to apply for permission to reduce benefits under Section 305(e)(9) of ERISA (and Section 432(e)(9) of the Internal Revenue Code).  

A separate PBGC interim final rule describes the application process for multiemployer plan partitions under Section 4223 of ERISA, as amended by the Multiemployer Pension Reform Act of 2014 (MPRA).  In order to be eligible for a partition, the plan must have proposed benefit reductions (called suspensions) to the maximum extent permitted under MPRA, although the suspensions cannot take effect until the effective date of the partition (when the application for partition is filed in conjunction with the application for the benefit suspension).

The requirements for the applications are extensive, so the process is likely to be slow and daunting.  Even if the plan sponsor starts the process now, benefit suspensions (and partitions) will not occur for quite some time. The IRS will not approve any benefit suspensions until the proposed regulations are finalized. A hearing on the proposed regulations is scheduled for September 10, 2015 and it will likely take some time after that for the regulations to be finalized. Realistically, the regulations will probably not be finalized until early 2016. Furthermore, the PBGC has nine months from the date of filing to make a determination on an application for a partition. So, even if a plan were able to file its applications to both agencies within the next month, decisions on the applications will not be finalized until sometime in 2016.

On the same day, the IRS retained Kenneth Feinberg (who previously served as Special Master of the U.S. government's September 11th Victim Compensation Fund) as Special Master to review applications for benefit suspensions. According to Treasury Secretary Jacob Lew, "Ken has a proven track record of approaching these matters in an even-handed and thoughtful way, and he will oversee an open and balanced process for reviewing these applications."

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