Pension Benefit Guaranty Corporation 94-5 Septembe r 27, 1994 RE FE RE NC E: [*1] 4 211 W ithdraw al Liab ility >29 CFR 2644 .2( d)> OP INI ON : I writ e in re sponse t o your l ette r request ing cl arif icat ion o f P BGC Opinion Let ter 90- 2 to the extent it addresses calc ulat ion of unf unded vest ed benefi ts f or purposes of secti on 4211 of the Employee Ret ir emen t I ncome Securit y Act of 1974, as amended ( "ERISA"). There, we wrot e th at t he val ue of unf unde d vest ed benefi ts can not be modif ied retroa ctively if the pl an' s actu ary l ater f inds an error i n it s calc ulat ion. Any adjust ment to t he valu e of th e unf unde d vested bene fits would have o nly a pro spec tive imp act. Therefore, if f aulty as sumptions result ed in an understatement of unfunded vested benefits, employers who wer e under asse ssed wit hdrawa l l iabi li ty as a r esul t wou ld not gener all y be subje ct to an add itional ass essme nt. You ask us to reevaluat e that is sue with res pect to a mathematical or computational err or that resul ts in a with drawal liability overpayment . You asser t th at a computer progr am used to gen erate a n actuar ial valuat ion was f lawed so that the valuatio n did not co rrectly refl ect t he plan' s actu arial assumpti ons The trus tees of the pl an do not wish to change any of th e as sump ti ons or da ta use d fo r pu rpos es o f de ter min in g [* 2] wi th draw al li abi li ty . The y wi sh o nl y t o ru n t he s ame assumptions and data thr oug h correct ed soft ware. The corr ected cal culat ions wi ll r esult primari ly i n reduced assessments, and the t rust ees do not intend to incre ase ass essme nts even for the few emp loyers w hose withdra wal liab ility was understated because of the computer e rror. In par ti cula r, y ou have aske d whet her t he t rust ees ma y re fun d a wit hdrawal lia bili ty over payment r esult ing f rom such an er ror where the employ er did not , or can n o longer, reques t review and/o r arbitra tion of the origina l assessm ent. In Opin ion Lette r 90-2, we were ref errin g to err ors rel atin g to mis taken or varyi ng data or actuar ial assumptions, rather than er rors t hat ar e purely mathemati cal or comput ationa l in nature. Mo reover, we assumed that the Trustees were con siderin g add itional ass essme nts for un derp ayme nts, rather than refu nds fo r ove rpaym ents, ba sed o n these e rrors. Under app licable PBGC regulati ons, a plan sponsor is required t o refund any amount of withd rawa l liability paid by an empl oyer tha t i s su bseque ntl y de termi ned to be an over paymen t dur ing the revi ew and a rbit rat ion pr ocess . 29 C.F. R. § 2644.2( d). Because the purpos e of t his [*3] requ ireme nt is to enc oura ge withd rawa l liability paym ents to the plan whi le t he l iabi li ty is in di spu te, the r egulation does not requi re the refun d of any a mount deter mined to be an overpayment after the expiration of t he time for revi ew and arbitration. PBG C Op inion Letter 86-11 (M ay 13, 1986). Similarl y, howe ver, no thing in the regula tion or in Title I V o f ER ISA prec ludes the refun d of a withdra wal liab ility ove rpaym ent. Of cou rse, any such refund o f a withdrawal liability overpayme nt must come within an exception to t he exclusive ben efit rule of T itle I of ERISA, whi ch provides that the as sets of a pla n are t o be used for the excl usive benefi t of pl an part ici pa nts and b eneficia ries and shall nev er inure to the b enefit of a n emp loyer. E RIS A § 4 03( c); 29 U.S .C. § 1103(c). See al so IRC § 401( a)(2) . The Depar tment of Labor has resp onsib ility for interp reting E RIS A § 4 03( c). W e understand that you have request ed the Department of Labor's opinion. We also note that the Department of Treasury has propose d regu lat ions on th is subje ct. Prop. Tre as. Re g. 1.4 01( a)-3, 4 8 Fe d. Re g. 10 374 (19 83) . W e will de fer to the ir views o n this issue. I hope this let ter is of assist ance. [*4] If you have any addit ional quest ions , pl ease conta ct D. Bruce Campbel l of my staff at the abo ve ad dress or at (2 02) 326 -412 3. Carol Connor Flowe Ge neral C ouns el