Brief Case
Pension Resource

I.R.C. § 418E

Insolvent plans
USC 2024 ed., current through 2025-01-06 · current · last amended by Pub. L. 115-141
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Amended effective Jan 14, 2019 by Pub. L. 115-141. See what changed
(a) Suspension of certain benefit payments Notwithstanding section 411, in any case in which benefit payments under an insolvent multiemployer plan exceed the resource benefit level, any such payments of benefits which are not basic benefits shall be suspended, in accordance with this section, to the extent necessary to reduce the sum of such payments and the payments of such basic benefits to the greater of the resource benefit level or the level of basic benefits, unless an alternative procedure is prescribed by the Pension Benefit Guaranty Corporation under section 4022A(g)(5) of the Employee Retirement Income Security Act of 1974.
(b) Definitions For purposes of this section, for a plan year—
(1) Insolvency A multiemployer plan is insolvent if the plan's available resources are not sufficient to pay benefits under the plan when due for the plan year, or if the plan is determined to be insolvent under subsection (d).
(2) Resource benefit level The term "resource benefit level" means the level of monthly benefits determined under subsections (c)(1) and (3) and (d)(3) to be the highest level which can be paid out of the plan's available resources.
(3) Available resources The term "available resources" means the plan's cash, marketable assets, contributions, withdrawal liability payments, and earnings, less reasonable administrative expenses and amounts owed for such plan year to the Pension Benefit Guaranty Corporation under section 4261(b)(2) of the Employee Retirement Income Security Act of 1974.
(4) Insolvency year The term "insolvency year" means a plan year in which a plan is insolvent.
(c) Benefit payments under insolvent plans
(1) Determination of resource benefit level The plan sponsor of a plan in critical status, as described in section 432(b)(2), shall determine in writing the plan's resource benefit level for each insolvency year, based on the plan sponsor's reasonable projection of the plan's available resources and the benefits payable under the plan.
(2) Uniformity of the benefit suspension
(A) The suspension of benefit payments under this section shall, in accordance with regulations prescribed by the Secretary, apply in substantially uniform proportions to the benefits of all persons in pay status under the plan, except that the Secretary may prescribe rules under which benefit suspensions for different participant groups may be varied equitably to reflect variations in contribution rates and other relevant factors including differences in negotiated levels of financial support for plan benefit obligations.
(B) For purposes of this paragraph—
(i) the term "person in pay status" means—
(I) a participant or beneficiary on the last day of the base plan year who, at any time during such year, was paid an early, late, normal, or disability retirement benefit (or a death benefit related to a retirement benefit), and
(II) to the extent provided in regulations prescribed by the Secretary of the Treasury, any other person who is entitled to such a benefit under the plan.
(ii) the base plan year for any plan year is—
(I) if there is a relevant collective bargaining agreement, the last plan year ending at least 6 months before the relevant effective date, or
(II) if there is no relevant collective bargaining agreement, the last plan year ending at least 12 months before the beginning of the plan year.
(iii) a relevant collective bargaining agreement is a collective bargaining agreement—
(I) which is in effect for at least 6 months during the plan year, and
(II) which has not been in effect for more than 36 months as of the end of the plan year.
(iv) the relevant effective date is the earliest of the effective dates for the relevant collective bargaining agreements.
(3) Resource benefit level below level of basic benefits Notwithstanding paragraph (2), if a plan sponsor determines in writing a resource benefit level for a plan year which is below the level of basic benefits, the payment of all benefits other than basic benefits shall be suspended for that plan year.
(4) Excess resources
(A) In general If, by the end of an insolvency year, the plan sponsor determines in writing that the plan's available resources in that insolvency year could have supported benefit payments above the resource benefit level for that insolvency year, the plan sponsor shall distribute the excess resources to the participants and beneficiaries who received benefit payments from the plan in that insolvency year, in accordance with regulations prescribed by the Secretary.
(B) Excess resources For purposes of this paragraph, the term "excess resources" means available resources above the amount necessary to support the resource benefit level, but no greater than the amount necessary to pay benefits for the plan year at the benefit levels under the plan.
(5) Unpaid benefits If, by the end of an insolvency year, any benefit has not been paid at the resource benefit level, amounts up to the resource benefit level which were unpaid shall be distributed to the participants and beneficiaries, in accordance with regulations prescribed by the Secretary, to the extent possible taking into account the plan's total available resources in that insolvency year.
(6) Retroactive payments Except as provided in paragraph (4) or (5), a plan is not required to make retroactive benefit payments with respect to that portion of a benefit which was suspended under this section.
(d) Plan sponsor determination
(1) Triennial test As of the end of the first plan year in which a plan is in critical status, as described in section 432(b)(2), and at least every 3 plan years thereafter (unless the plan is no longer in critical status, as described in section 432(b)(2)), the plan sponsor shall compare the value of plan assets for that plan year with the total amount of benefit payments made under the plan for that plan year. Unless the plan sponsor determines that the value of plan assets exceeds 3 times the total amount of benefit payments, the plan sponsor shall determine whether the plan will be insolvent in any of the next 5 plan years. If the plan sponsor makes such a determination that the plan will be insolvent in any of the next 5 plan years, the plan sponsor shall make the comparison under this paragraph at least annually until the plan sponsor makes a determination that the plan will not be insolvent in any of the next 5 plan years.
(2) Determination of insolvency If, at any time, the plan sponsor of a plan in critical status, as described in section 432(b)(2), reasonably determines, taking into account the plan's recent and anticipated financial experience, that the plan's available resources are not sufficient to pay benefits under the plan when due for the next plan year, the plan sponsor shall make such determination available to interested parties.
(3) Determination of resource benefit level The plan sponsor of a plan in critical status, as described in section 432(b)(2), shall determine in writing for each insolvency year the resource benefit level and the level of basic benefits no later than 3 months before the insolvency year.
(4) For purposes of this subsection, the value of plan assets shall be the value of the available plan assets determined under regulations prescribed by the Secretary of the Treasury.
(e) Notice requirements
(1) Impending insolvency If the plan sponsor of a plan in critical status, as described in section 432(b)(2), determines under subsection (d)(1) or (2) that the plan may become insolvent (within the meaning of subsection (b)(1)), the plan sponsor shall—
(A) notify the Secretary and the parties described in section 101(f)(1) of the Employee Retirement Income Security Act of 1974 of that determination, and
(B) inform the parties described in section 101(f)(1) of the Employee Retirement Income Security Act of 1974 that if insolvency occurs certain benefit payments will be suspended, but that basic benefits will continue to be paid.
(2) Resource benefit level No later than 2 months before the first day of each insolvency year, the plan sponsor of a plan in critical status, as described in section 432(b)(2), shall notify the Secretary, the Pension Benefit Guaranty Corporation, the parties described in section 418A(a)(2), and the plan participants and beneficiaries of the resource benefit level determined in writing for that insolvency year.
(3) Potential need for financial assistance In any case in which the plan sponsor anticipates that the resource benefit level for an insolvency year may not exceed the level of basic benefits, the plan sponsor shall notify the Pension Benefit Guaranty Corporation.
(4) Regulations Notice required by this subsection shall be given in accordance with regulations prescribed by the Pension Benefit Guaranty Corporation, except that notice to the Secretary shall be given in accordance with regulations prescribed by the Secretary.
(5) Corporation may prescribe time The Pension Benefit Guaranty Corporation may prescribe a time other than the time prescribed by this section for the making of a determination or the filing of a notice under this section.
(f) Financial assistance
(1) Permissive application If the plan sponsor of an insolvent plan for which the resource benefit level is above the level of basic benefits anticipates that, for any month in an insolvency year, the plan will not have funds sufficient to pay basic benefits, the plan sponsor may apply for financial assistance from the Pension Benefit Guaranty Corporation under section 4261 of the Employee Retirement Income Security Act of 1974.
(2) Mandatory application A plan sponsor who has determined a resource benefit level for an insolvency year which is below the level of basic benefits shall apply for financial assistance from the Pension Benefit Guaranty Corporation under section 4261 of the Employee Retirement Income Security Act of 1974.
(g) Financial assistance Any amount of any financial assistance from the Pension Benefit Guaranty Corporation to any plan, and any repayment of such amount, shall be taken into account under this subpart in such manner as determined by the Secretary.
(h) Subsections (a) and (c) shall not apply to a plan that, for the plan year, is operating under section 432(e)(9), regarding benefit suspensions by certain multiemployer plans in critical and declining status.
Source credit, amendments & notes

(Added Pub. L. 96–364, title II, §202(a), Sept. 26, 1980, 94 Stat. 1282; amended Pub. L. 109–280, title II, §213(a), Aug. 17, 2006, 120 Stat. 917; Pub. L. 113–235, div. O, title I, §108(b)(2), Dec. 16, 2014, 128 Stat. 2787; Pub. L. 115–141, div. U, title IV, §401(a)(92)–(94), Mar. 23, 2018, 132 Stat. 1188.)

Editorial Notes
References in Text

Section 4022A(g)(5) of the Employee Retirement Income Security Act of 1974, referred to in subsec. (a), is classified to section 1322a(g)(5) of Title 29, Labor.

Section 4261 of the Employee Retirement Income Security Act of 1974, referred to in subsecs. (b)(3) and (f), is classified to section 1431 of Title 29, Labor.

Section 101(f)(1) of the Employee Retirement Income Security Act of 1974, referred to in subsec. (e)(1), is classified to section 1021(f)(1) of Title 29, Labor.

Amendments

2018—Pub. L. 115–141, §401(a)(92), substituted "section 432(b)(2)" for "subsection 432(b)(2)" wherever appearing.

Subsec. (d)(1). Pub. L. 115–141, §401(a)(93), substituted "section 432(b)(2)," for "section 432(b)(2),,", "section 432(b)(2))" for "section 432(b)(2),)", and "compare the value of plan assets for that plan year with" for "compare the value of plan assets (determined in accordance with section 418B(b)(3)(B)(ii)) for that plan year with".

Subsec. (e)(1)(A). Pub. L. 115–141, §401(a)(94), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "notify the Secretary, the Pension Benefit Guaranty Corporation, the parties described in section 418A(a)(2), and the plan participants and beneficiaries of that determination, and".

2014—Subsec. (c)(1). Pub. L. 113–235, §108(b)(2)(A), substituted "critical status, as described in subsection 432(b)(2)," for "reorganization".

Subsec. (c)(2). Pub. L. 113–235, §108(b)(2)(B), designated existing provisions as subpar. (A), struck out "(within the meaning of section 418(b)(6))" after "pay status", and added subpar. (B).

Subsec. (d). Pub. L. 113–235, §108(b)(2)(A), substituted "critical status, as described in subsection 432(b)(2)," for "reorganization" wherever appearing.

Subsec. (d)(1). Pub. L. 113–235, §108(b)(2)(C)(i), which directed amendment of par. (1) by striking out "(determined in accordance with section 418B(3)(B)(ii))", could not be executed because the phrase "(determined in accordance with section 418B(3)(B)(ii))" did not appear.

Subsec. (d)(4). Pub. L. 113–235, §108(b)(2)(C)(ii), added par. (4).

Subsec. (e)(1). Pub. L. 113–235, §108(b)(2)(A), substituted "critical status, as described in subsection 432(b)(2)," for "reorganization".

Subsec. (e)(1)(A). Pub. L. 113–235, §108(b)(2)(D)(i), which directed substitution of "the parties described in section 101(f)(1) of the Employee Retirement Income Security Act of 1974" for "the corporation, the parties described in section 418A(a)(2), and the plan participants and beneficiaries", could not be executed because the phrase "the corporation, the parties described in section 418A(a)(2), and the plan participants and beneficiaries" did not appear.

Subsec. (e)(1)(B). Pub. L. 113–235, §108(b)(2)(D)(ii), substituted "section 101(f)(1) of the Employee Retirement Income Security Act of 1974" for "section 418A(a)(2) and the plan participants and beneficiaries".

Subsec. (e)(2). Pub. L. 113–235, §108(b)(2)(A), substituted "critical status, as described in subsection 432(b)(2)," for "reorganization".

Subsec. (h). Pub. L. 113–235, §108(b)(2)(E), added subsec. (h).

2006—Subsec. (d)(1). Pub. L. 109–280 substituted "5 plan years" for "3 plan years" the second place it appeared and inserted at end "If the plan sponsor makes such a determination that the plan will be insolvent in any of the next 5 plan years, the plan sponsor shall make the comparison under this paragraph at least annually until the plan sponsor makes a determination that the plan will not be insolvent in any of the next 5 plan years."

Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment

Amendment by Pub. L. 113–235 applicable with respect to plan years beginning after Dec. 31, 2014, see section 108(c) of div. O of Pub. L. 113–235, set out as an Effective Date of Repeal note under section 418 of this title.

Effective Date of 2006 Amendment

Pub. L. 109–280, title II, §213(b), Aug. 17, 2006, 120 Stat. 918, provided that: "The amendments made by this section [amending this section] shall apply with respect to the determinations made in plan years beginning after 2007."

Effective Date

Section effective, with respect to each plan, on the first day of the first plan year beginning on or after the earlier of the date on which the last collective-bargaining agreement providing for employer contributions under the plan, which was in effect on Sept. 26, 1980, expires, without regard to extensions agreed to after such date, or 3 years after Sept. 26, 1980, see section 210 of Pub. L. 96–364, set out as a note under section 194A of this title.

I.R.C. § 418E — Insolvent plans · USC 2024 ed., current through 2025-01-06 · https://pensionresource.website/EAMain?content=EAMain.Law&id=irc-418E · printed Oct 16, 2026
On this page
  • (a) Suspension of certain benefit payments
  • (b) Definitions
  • (c) Benefit payments under insolvent plans
  • (d) Plan sponsor determination
  • (e) Notice requirements
  • (f) Financial assistance
  • (g) Financial assistance
  • (h) (h) Subsections (a) and (c) shall not apply to a plan that,…
Cited by (code & regs)

No regulations are linked to this section in the library.

Guidance addressing this section
IRS / Treasury
Final Rules
  • 80 FR 35207 Jun 19, 2015 — Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014
Also cited in 12 other documents
IRS / Treasury
Final Rules
  • 89 FR 58886 Jul 19, 2024 — Required Minimum Distributions
  • 81 FR 25540 Apr 28, 2016 — Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014 (b)(1)(b)(3)
Proposed Rules
  • 87 FR 10504Proposed Feb 24, 2022 — Required Minimum Distributions Comments due May 25, 2022
  • 80 FR 35262Proposed Jun 19, 2015 — Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014 Comments due Aug 18, 2015 (b)(3)
  • 80 FR 8578Proposed Feb 18, 2015 — Request for Information on Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014 Comments due Apr 6, 2015
  • REG-110136-07Proposed Apr 28, 2008 — Proposed regulations under section 4980F of the Code provide guidance relating to a plan amendment that is permitted to be effective before the plan amendment’…
Notices
  • Notice 2021-57 Nov 1, 2021 — Notice 2021-57 provides guidance to multiemployer defined benefit pension plan sponsors and actuaries on the application of funding relief under IRC § 431 and …
  • Notice 2010-83 Dec 20, 2010 — Funding relief for multiemployer defined benefit plans under PRA 2010. This notice provides guidance in the form of questions and answers for sponsors of multi…
Revenue Procedures
  • Rev. Proc. 2016-27 May 9, 2016 — This revenue procedure contains revised procedures for applications for a suspension of benefits under a multiemployer defined benefit pension plan that is in … (b)(3)
  • Rev. Proc. 2015-34 Jul 6, 2015 — This revenue procedure prescribes the application process for proposed suspensions of benefits for certain multiemployer defined benefit pension plans that are… (b)(3)
PBGC
Final Rules
  • 87 FR 40968 Jul 8, 2022 — Special Financial Assistance by PBGC
  • 86 FR 36598 Jul 12, 2021 — Special Financial Assistance by PBGC

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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Jan 4, 1995Jan 7, 2008USC 1994 ed., current through 1995-01-04 run 49Pub. L. 96-364View
Jan 8, 2008Jan 4, 2015USC 2013 ed., current through 2014-01-16 run 13Pub. L. 109-280View · Redline (sign in)
Jan 5, 2015Jan 13, 2019USC 2014 ed., current through 2015-01-05 run 14Pub. L. 113-235View · Redline (sign in)
Jan 14, 2019currentUSC 2024 ed., current through 2025-01-06 run 1Pub. L. 115-141View · Redline (sign in)
Provision-level history (blame)