Pension Benefit Guaranty Corporation 94-8 Septembe r 30, 1994 RE FE RE NC E: [*1] 4203(b) Co mplete W ithdrawal. Building & Construction Industry Exemption >4211( )> >4211( )( 4)( B)> 421 9 N otice & Co llection o f W ithdraw al Liab ility 422 1 Reso lution of Disputes >29 USC 1461 n ote > OP INI ON : I wri te i n res ponse t o your reque st for the opini on of the Pension Benefit Guaranty Corporation ("PBG C"). Your fir st r equest c oncerns a par ticu lar applicat ion of t he princ iples set f orth i n the PBGC's Notice enti tled "Mult iemployer Pensi on Plans ; With drawal Liabi li ty in Pl ans w it hout Unfun ded Vest ed Benef it s," 56 Fed. Reg. 12288 (March 1991) (the "March 19 91 No tice"), copy encl osed. Your second r equest c oncerns t he determi nati on of real located u nfunded vested bene fits with resp ect to c ertain p lans co vering emp loyers in th e build ing and cons truction industry. W ith regar d to yo ur first req uest, PBGC believe s t hat the appli cati on of t he pri ncipl es s et f orth in t he March 1991 Notice to part icul ar fact patter ns and al locati on methods i s best lef t to pl an sponsor r eview and arbitrati on under sections 421 9 and 422 1 of E RIS A, sub ject to j udicia l review . In your second request, you ask about an em ploye r subj ect to the spe cial "c onstru ction ind ustry" w ithdraw al rule in sec ti on 4203 (b) of [* 2] ERI SA who no longer participates i n a plan but has not wit hdrawn under that rule. Mo re spec ifically, you ask whether the unf unded vest ed benefi ts ot herwis e all ocable to s uch an em ploye r must b e includ ed in reall ocated unfunded vested ben efits when determining the withd rawal liability of withdrawing emp loyers u nder the "pr esum ptive ru le" in se ction 4 211 (b) o f ER ISA . Secti on 4211(b )(4)( B) of ER ISA provides that "[e]xcept as otherwise provided in regul ations prescribed by the corp oratio n, the rea llocate d unfu nde d ves ted b enefits for a plan year is the su m of -- (i) any amount which the plan spons or determi nes in that plan ye ar to be uncol lect ible f or reasons aris ing out of cases or proceedings under title 11, United Stat es Code, or similar proceedings[,] (ii) any am ount w hich the plan sp onso r dete rmine s in that pla n year w ill not be ass esse d as a r esul t of the operat ion of sec ti on 4209 , 421 9(c) (1) (B), or 422 5 aga in st an e mplo yer to w hom a notic e descri bed in sect ion 4219 has been sent, and (iii) any am ount w hich the plan sp onso r dete rmine s to be uncol lect ibl e or un asse ssabl e in tha t pl an ye ar f or other reasons under standards not inconsis tent wit h regulati ons prescribed by the corporation. [*3] As you know, PBG C has not issued regulat ions under thi s provis ion. However, secti on 405(a) of t he Multiempl oyer Pensi on Plan Amendments Act of 1980, Pub. L. No. 96-364, 94 Stat . 1208, 1303, permit s plan s ponsors t o act in advance of PB GC 's prom ulgation of regu lations, so long a s their ac tions are reaso nab le. W ith regar d to yo ur pa rticular q uestion , section 421 1(b )(4)(B )(iii) of ER ISA does not expl icit ly r equire t hat an em ployer hav e wit hdrawn under secti on 4203 for the pl an sponsor t o determin e that amounts wi th res pect to t hat employer should be treated as reall ocated unfunded vested benefits when calcul ating the with drawal l iabil ity of anoth er emp loyer. Acc ord ingly, it wou ld be reaso nab le for a plan spo nsor to de termine that amo unts are unassessab le against an employer, withi n the meaning of section 4211(b)(4)(B)(iii) of ERISA, even though the employer h as not wi thdrawn under s ecti on 4203(b) of ERISA. This a pproach would be cons ist ent wit h th e pri ncipl e th at, under any method of calculati ng wit hdrawa l l iabi li ty , t he f ull amount of unfunded vested benefits under the plan should be allocated among the employers with r espect to who m wi th draw al li abi li ty may be as ses sed and c oll ect ed. [* 4] Se e ERISA §

421 1( c) (5 )( B) (requiri ng t hat alt ernat ive all ocati on met hods pr escr ibed by regu lat ion pr ovide for the all ocati on of substa ntially all of th e plan' s unf unded veste d benefi ts among empl oyers wh o have an obli gati on to contr ibute under the plan) . If you ha ve furthe r que stion ab out the se ma tters, you m ay call Ja mes B eller of m y office at 2 02-3 26-4 076 . Carol Connor Flowe Ge neral C ouns el