Partitions of Eligible Multiemployer Plans, 35220-35236 [2015-14930]

Agencies

• Pension Benefit Guaranty Corporation

[Federal Register Volume 80, Number 118 (Friday, June 19, 2015)]
[Rules and Regulations]
[Pages 35220-35236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14930]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4233

RIN 1212-AB29


Partitions of Eligible Multiemployer Plans

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Interim final rule.

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SUMMARY: This document contains an interim final rule prescribing the 
application process and notice requirements for partitions of eligible 
multiemployer plans under title IV of the Employee Retirement Income 
Security Act of 1974 (ERISA), as amended by the Multiemployer Pension 
Reform Act of 2014 (MPRA). The interim final rule is published pursuant 
to section 122 of MPRA in order to carry out the provisions of section 
4233 of ERISA. PBGC is soliciting public comments on the interim final 
regulation.

DATES: Effective June 19, 2015. Comments must be submitted on or before 
August 18, 2015.

ADDRESSES: Comments, identified by Regulation Identifier Number (RIN) 
1212-AB29, may be submitted by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the Web site instructions for submitting comments.
     Email: reg.comments@pbgc.gov.
     Fax: 202-326-4112.
     Mail or Hand Delivery: Regulatory Affairs Group, Office of 
the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026. All submissions must include the 
Regulation Identifier Number for this rulemaking (RIN 1212-AB29). 
Comments received, including personal information provided, will be 
posted to www.pbgc.gov. Copies of comments may also be obtained by 
writing to Disclosure Division, Office of the General Counsel, Pension 
Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-
4026, or calling 202-326-4040 during normal business hours. (TTY and 
TDD users may call the Federal relay service toll-free at 1-800-877-
8339 and ask to be connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Joseph J. Shelton 
(shelton.joseph@pbgc.gov), Assistant General Counsel, Office of the 
General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street 
NW., Washington, DC 20005-4026; 202-326-4400, ext. 6559; Kimberly J. 
Duplechain (duplechain.kimberly@pbgc.gov), Deputy Assistant General 
Counsel, Office of the General Counsel, 202-326-4400, ext. 3028.

SUPPLEMENTARY INFORMATION: 

Executive Summary

Purpose of the Regulatory Action

    This interim final rule implements provisions of the Multiemployer 
Pension Reform Act of 2014 (MPRA) \1\ that prescribe the statutory 
conditions and notice requirements that must be met before PBGC may 
partition an

[[Page 35221]]

eligible multiemployer plan under section 4233 of ERISA.
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    \1\ Division O of the Consolidated and Further Continuing 
Appropriations Act, 2015, Public Law 113-235 (128 Stat. 2130 
(2014)).
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    PBGC's legal authority for this action comes from section 
4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to 
carry out the purposes of title IV of ERISA, and section 4233 of ERISA, 
as amended by MPRA, which requires that the partition process be 
conducted in accordance with regulations prescribed by PBGC.

Major Provisions of the Regulatory Action

    This rule adds a new part 4233 to PBGC's regulations. Part 4233 
prescribes the application process to ensure the timely processing of 
applications for partition and related notice requirements.

Background

PBGC and the Multiemployer Insurance Program

    This interim final rule provides necessary guidance to plan 
sponsors on the application and notice requirements under section 4233 
of ERISA for partitions of eligible multiemployer plans. To understand 
the effect of a partition of a multiemployer plan under MPRA, however, 
it is first helpful to understand the structure and operation of PBGC's 
multiemployer insurance program.
    PBGC is a Federal corporation created under title IV of ERISA to 
guarantee the payment of pension benefits earned by more than 41 
million American workers and retirees in nearly 24,000 private-sector 
defined benefit pension plans. The purpose of PBGC and the title IV 
insurance program is (1) to encourage the continuation and maintenance 
of voluntary private pension plans for the benefit of their 
participants; (2) to provide for the timely and uninterrupted payment 
of pension benefits under insured plans; and (3) to maintain premiums 
at the lowest level consistent with PBGC's obligations.
    PBGC administers two insurance programs--one for single-employer 
defined benefit pension plans and a second for multiemployer defined 
benefit pension plans. This interim final rule applies only to the 
multiemployer program. The multiemployer program protects the benefits 
of approximately 10 million workers and retirees in approximately 1,400 
plans. A multiemployer plan is a collectively bargained pension 
arrangement involving two or more unrelated employers, usually in a 
common industry, such as construction or trucking. Multiemployer plans 
pay an annual premium to PBGC. Under MPRA, the annual premium for 2015 
increased from $13 to $26 per participant. For plan years beginning 
after 2015, the annual premium will increase based on increases in the 
national average wage index.
    In general, a multiemployer plan may be terminated in one of two 
ways: (1) By plan amendment that ``freezes'' the accrual and vesting of 
benefits after a specified date, or that converts the plan into a 
defined contribution plan; or (2) every employer withdraws from the 
plan or ceases to have an obligation to contribute to the plan. In 
contrast to the single-employer program, however, plan termination is 
not an insurable event. In other words, plan termination does not 
trigger the payment of PBGC-insured, guaranteed benefits to 
participants and beneficiaries. The insurable event under the 
multiemployer program is plan insolvency, which generally occurs when a 
plan is unable to pay benefits at the level promised for the plan year.
    The PBGC guarantee for multiemployer plans is lower than the 
guarantee for single-employer plans, and is based on a participant's 
credited service and accrual rate, as defined in section 4022A. The 
maximum monthly benefit payable by PBGC under the multiemployer program 
is equal to a participant's years of service multiplied by the sum of--
     100 percent of the first $11 of the accrual rate, and
     75 percent of the next $33 of the accrual rate.

    Under this formula, benefits in excess of $3,960 per year are only 
partially guaranteed, and the maximum guarantee amount payable per year 
is capped at $12,870 (applicable to a participant with 30 years of 
service and with an annual benefit in excess of $15,840).\2\
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    \2\ The guarantee amount will exceed this amount if the 
participant has more than 30 years of service.
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    Another important difference between the single-employer program 
and the multiemployer program is the manner in which PBGC pays 
guaranteed benefits. Under the multiemployer program, PBGC does not pay 
guaranteed benefit amounts directly to participants and beneficiaries. 
Rather, when a multiemployer plan becomes insolvent, PBGC provides 
financial assistance in the form of loans to the insolvent plan 
sufficient to pay guaranteed benefit amounts to participants and 
beneficiaries. Despite this difference, the receipt of guaranteed 
benefit amounts from an insolvent multiemployer plan receiving 
financial assistance from PBGC is considered the receipt of benefits 
guaranteed by PBGC under title IV of ERISA.

MPRA Changes to Partition Rules

    Although many multiemployer plans are healthy, a significant 
minority of financially troubled plans are projected to become 
insolvent over the next two decades.\3\ PBGC's multiemployer insurance 
program is also projected to become insolvent within that timeframe. 
During 2013 and 2014, congressional committees held several hearings on 
the problems facing these plans and PBGC. Those challenges include, 
among other things, investment market declines, employer withdrawals, 
and demographic changes.
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    \3\ See FY 2013 PBGC Projections Report at https://www.pbgc.gov/documents/Projections-report-2013.pdf.
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    In December 2014, Congress enacted, and the President signed, the 
Consolidated and Further Continuing Appropriations Act, 2015, Public 
Law 113-235 (128 Stat. 2130 (2014)), of which MPRA is a part. MPRA 
contains a number of statutory reforms intended to help financially 
troubled multiemployer plans, and to improve the financial condition of 
PBGC's multiemployer insurance program. In addition to increased 
premiums, sections 121 and 122 of MPRA provide PBGC with new statutory 
authority to assist financially troubled multiemployer plans under 
certain conditions, if doing so would reduce potential future costs to 
PBGC and if PBGC can certify that its ability to meet existing 
financial assistance to other plans will not be impaired.
    In addition, section 201 of MPRA amended the funding rules under 
section 305 of ERISA to add a new ``critical and declining'' status for 
financially troubled multiemployer plans. Under section 305(b)(6) of 
ERISA, a plan is in critical and declining status if it satisfies the 
criteria for critical status under section 305(b)(2), and is projected 
to become insolvent within the meaning of section 4245 of ERISA during 
the current plan year or any of the 14 succeeding plan years (19 
succeeding plan years if the plan has a ratio of inactive participants 
to active participants that exceeds two to one, or if the funded 
percentage of the plan is less than 80 percent). Section 305(e)(9) of 
ERISA, as added by MPRA, prescribes new benefit suspension rules for 
multiemployer defined benefit plans in critical and declining status. 
The Department of the Treasury (Treasury) has interpretative 
jurisdiction over the subject matter in section 305 of ERISA

[[Page 35222]]

and is contemporaneously issuing regulatory guidance in this area.\4\
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    \4\ See Rev. Proc. 2015-34, and the temporary and proposed 
regulations under section 305(e)(9) of ERISA (section 432(e)(9) of 
the Internal Revenue Code). 
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    As noted above, the purpose of this rule is to implement 
application and notice requirements under section 122 of MPRA, which 
prescribes the statutory conditions and notice requirements that must 
be met before PBGC may partition an eligible multiemployer plan. PBGC 
expects to publish a proposed rule on facilitated mergers involving 
critical and declining status plans under section 121 of MPRA in a 
separate rulemaking.

Multiemployer Plan Partitions--Prior Law

    Before MPRA, PBGC could partition a multiemployer plan likely to 
become insolvent upon application by a plan sponsor or on its own 
accord. In either case, partition was only available in certain limited 
circumstances involving employer bankruptcies, and the liabilities 
transferred were restricted to the nonforfeitable benefits directly 
attributable to service with bankrupt employers, along with an 
equitable share of assets. The new plan created by the partition order 
was a successor plan under section 4022A of ERISA, and a terminated 
multiemployer plan to which section 4041A(d) applies.\5\ In addition, 
if the new plan did not have sufficient assets to pay the transferred 
benefits as of the date of the partition order, which generally was the 
case, it would be insolvent within the meaning of section 4245(b)(1) of 
ERISA. In such a case, PBGC provided financial assistance to the new 
plan so that it could make benefit payments to participants whose 
benefits had been transferred to the new plan, but reduced to the PBGC 
guarantee level. In contrast, participants in the ongoing plan 
continued to receive unreduced plan benefits. Due in part to the 
eligibility limitations for partition, PBGC had partitioned only a few 
plans prior to the enactment of MPRA.
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    \5\ Section 4041A(d) of ERISA provides that the plan sponsor of 
a plan which terminates under section 4041A(a)(2) (termination by 
mass withdrawal) shall reduce benefits and suspend benefit payments 
in accordance with section 4281 of ERISA.
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Multiemployer Plan Partitions--MPRA

    Section 122 of MPRA replaced the rules for partition with a new 
framework of rules. One of the most obvious changes is that PBGC may 
approve a partition without requiring an employer bankruptcy and, 
therefore, the benefits subject to transfer in a partition are no 
longer limited to those attributable to service with a bankrupt 
employer. The statute imposes a number of new eligibility requirements, 
however, such as a requirement that the plan be in critical and 
declining status as defined in section 305 of ERISA, and new statutory 
conditions and obligations that apply both before and after a 
partition, including a new, ongoing benefit payment obligation that 
applies to the eligible multiemployer plan that requested the 
partition.
    Another important change under MPRA is the relationship between the 
partition rules under section 4233 and the suspension of benefits rules 
under section 305(e)(9) of ERISA.\6\ Section 305(e)(9) permits critical 
and declining status plans to apply to Treasury for approval to suspend 
certain benefits following the provision of specified notice, 
consideration of comments, Treasury review and approval, and 
satisfaction of other specified conditions (including a participant 
vote). One example of the interplay between an application for 
partition and an application for suspension of benefits is that before 
Treasury can approve an application for suspension, the plan actuary 
must certify that, taking into account a proposed suspension of 
benefits and, if applicable, a proposed partition under section 4233, 
the plan is projected to avoid insolvency within the meaning of section 
4245, assuming the suspension of benefits continues until the 
suspension expires by its own terms or, if no such expiration date is 
set, indefinitely.
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    \6\ Section 305(e)(9)(B) defines the term ``suspension of 
benefits'' as the temporary or permanent reduction of any current or 
future payment obligation of the plan to any participant or 
beneficiary under the plan, whether or not in pay status at the time 
of the suspension of benefits.
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    Another example of the interplay between an application for 
partition and an application for suspension of benefits is that before 
PBGC may order a partition, it must first determine, in consultation 
with the Participant and Plan Sponsor Advocate,\7\ that the plan 
sponsor has taken (or is taking concurrently with an application for 
partition) all reasonable measures to avoid insolvency, including 
maximum benefit suspensions under section 305(e)(9), if applicable. In 
addition, section 305(e)(9)(D)(iv) provides that any suspension of 
benefits, in the aggregate (and, if applicable, in combination with a 
partition), must be reasonably estimated to achieve, but not materially 
exceed, the level that is necessary to avoid insolvency. Finally, 
section 305(e)(9)(D)(v) requires that in any case in which an 
application for suspension of benefits to Treasury is made in 
combination with an application for partition to PBGC, the suspension 
of benefits may not take effect prior to the effective date of the 
partition.
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    \7\ The Participant and Plan Sponsor Advocate position was 
created in 2012 by the Moving Ahead for Progress in the 21st Century 
Act (MAP-21). See section 4004 of ERISA for the rules governing this 
position.
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    Given the interplay between MPRA's partition and suspension of 
benefits provisions, PBGC staff has consulted with staff of Treasury 
and the Department of Labor in developing this interim final rule. PBGC 
will continue to work closely with these agencies as part of the 
interagency consultative process required under section 305(e)(9) of 
ERISA.
    The following is a summary of the new statutory framework for 
partitions under MPRA.

Partition Application and Notice Requirements

    Section 4233(a)(1) of ERISA states that, upon application by the 
plan sponsor of an eligible multiemployer plan, PBGC may order a 
partition of the plan in accordance with that section. As under prior 
law, PBGC's decision to order a partition is discretionary. Unlike 
prior law, however, the statute requires PBGC to make a determination 
not later than 270 days after the date such application was filed (or, 
if later, the date such application was completed), in accordance with 
regulations promulgated by PBGC.
    In addition, section 4233(a)(2) states that not later than 30 days 
after submitting an application for partition, the plan sponsor shall 
notify the participants and beneficiaries of such application, in the 
form and manner prescribed by regulations issued by PBGC.

Eligibility Criteria for Partition

    Section 4233(b) of ERISA contains five statutory conditions that 
must be satisfied before PBGC may order a partition. They are discussed 
below:
    Critical and declining status. In accordance with section 
4233(b)(1), the plan must be in critical and declining status as 
defined in section 305(b)(6) of ERISA. As noted above, a plan is in 
critical and declining status if the plan satisfies the criteria for 
critical status under section 305(b)(2), and is projected to become 
insolvent within the meaning of section 4245 during the current plan 
year or any of the 14 succeeding plan years (or 19 succeeding plan 
years if the plan has a ratio of inactive participants to active 
participants that exceeds two to one or if the funded percentage of the 
plan is less than 80 percent). Section

[[Page 35223]]

305(b)(3)(A)(i) requires an annual certification from the plan actuary 
on whether a plan is or will be in critical and declining status for 
such plan year. Treasury has interpretative jurisdiction over the 
subject matter in section 305 of ERISA.
    PBGC determination on reasonable measures. Under section 4233(b)(2) 
of ERISA, PBGC must determine, after consultation with the Participant 
and Plan Sponsor Advocate, that the plan sponsor has taken (or is 
taking concurrently with an application for partition) all reasonable 
measures to avoid insolvency, including maximum benefit suspensions 
under section 305(e)(9) of ERISA, if applicable.
    The term ``maximum benefit suspensions'' is not defined in section 
305(e)(9) of ERISA.\8\ However, based on the structure and operation of 
section 305(e)(9)--specifically, the statutorily defined limitations 
and protections contained in section 305(e)(9)(D), which limits the 
maximum amount of a suspension so that the post-suspension benefit is 
no less than 110 percent of the PBGC guarantee under section 4022A, 
exempts certain categories of individuals based on their age, and 
exempts benefits based on disability--PBGC interprets the term 
``maximum benefit suspensions'' in section 4233(b)(2) of ERISA to mean 
the maximum benefit suspensions permissible under section 305(e)(9). 
For example, the maximum benefit suspension permissible for an 
individual with a plan benefit based on disability would be zero, 
because benefits based on disability may not be suspended under section 
305(e)(9)(D)(iii).
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    \8\ The term ``maximum benefit suspensions'' in section 
4233(b)(2) of ERISA should not to be confused with the term 
``maximum suspendable benefits'' under section 305(e)(9)(D)(ii)(ll).
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    The requirement under section 4233(b)(2) that a plan sponsor has 
taken (or is currently taking) all reasonable measures to avoid 
insolvency is similar to the demonstration that a plan sponsor must 
make under section 305(e)(9)(C)(ii) relating to an application for 
suspension of benefits. Under that provision, the plan sponsor must 
maintain a written record demonstrating that the plan is projected to 
become insolvent unless benefits are suspended, although all reasonable 
measures have been taken (and continue to be taken during the period of 
the benefit suspension).
    Although it is possible for a plan to file only an application for 
partition (and not an application for suspension of benefits under 
section 305(e)(9) of ERISA), the only instance in which that may occur 
would be if all participants and beneficiaries are older than 80, and/
or receive benefits based on disability, or have accrued benefits not 
greater than 110 percent of the monthly benefit guaranteed by PBGC 
under section 4022A. Therefore, PBGC expects that most applicants for 
partition will also apply to Treasury for a suspension of benefits.
    While the statute does not require a plan sponsor to file 
concurrent applications for partition and suspension of benefits, PBGC 
strongly encourages plan sponsors to do so because of the interplay 
between these provisions. For example, under section 305(e)(9) of 
ERISA, it is necessary for Treasury to review whether a proposed 
suspension of benefits and partition combined will allow the plan to 
avoid insolvency, and both PBGC and Treasury must make overlapping 
findings for each application. Furthermore, participant communications 
may be simplified if participants and beneficiaries receive a notice of 
partition concurrently with that of suspension. Finally, applications 
for partition and suspension that are not closely coordinated may also 
make it difficult for the agencies to comply with the statutory 
timeframes.
    Long-term loss and plan solvency. In accordance with section 
4233(b)(3) of ERISA, PBGC must reasonably expect that--
     Partition will reduce PBGC's expected long-term loss with 
respect to the plan; and
     Partition is necessary for the plan to remain solvent.
    Certification to Congress. In accordance with section 4233(b)(4) of 
ERISA, PBGC must certify to Congress that its ability to meet existing 
financial assistance obligations to other plans (including any 
liabilities associated with multiemployer plans that are insolvent or 
that are projected to become insolvent within 10 years) will not be 
impaired by the partition.
    Source of funding. In accordance with section 4233(b)(5) of ERISA, 
the cost to PBGC arising from the partition must be paid exclusively 
from the PBGC fund for basic benefits guaranteed for multiemployer 
plans.

PBGC Partition Order

    Upon PBGC's approval of an application for partition, section 
4233(c) of ERISA provides that PBGC's partition order shall provide for 
a transfer to the plan created by the partition order (the successor 
plan) the minimum amount of the original plan's liabilities necessary 
for the original plan to remain solvent.
    Sections 4233(d)(1) and (2) of ERISA describe the nature of the 
successor plan, and assign responsibility for its management. 
Specifically, section 4233(d)(1) provides that the plan created by the 
partition order is a successor plan to which section 4022A applies. 
Section 4233(d)(2) provides that the plan sponsor of the original plan 
and the administrator of such plan shall be the plan sponsor and 
administrator, respectively, of the successor plan.

Partition Withdrawal Liability Rule

    As noted above, unlike the partition rule under prior law, MPRA 
imposes a number of ongoing statutory obligations on the solvent, 
original plan and its contributing employers. For example, section 
4233(d)(3) of ERISA prescribes a new withdrawal liability rule that 
applies for 10 years following the date of the partition order. Under 
the new withdrawal liability rule, if an employer withdraws from the 
original plan within 10 years following the date of the partition, 
withdrawal liability is computed under section 4201 with respect to the 
original plan and the successor plan. If, however, the withdrawal 
occurs more than 10 years after the date of the partition order, 
withdrawal liability is computed under section 4201 only with respect 
to the original plan (and not with respect to the successor plan). In 
either case, withdrawal liability is payable to the original plan (and 
not the successor plan).

Continuing Payment Obligation

    Section 4233(e)(1) imposes an ongoing benefit payment obligation on 
the original plan with respect to each participant or beneficiary of 
the original plan whose guarantee amount was transferred to the 
successor plan pursuant to a partition order. With respect to these 
individuals, the original plan must pay a monthly benefit for each 
month in which such benefit is in pay status following the effective 
date of the partition in an amount equal to the excess of--
     The monthly benefit that would be paid to such participant 
or beneficiary for such month under the terms of the plan (taking into 
account benefit suspensions under section 305(e)(9) and any plan 
amendments following the effective date of such partition) if the 
partition had not occurred, over
     The monthly benefit for such participant or beneficiary 
that is guaranteed under section 4022A.\9\
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    \9\ Because the benefit payment obligation under section 
4233(e)(1) is based, in part, on the monthly benefit that is 
guaranteed under section 4022A, the amount of this benefit payment 
obligation is subject to change under section 4022A(f)(2)(C).

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[[Page 35224]]

    As a result of this continuing payment obligation, PBGC expects 
that participants and beneficiaries whose guarantee amounts are 
transferred to a successor plan, and who have a plan benefit that 
exceeds the PBGC guarantee (e.g., 110 percent of the PBGC guarantee 
amount, benefit based on disability, etc.), will continue to 
participate in, and retain a right to receive a benefit payment from, 
the original plan after the effective date of a partition order.

Benefit Improvement Premium Payments to PBGC

    Section 4233(e)(2) of ERISA provides that in any case in which a 
plan provides a benefit improvement, as defined in section 
305(e)(9)(E)(vi), that takes effect after the effective date of the 
partition, the original plan shall pay to PBGC for each year during the 
10-year period following the partition effective date, an annual amount 
equal to the lesser of--
     The total value of the increase in benefit payments for 
such [plan] year that is attributable to the benefit improvement, or
     The total benefit payments from the successor plan for 
such [plan] year.
    This payment must be made at the time of, and in addition to, any 
other premium imposed by PBGC under title IV of ERISA.\10\
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    \10\ Section 305(e)(9)(E)(vi) defines the term ``benefit 
improvement'' as a resumption of suspended benefits, an increase in 
benefits, an increase at the rate at which benefits accrue, or an 
increase in the rate at which benefits become nonforfeitable under 
the plan. As noted above, Treasury has interpretative jurisdiction 
over the subject matter in section 305 of ERISA.
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Special Premium Rule

    Section 4233(e)(3) of ERISA imposes a special premium rule on the 
original plan, which requires it to pay the premiums for participants 
whose guarantee amounts were transferred to the successor plan for each 
year during the 10-year period following the partition effective date.

Notice of Partition Order

    In addition to the initial notice requirement under section 
4233(a)(2) of ERISA, which applies to the plan sponsor, section 4233(f) 
imposes a notice requirement on PBGC. It states that not later than 14 
days after the issuance of a partition order, PBGC must provide notice 
of the order to the Committee on Education and the Workforce of the 
House of Representatives; the Committee on Ways and Means of the House 
of Representatives; the Committee on Finance of the Senate; the 
Committee on Health, Education, Labor, and Pensions of the Senate; and 
any affected participants or beneficiaries.

PBGC Request for Information

    On February 18, 2015, PBGC published in the Federal Register a 
request for information (RFI) to solicit information from interested 
parties on issues PBGC should consider in implementing sections 4231 
and 4233 of ERISA, and received 20 comments in response to the RFI.\11\ 
PBGC has reviewed these comments and this interim final rule reflects a 
number of the suggestions contained in those comments.\12\
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    \11\ The RFI and comments are accessible at https://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html.
    \12\ Treasury issued an RFI seeking comments on certain matters 
related to the suspension of benefit rules under section 432(e)(9) 
of the Internal Revenue Code (section 305(e)(9) of ERISA). The 
Treasury RFI and comments are accessible at https://www.regulations.gov/#!docketDetail;D=IRS-2015-0004.
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    In general, commenters supported the implementation of section 4233 
of ERISA and urged PBGC to issue guidance in a timely manner. Most 
commenters emphasized a need for clear guidance from PBGC on the types 
of information, documents, data, and actuarial projections needed to 
complete an application for partition. A number of commenters suggested 
that whenever possible and consistent with statutory requirements, the 
application should be based on information that plans are already 
required to prepare, or information that plans could easily develop. 
Consistent with these comments, PBGC believes that the interim final 
rule strikes an appropriate balance between providing clear and 
detailed guidance on the required content of an application for 
partition and not being unduly burdensome.
    A number of commenters requested guidance on PBGC's evaluation 
criteria and standards for approval. PBGC considered these comments, 
but concluded that given the nature of the analysis and determinations 
required under section 4233(b) of ERISA with respect to both the plan 
applicant and PBGC, it is not able to provide guidance in those areas 
at this time. As a result, PBGC will review each application for 
partition on a case-by-case basis in accordance with the statutory 
criteria in section 4233(b). Such experience may enable PBGC to develop 
appropriate guidance in those areas in the future.
    There were also differing views on a number of other issues, 
including the required showing of solvency under ERISA section 4233, 
and whether there is a need for additional post-partition oversight by 
PBGC. As discussed below, PBGC interprets the term ``remain solvent'' 
to have the same meaning as ``avoid insolvency'' in section 
305(e)(9)(D)(iv) of ERISA and the regulations thereunder. PBGC agrees 
with those commenters who suggested a need for post-partition 
oversight. In PBGC's view, additional oversight is necessary to ensure 
compliance with the partition order, statutory post-partition 
obligations of the original plan, and proper stewardship of PBGC 
financial assistance provided to the successor plan. A more detailed 
discussion of the regulatory changes and the RFI comments follows.

Regulatory Changes

Overview

    To implement MPRA's changes to section 4233 of ERISA, PBGC is 
adding a new part 4233, Partitions of Eligible Multiemployer Plans, to 
its regulations. Part 4233 provides guidance to multiemployer plan 
sponsors on the process for submitting an application for partition, 
the information required to be included in an application, notice 
requirements under section 4233(a)(2), including the form and manner of 
the notice, the notification process for PBGC decisions on applications 
for partition, the content of a partition order, and the scope of 
PBGC's continuing jurisdiction under a partition order.

Section-by-Section Discussion

    Section 4233.1 of the regulation describes the purpose and scope of 
part 4233, which is to prescribe application and notice requirements 
for partition under section 4233 of ERISA. The procedures set forth in 
the regulation represent the exclusive means by which PBGC will review 
an application for partition under section 4233 of ERISA.
    Section 4233.2 of the regulation defines key terms used in the 
regulation. The statute uses the terms ``eligible multiemployer plan,'' 
the ``eligible multiemployer plan prior to the partition,'' and the 
``plan that was partitioned,'' to refer to the multiemployer plan that 
is the subject of the partition application under section 4233(a) of 
ERISA. To avoid confusion, the regulation uses the term ``original 
plan'' to refer to the eligible multiemployer plan under section 
4233(b) of ERISA, and ``successor plan'' to refer to the plan created 
by the

[[Page 35225]]

partition order under section 4233(d)(1) of ERISA.
    The term ``successor plan benefit'' is the portion of the accrued 
nonforfeitable monthly benefit which would be guaranteed under section 
4022A as of the effective date of the partition, calculated under the 
terms of the original plan without reflecting any changes related to a 
benefit suspension under section 305(e)(9) of ERISA. Because the 
payment of a successor plan benefit from a plan receiving financial 
assistance is the payment of a guaranteed benefit under title IV of 
ERISA, the definition of successor plan benefit makes clear that the 
payment of such benefits is subject to the limitations and conditions 
contained in sections 4022A(a)-(f) of ERISA.
    The term ``residual benefit'' is the monthly benefit payable from 
the original plan to a participant or beneficiary whose benefit was 
transferred to a successor plan pursuant to a partition order. The 
residual benefit is the difference between the monthly benefit defined 
in section 4233(e)(1)(A) of ERISA (i.e., the monthly benefit that would 
be paid under the terms of the plan after taking into account benefit 
suspensions and any plan amendments following the effective date of the 
partition) and the successor plan benefit. The residual benefit is not 
subject to a separate guarantee under section 4022A of ERISA.
    The term ``remain solvent'' has the same meaning as ``avoid 
insolvency'' in section 305(e)(9)(D)(iv) of ERISA, and is determined in 
the same manner and using the same methodology as is required under 
section 305(e)(9) and the Treasury regulations thereunder. This is 
based on the requirement under MPRA that Treasury make a finding that a 
plan is reasonably estimated to avoid insolvency taking into account 
both suspension and partition in the case of a plan that requires both 
to avoid insolvency.

Application Requirements

    Section 4233.3 of the regulation provides general information on 
the application filing requirements, including the method of filing, 
who may file, and where to file an application for partition under 
section 4233 of ERISA.
    Section 4233.4 of the regulation summarizes the information needed 
for PBGC to make a determination on whether an application is complete. 
It states that an application will not be considered complete unless 
the application includes the information specified in Sec.  4233.5 
(plan information), Sec.  4233.6 (partition information), Sec.  4233.7 
(actuarial and financial information); Sec.  4233.8 (participant census 
data), and Sec.  4233.9 (financial assistance information). It also 
states that PBGC may require additional information it deems necessary 
to review an application, including information needed to calculate or 
verify the amount of financial assistance that would be necessary for a 
partition. Finally, section 4233.4 of the regulation also imposes an 
affirmative obligation on the plan sponsor to promptly notify PBGC in 
writing if the plan sponsor discovers that any material fact or 
representation contained in or relating to an application for 
partition, or in any supporting document, is no longer accurate, or has 
been omitted.
    Section 4233.5 of the regulation identifies the various categories 
of plan-related information required for an application to be complete, 
such as formal plan documents, trust agreements, summary plan 
descriptions, summaries of material modifications, rehabilitation 
plans, Forms 5500, a current listing of employers who have an 
obligation to contribute to the plan, and the approximate number of 
participants for whom each employer is currently making contributions. 
PBGC expects that most, if not all, of the information required under 
this subsection should be readily available and accessible by plan 
sponsors, an issue also identified by several commenters.
    Section 4233.6 of the regulation identifies information needed to 
evaluate the partition as proposed by the plan sponsor, such as the 
proposed structure, effective date, and a detailed description of any 
larger integrated transaction of which the proposed partition is a part 
(including, but not limited to, an application for suspension of 
benefits under section 305(e)(9)(G), or a merger under section 4231 of 
ERISA). If applicable, it also requires the plan sponsor to submit a 
copy of its application for suspension of benefits under section 
305(e)(9)(G) of ERISA (including all attachments and exhibits). In 
addition, consistent with section 4233(b)(2) of ERISA, the regulation 
requires the plan sponsor to provide a detailed description of all 
measures the plan sponsor has taken (or is taking) to avoid insolvency, 
as well as those measures the plan sponsor considered taking but did 
not take, including the factor(s) the plan sponsor considered in making 
these determinations.\13\
---------------------------------------------------------------------------

    \13\ PBGC is not defining the Participant and Plan Sponsor 
Advocate's consultative role in determining if the plan sponsor has 
taken all reasonable measures, but will let that role evolve on a 
case-by-case basis.
---------------------------------------------------------------------------

    Finally, without limiting PBGC's ability to determine the final 
structure and amounts involved in a partition, Sec.  4233.6 requires 
the plan sponsor to provide a detailed description of the estimated 
minimum amount of guaranteed benefit amounts the plan sponsor proposes 
to transfer in a partition, including:
     The estimated number of participants and beneficiaries 
(and, if applicable, alternate payees) whose benefits (or any portion 
thereof) would be transferred, including the number of retirees 
receiving payments (if any), terminated vested participants (if any), 
and active participants (if any).
     All supporting data, calculations, assumptions, and 
methods used to determine the estimated minimum amount of benefit 
liabilities.
     If applicable, a description of any classifications or 
specific group(s) of participants and beneficiaries whose benefits the 
plan sponsor proposes to transfer, and the plan sponsor's rationale or 
basis for selecting those classifications or groups.
    Section 4233.7 of the regulation identifies actuarial and financial 
information requirements. The first two information requirements relate 
to plan actuarial reports and an actuarial certification, which should 
ordinarily be within the possession of the plan sponsor or plan 
actuary. Sections 4233.7(a)(3)-(8) of the regulation require the 
submission of certain actuarial and financial information specific to 
the proposed partition, which are necessary for PBGC to evaluate 
whether a partition is necessary for the plan to remain solvent.
    Section 4233.8 of the regulation identifies the types of 
participant census data to include with an application for partition.
    Section 4233.9 of the regulation requires the submission of certain 
information relevant to an application for financial assistance.

Initial Review Process

    Section 4233.10 of the regulation prescribes an initial review 
process for the purpose of determining whether an application is 
complete under section 4233(a)(1) of ERISA. An application will not be 
deemed complete until PBGC has made an initial determination under the 
regulation. One of the RFI commenters noted that it would be helpful if 
guidance called for the trustees to be notified at the time an 
application is complete. Consistent with that comment, Sec.  4233.10(c) 
provides that upon making a determination that an application is 
complete, PBGC will issue a written notice to the plan

[[Page 35226]]

sponsor. Similarly, if PBGC determines that an application is 
incomplete, it will issue a written notice to the plan sponsor 
describing the information missing from the application.
    Because PBGC's determination on whether an application is complete 
marks the beginning of the 270-day statutory review period under 
section 4233(a)(1) of ERISA and the 30-day notice period under section 
4233(a)(2), Sec.  4233.10(c) provides that the date of PBGC's written 
notice to a plan sponsor that an application is complete will mark the 
beginning of PBGC's 270-day review period under section 4233(a)(1) of 
ERISA, and the plan sponsor's 30-day notice period under section 
4233(a)(2) of ERISA.
    Section 4233.10(d) of the regulation provides that for a plan 
sponsor that is coordinating applications for partition and suspension 
of benefits, an initial determination that a partition application is 
complete will be conditioned on filing an application for benefit 
suspensions with Treasury within 30 days after receipt of written 
notice of the determination. Because a multiemployer plan must suspend 
benefits to the maximum extent possible to be eligible for a partition, 
the effect of a suspension on the plan is integral to PBGC's evaluation 
of the partition. Moreover, this rule will ensure that participants and 
other interested parties receive notice of the plan's proposed 
suspension, which must be given concurrently with an application for 
suspension, in advance of or at the same time as they receive notice of 
an application for partition, assisting in their understanding of the 
integrated transaction. Section 4233.13 facilitates the provision of a 
combined notice of application for benefit suspensions and partition. A 
copy of the completed application for benefit suspensions must be 
provided to PBGC under Sec.  4233.6.
    Finally, recognizing the importance of early PBGC engagement on 
partitions, Sec.  4233.10(e) states that the initial review process is 
not intended to preclude a plan sponsor from contacting PBGC on an 
informal basis to discuss a potential partition application. Allowing 
for such discussions in advance of an application for partition is 
consistent with a number of the RFI comments. For example, in 
discussing the difficulties faced by severely distressed plans that 
will require both a partition and maximum benefit suspensions to remain 
solvent, one commenter noted that in light of the time and costs 
involved in the benefit suspension process, it is not in the interests 
of anyone involved for trustees to apply for a suspension without 
preliminary feedback from PBGC on the feasibility of partition.
    Similarly, another commenter noted that guidance should encourage 
plans to contact PBGC before making any substantive decisions on how to 
approach a potential partition application. Given the many complexities 
and uncertainties involved in a partition, including the fact that 
PBGC's authority to order a partition will depend, in part, on whether 
the proposed partition would impair PBGC's ability to meet existing 
financial assistance obligations to other plans, PBGC agrees with these 
comments and encourages plans to contact PBGC and engage in informal 
discussions on these and other issues before making a formal 
application.

Notice Requirements

    Section 4233.11 describes the timing requirements applicable to 
furnishing the notice to interested parties under section 4233(b) of 
ERISA, and the information that must be included in the notice. Section 
4233.11(a) of the regulation requires the plan sponsor to send the 
notice to interested parties not later than 30 days after receipt of a 
determination under Sec.  4233.10(c), and provides a cross-reference to 
filing rules in PBGC's regulation on Filing, Issuance, Computation of 
Time, and Record Retention (29 CFR part 4000).
    Section 4233.11(b) of the regulation prescribes content 
requirements for the notice of application for partition. The 
information required to be included in the notice is necessary to 
ensure that it provides adequate notice to interested parties on the 
meaning of a partition; the condition of the plan; and the effect of a 
partition on the plan, participants and beneficiaries, the plan 
sponsor, and contributing employers. In addition, the notice must 
include contact information for the plan sponsor, PBGC, and the 
Participant and Plan Sponsor Advocate.
    PBGC is providing model notices that may be used by a plan sponsor. 
The model notices, which can be found in Appendix A of the regulation, 
may be used or adapted by plan sponsors to meet the notice requirements 
under section 4233(a)(2) of ERISA. Use of the model notices is not 
required, but will be deemed to satisfy the requirements of section 
4233(a)(2) of ERISA and this part. PBGC specifically requests comments 
on the form and content of the model notices, including what, if any, 
additional information should be included in the model notices.

Determination Process

    Section 4233.12 of the regulation describes the timing and manner 
in which PBGC will notify a plan sponsor of PBGC's decision on an 
application for partition. As noted above in the discussion of the 
initial review process, PBGC will approve or deny an application in 
accordance with the standards set forth in section 4233(b) of ERISA 
within 270 days after issuing notice to the plan sponsor of the 
completed application under Sec.  4233.10(c).\14\ If PBGC denies the 
application, PBGC's written decision will state the reason(s) for the 
denial. If PBGC approves the application, PBGC will issue a partition 
order in accordance with Sec.  4233.14 and section 4233(c) of ERISA. 
The decision to approve or deny an application for partition under 
section 4233 of ERISA is within PBGC's discretion, and is a final 
agency action not subject to PBGC's rules for reconsideration or 
administrative appeal.
---------------------------------------------------------------------------

    \14\ As noted above, section 4233(b) sets forth five statutory 
conditions that must be satisfied before PBGC may order a partition. 
PBGC will review each application for partition on a case-by-case 
basis in accordance with the statutory criteria in section 4233(b). 
PBGC's determination under section 4233(b)(2) will be made in 
consultation with the Participant and Plan Sponsor Advocate.
---------------------------------------------------------------------------

    Section 4233.12(c) describes an optional conditional determination 
process for plan sponsors who file applications for partition and a 
suspension of benefits. This provision is in response to those 
commenters who urged PBGC to create a conditional, or accelerated, 
approval process. With respect to this issue, one commenter noted that 
a multiemployer plan that needs a partition and suspension to become 
solvent should not have to go through a suspension of benefits vote by 
participants only to have its application for partition denied by PBGC, 
and consequently have to inform its participants that although they 
voted for the suspension of benefits, the plan cannot proceed with the 
suspension because PBGC denied the application for partition.
    Similarly, noting that the suspension process is likely to be long 
and costly, another commenter stated that because an approved 
suspension cannot be implemented before the effective date of the 
related partition, and because the magnitude of any needed partition 
typically increases with time, guidance (and any related internal 
procedures) should permit PBGC to issue a partition order prior to, but 
conditioned upon approval and implementation of, the suspension.
    Consistent with these and other comments, Sec.  4233.12(c) provides 
that, at the request of a plan sponsor, PBGC may, in its discretion, 
issue a

[[Page 35227]]

preliminary approval of an application conditioned on Treasury's final 
authorization to suspend benefits under section 305(e)(9) of ERISA. The 
regulation requires that the conditional approval include a written 
statement of preliminary findings, conclusions, and conditions. A 
partition will only become effective, however, upon satisfaction of the 
required conditions, and the issuance of an order of partition under 
section 4233(c) of ERISA.

Coordinated Application Process for Partition and Benefit Suspension

    Section 4233.13 of the regulation provides special rules for plan 
sponsors who file applications for partition under section 4233 of 
ERISA with PBGC, and benefit suspensions under section 305(e)(9) of 
ERISA with Treasury. Section 4233.13(a) describes the interagency 
coordination process applicable to such plans.
    In response to RFI comments urging PBGC and Treasury to allow for a 
combined notice of application for benefit suspension and partition, 
Sec.  4233.13(b) provides that a plan sponsor may combine the model 
notice provided at Appendix A with the model notice contained in Rev. 
Proc. 2015-34 to satisfy the notice requirements of this part.

Partition Order

    Section 4233.14 of the regulation describes the content of a PBGC 
partition order. It provides that the partition order will describe the 
liabilities to be transferred to the successor plan, and the manner in 
which financial assistance will be provided to the successor plan by 
PBGC. Section 4233.14(a) states that the partition order shall set 
forth PBGC's findings and conclusions on the application for partition, 
the effective date of partition, the obligations and responsibilities 
of the plan sponsor of the original plan and the successor plan, and 
such other information as PBGC may deem appropriate.
    Section 4233.14(b) provides that the partition order will set forth 
the terms and conditions of the partition, and will incorporate by 
reference the applicable requirements under sections 4233(d) and 
4233(e) of ERISA. Finally, Sec.  4233.14(b) requires that the plan 
sponsor of the original plan and the successor plan amend the original 
plan and successor plan, respectively, to reflect the benefits payable 
to participants and beneficiaries resulting from the partition order. 
While the regulation does not require a plan sponsor to submit a draft 
amendment to the original plan or a draft successor plan document with 
an application for partition, PBGC will require the submission of these 
and other related documents pursuant to Sec.  4233.4(b) before it will 
issue a partition order.

Nature and Operation of Successor Plan

    Section 4233.15 of the regulation describes the nature and 
operation of the successor plan created by the partition order. Section 
4233(d)(1) of ERISA states that the plan created by the partition order 
is a successor plan to which section 4022A of ERISA applies. The 
statutory cross-reference to section 4022A of ERISA makes clear that 
the portion of a participant's or beneficiary's benefit transferred to 
a successor plan is subject to and limited by section 4022A of ERISA. 
The aggregate amount of benefits subject to transfer is further limited 
by section 4233(c) of ERISA, which states that PBGC's partition order 
shall provide for a transfer of the ``minimum amount of the [original] 
plan's liabilities necessary for the [original] plan to remain 
solvent.'' The statutory reference to successor plan status under 
section 4233(d)(1) is relevant under title IV for purposes of coverage 
determinations under section 4021 of ERISA, and for determining the 
period of time for which a benefit or a benefit increase has been in 
effect under section 4022A(b)(1) of ERISA.
    Consistent with the statute, Sec.  4233.15(a) of the regulation 
provides that the plan created by the partition order is a successor 
plan to which section 4022A applies. Although the statute does not 
reference section 4245 of ERISA or the solvency of the successor plan, 
Sec.  4233.15(a) also states that the successor plan is an insolvent 
plan under section 4245 of ERISA. A successor plan is insolvent as of 
the effective date of a partition order because the order will provide 
for a transfer of guaranteed benefit amounts (the minimum amount of the 
original plan's liabilities necessary for it to remain solvent) but no 
corresponding transfer of assets. Therefore, as of the effective date 
of the partition order, the successor plan will be insolvent within the 
meaning of section 4245 of ERISA because it will not have sufficient 
available resources to pay benefits under the plan when due for the 
plan year. The guaranteed benefit amounts transferred to the successor 
plan will be paid with PBGC financial assistance in an amount 
sufficient to enable the plan to pay such benefits under section 4261 
of ERISA.
    Section 4233.15(b) states that the successor plan is also treated 
as a terminated multiemployer plan to which section 4041A(d) of ERISA 
applies because there will be no contributing employers with an 
obligation to contribute to the successor plan as of the effective date 
of the partition order. The treatment of the successor plan as a 
terminated plan under section 4041A(a)(2), however, is not taken into 
account for purposes of determining withdrawal liability of any 
contributing employer to the original plan. Under section 4233(d)(3) of 
ERISA, in the event an employer withdraws from the original plan within 
10 years following the effective date of the partition order, 
withdrawal liability shall be computed under section 4201 with respect 
to both the original plan and the plan created by the partition order.
    Consistent with section 4233(d)(2) of ERISA, Sec.  4233.15(c) 
provides that the plan sponsor of an eligible multiemployer plan prior 
to the partition and the administrator of such plan shall be the plan 
sponsor and the administrator, respectively, of the successor plan. 
PBGC retains the right to remove and replace the plan sponsor of the 
successor plan pursuant to section 4042(b)(2) of ERISA.

Coordination of Benefits Under Original Plan and Successor Plan

    Section 4233.16 of the regulation describes the relationship and 
interaction between the residual benefit and the successor plan 
benefit, and the treatment of such benefits under section 4022A of 
ERISA. Section 4233.16(a) provides that subject to the limitations 
contained in section 4022A of ERISA, the only benefits payable under a 
successor plan are successor plan benefits as defined in Sec.  4233.2. 
While the only benefits payable under a successor plan are successor 
plan benefits, which are subject to the limitations and conditions 
contained in section 4022A, participants and beneficiaries whose 
guaranteed benefit amounts are transferred to a successor plan will 
also generally retain a right to receive a residual benefit under the 
original plan pursuant to section 4233(e)(1) of ERISA.\15\ Section 
4233.2 of the regulation defines the term ``residual

[[Page 35228]]

benefit'' to mean the difference between the monthly benefit under 
section 4233(e)(1)(A) of ERISA and the successor plan benefit. The 
following example illustrates the benefit payment responsibilities of 
an original plan and a successor plan in a partition:
---------------------------------------------------------------------------

    \15\ Section 4233(e)(1) requires the original plan to pay a 
monthly benefit for each month in which such benefit is in pay 
status following the effective date of the partition in an amount 
equal to the excess of the monthly benefit that would be paid to 
such participant or beneficiary for such month under the terms of 
the plan (taking into account benefit suspensions under section 
305(e)(9) and any plan amendments following the effective date of 
such partition) if the partition had not occurred, over the monthly 
benefit of such participant or beneficiary which is guaranteed under 
section 4022A.
---------------------------------------------------------------------------

    Assume Plan X has $200 million in accrued liabilities and $75 
million in assets. Annual benefit payments total $15 million under the 
Plan. Plan X is projected to become insolvent within 10 years. The 
actuary for Plan X advises the Board of Trustees of Plan X that maximum 
benefit suspensions under section 305(e)(9) of ERISA would reduce 
liabilities to $130 million and reduce benefit payments in the years 
following a partition to $10 million per year.
    The actuary for Plan X estimates that a partition under section 
4233 of ERISA transferring $50 million of guarantee-liabilities payable 
by PBGC and corresponding benefit payments of $4 million per year to a 
successor plan, in combination with maximum benefit suspensions, would 
enable Plan X to avoid insolvency within the meaning of section 4245. 
PBGC financial assistance payable to the successor plan would cover $4 
million in annual guaranteed payments under the successor plan. Plan X 
would pay a total of $6 million in benefits in the year following 
partition, consisting of--
     The additional residual benefit amounts necessary to raise 
the benefit level for participants and beneficiaries with benefits 
under the successor plan to the same amount they would have received 
under Plan X if the partition had not occurred, plus
     Benefit payments for the participants and beneficiaries 
whose benefits were not transferred to the successor plan.
    Assume that before the partition, Participant A, a retired 
participant with 25 years of service, received a Plan X benefit of 
$1,500 per month at normal retirement age payable as a single life 
annuity. Plan X proposes to transfer the guarantee portion of 
Participant A's benefit to the successor plan. Since Participant A's 
monthly accrual rate exceeds $44 ($1,500 / 25 = $60), the guarantee 
amount (applying the guarantee formula under section 4022A(c)) is 
$893.75 ($35.75 x 25 years of service = $893.75). If maximum benefit 
suspensions are approved, Participant A's benefit would be reduced to 
110 percent of his monthly guaranteed benefit amount (Participant A is 
not protected by the age limitations or the limitations on suspension 
of benefits based on disability under section 305(e)(9)(D) of ERISA). 
Upon the effective date of the partition, Participant A would receive a 
PBGC-guaranteed monthly benefit of $893.75 from the successor plan (the 
successor plan benefit), funded by PBGC financial assistance, and an 
$89.38 monthly residual benefit funded by Plan X.\16\
---------------------------------------------------------------------------

    \16\ Participant A's residual benefit of $89.38 is the portion 
of Participant A's monthly benefit (taking into account benefit 
suspensions) that is not transferred to the successor plan as part 
of the guarantee amount payable by PBGC. As such, it would not be 
subject to a separate guarantee under section 4022A of ERISA.
---------------------------------------------------------------------------

    Section 4233.16(c) of the regulation provides that when a 
participant's or beneficiary's benefit is partially or wholly 
transferred to a successor plan, the PBGC guarantee applicable to such 
benefit is transferred to, and becomes payable under, the successor 
plan. The benefit remaining in the original plan as of the effective 
date of the partition (the residual benefit), if any, is not subject to 
a separate guarantee, and any increase in the PBGC guarantee amount 
payable under the original plan will arise solely, if at all, due to an 
increase in the accrued benefit under a plan amendment following the 
effective date of the partition, or an additional accrual attributable 
to service after the effective date of the partition.
    Section 4233.16(d) provides that subject to the conditions 
contained in section 4261 of ERISA, PBGC shall provide financial 
assistance to the successor plan in an amount sufficient to enable the 
successor plan to pay only the portion of the PBGC-guaranteed benefits 
transferred to the successor plan pursuant to the partition order, and 
reasonable and necessary administrative expenses if approved by PBGC. 
The receipt of benefits under a multiemployer plan receiving financial 
assistance from PBGC shall be considered the receipt of amounts from 
PBGC of guaranteed benefits.
    Finally, section 4233.16(e) provides that the plan sponsors of an 
original plan and a successor plan may, but are not required to, pay 
monthly benefits payable under the original plan and successor plan, 
respectively, in a single monthly payment pursuant to a written cost 
sharing or expense allocation agreement between the plans.

Continuing Jurisdiction

    Section 4233.17 of the regulation describes PBGC's continuing 
jurisdiction over the original plan and the successor plan. As noted 
above in the discussion of the RFI comments, while there were differing 
views on the need for additional post-partition oversight by PBGC to 
ensure compliance with MPRA's post-partition requirements, PBGC has 
determined that additional oversight is necessary to ensure compliance 
with the partition order, statutory post-partition payment obligations, 
and proper stewardship of PBGC financial assistance. Consistent with 
this view, Sec.  4233.16(a) provides that PBGC will continue to have 
jurisdiction over the original plan and the successor plan to carry out 
the purposes, terms, and conditions of the partition order, section 
4233 of ERISA, and the regulations thereunder. Section 4233.16(b) 
states that PBGC may, upon notice to the plan sponsor, make changes to 
the partition order in response to changed circumstances consistent 
with section 4233 of ERISA and Part 4233.

Request for Comments

    In addition to the specific requests for comments identified above, 
PBGC encourages all interested parties to submit their comments, 
suggestions, and views concerning the provisions of this interim final 
rule, including the model notices. In particular, PBGC is interested in 
any area in which additional guidance may be needed.

Applicability

    The amendments in this interim final rule are applicable to 
applications for partition submitted to PBGC on or after June 19, 2015.

Compliance With Rulemaking Guidelines

Executive Orders 12866 ``Regulatory Planning and Review'' and 13563 
``Improving Regulation and Regulatory Review''

    Having d