Treasury and the IRS have issued temporary (T.D. 9735) and proposed (REG-123640-15) regulations that provide guidance on the administration of votes that may be undertaken to reduce pension benefits payable to plan participants and beneficiaries.
This mechanism was instituted under the Multiemployer Pension Reform Act of 2014 (MPRA) and pertains to multiemployer plans projected to have insufficient funds at some point in the future to pay the full plan benefits to which individuals will be entitled (referred to as plans in "critical and declining status"). The sponsors of those plans are permitted to reduce the pension benefits payable to plan participants and beneficiaries if certain conditions are satisfied.
The participant vote requires three steps to be completed: (1) A package of ballot materials is distributed to eligible voters; (2) the eligible voters cast their votes, and the votes are collected and tabulated; and (3) the Department of Treasury determines whether a majority of the eligible voters have voted to approve or reject the proposal. Eligible voters include all plan participants and all beneficiaries of deceased participants.
The temporary regulations state that Treasury may designate a service provider to facilitate the administration of the vote, that the ballot packages must include a unique identifier for each eligible voter and that the plan sponsor is required to pay all costs of the ballot package, including postage.
In addition, the temporary regulations provide that the voting period will generally remain open until the 30th day following the date Treasury approves the application for a suspension of benefits, and that the votes must be collected and tabulated using an automated voting system, which will record votes through both a website and a telephone system. Paper ballots will not be permitted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
