29 U.S.C. § 1081 — Coverage

Page 447 TITLE 29—LABOR § 1081 gate, than the rules provided under sections 1052, 1053, and 1054 of this title. (2) For purposes of paragraph (1), the term ‘‘supplementary or special plan provision’’ means any plan provision which— (A) provides supplementary benefits, not in excess of one-third of the basic benefit, in the form of an annuity for the life of the partici- pant, or (B) provides that, under a contractual agree- ment based on medical evidence as to the ef- fects of working in an adverse environment for an extended period of time, a participant hav- ing 25 years of service is to be treated as hav- ing 30 years of service. (3) This subsection shall apply with respect to a plan if (and only if) the application of this sub- section results in a later effective date for this part than the effective date required by sub- section (b). (d) If the administrator of a plan elects under section 1017(d) of this Act to make applicable to a plan year and to all subsequent plan years the provisions of title 26 relating to participation, vesting, funding, and form of benefit, this part shall apply to the first plan year to which such election applies and to all subsequent plan years. (e)(1) No pension plan to which section 1052 of this title applies may make effective any plan amendment with respect to breaks in service (which amendment is made or becomes effective after January 1, 1974, and before the date on which section 1052 of this title first becomes ef- fective with respect to such plan) which provides that any employee’s participation in the plan would commence at any date later than the later of— (A) the date on which his participation would commence under the break in service rules of section 1052(b) of this title, or (B) the date on which his participation would commence under the plan as in effect on January 1, 1974. (2) No pension plan to which section 1053 of this title applies may make effective any plan amendment with respect to breaks in service (which amendment is made or becomes effective after January 1, 1974, and before the date on which section 1053 of this title first becomes ef- fective with respect to such plan) if such amend- ment provides that the nonforfeitable benefit derived from employer contributions to which any employee would be entitled is less than the lesser of the nonforfeitable benefit derived from employer contributions to which he would be en- titled under— (A) the break in service rules of section 1052(b)(3) of this title, or (B) the plan as in effect on January 1, 1974. Subparagraph (B) shall not apply if the break in service rules under the plan would have been in violation of any law or rule of law in effect on January 1, 1974. (f) The preceding provisions of this section shall not apply with respect to amendments made to this part in provisions enacted after September 2, 1974. (Pub. L. 93–406, title I, § 211, Sept. 2, 1974, 88 Stat. 867; Pub. L. 99–272, title XI, § 11015(a)(1)(B), Apr. 7, 1986, 100 Stat. 265; Pub. L. 101–239, title VII, §§ 7891(a)(1), 7894(h)(2), Dec. 19, 1989, 103 Stat. 2445, 2451.) Editorial Notes REFERENCES IN TEXT Section 1086(c) of this title, referred to in subsec. (c)(1), was in the original ‘‘section 307(c)’’, meaning sec- tion 307(c) of Pub. L. 93–406, the Employee Retirement Income Security Act of 1974. Section 307(c) was renum- bered section 308(c) by Pub. L. 100–203, title IX, § 9341(b)(1), Dec. 22, 1987, 101 Stat. 1330–370 and subse- quently was repealed by Pub. L. 109–280, title I, § 101(a), Aug. 17, 2006, 120 Stat. 784. This chapter, referred to in subsec. (c)(1), was in the original ‘‘this Act’’, meaning Pub. L. 93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified prin- cipally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables. Section 1017(d) of this Act, referred to in subsec. (d), is section 1017 of Pub. L. 93–406, which is set out as an Effective Date; Transitional Rules note under section 410 of Title 26. AMENDMENTS 1989—Subsecs. (c)(1), (d). Pub. L. 101–239, § 7891(a)(1), substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Inter- nal Revenue Code of 1954’’, which for purposes of codi- fication was translated as ‘‘title 26’’. Subsec. (f). Pub. L. 101–239, § 7894(h)(2), added subsec. (f). 1986—Subsec. (c)(1). Pub. L. 99–272 made a technical amendment to the reference to section 1086(c) of this title to reflect the renumbering of the corresponding section of the original act. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7891(a)(1) of Pub. L. 101–239 ef- fective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7891(f) of Pub. L. 101–239, set out as a note under section 1002 of this title. Amendment by section 7894(h)(2) of Pub. L. 101–239 ef- fective, except as otherwise provided, as if originally included in the provision of the Employee Retirement Income Security Act of 1974, Pub. L. 93–406, to which such amendment relates, see section 7894(i) of Pub. L. 101–239, set out as a note under section 1002 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–272 applicable with respect to applications for waivers, extensions, and modifica- tions filed on or after Apr. 7, 1986, see section 11015(a)(3) of Pub. L. 99–272, set out as an Effective Date note under section 412 of Title 26, Internal Revenue Code. PART 3—FUNDING § 1081. Coverage (a) Plans excepted from applicability of this part This part shall apply to any employee pension benefit plan described in section 1003(a) of this title, (and not exempted under section 1003(b) of this title), other than— (1) an employee welfare benefit plan; (2) an insurance contract plan described in subsection (b); (3) a plan which is unfunded and is main- tained by an employer primarily for the pur- pose of providing deferred compensation for a Page 448 TITLE 29—LABOR § 1081 select group of management or highly com- pensated employees; (4)(A) a plan which is established and main- tained by a society, order, or association de- scribed in section 501(c)(8) or (9) of title 26, if no part of the contributions to or under such plan are made by employers of participants in such plan; or (B) a trust described in section 501(c)(18) of title 26; (5) a plan which has not at any time after September 2, 1974, provided for employer con- tributions; (6) an agreement providing payments to a re- tired partner or deceased partner or a deceased partner’s successor in interest as described in section 736 of title 26; (7) an individual retirement account or an- nuity as described in section 408(a) of title 26, or a retirement bond described in section 409 of title 26 (as effective for obligations issued before January 1, 1984); (8) an individual account plan (other than a money purchase plan) and a defined benefit plan to the extent it is treated as an indi- vidual account plan (other than a money pur- chase plan) under section 1002(35)(B) of this title; (9) an excess benefit plan; or (10) any plan, fund or program under which an employer, all of whose stock is directly or indirectly owned by employees, former em- ployees or their beneficiaries, proposes through an unfunded arrangement to com- pensate retired employees for benefits which were forfeited by such employees under a pen- sion plan maintained by a former employer prior to the date such pension plan became subject to this chapter. (b) ‘‘Insurance contract plan’’ defined For the purposes of paragraph (2) of subsection (a) a plan is an ‘‘insurance contract plan’’ if— (1) the plan is funded exclusively by the pur- chase of individual insurance contracts, (2) such contracts provide for level annual premium payments to be paid extending not later than the retirement age for each indi- vidual participating in the plan, and com- mencing with the date the individual became a participant in the plan (or, in the case of an increase in benefits, commencing at the time such increase became effective), (3) benefits provided by the plan are equal to the benefits provided under each contract at normal retirement age under the plan and are guaranteed by an insurance carrier (licensed under the laws of a State to do business with the plan) to the extent premiums have been paid, (4) premiums payable for the plan year, and all prior plan years under such contracts have been paid before lapse or there is reinstate- ment of the policy, (5) no rights under such contracts have been subject to a security interest at any time dur- ing the plan year, and (6) no policy loans are outstanding at any time during the plan year. A plan funded exclusively by the purchase of group insurance contracts which is determined under regulations prescribed by the Secretary of the Treasury to have the same characteristics as contracts described in the preceding sentence shall be treated as a plan described in this sub- section. (c) Applicability of this part to terminated multi- employer plans This part applies, with respect to a terminated multiemployer plan to which section 1321 of this title applies, until the last day of the plan year in which the plan terminates, within the mean- ing of section 1341a(a)(2) of this title. (Pub. L. 93–406, title I, § 301, Sept. 2, 1974, 88 Stat. 868; Pub. L. 96–364, title III, § 304(a), title IV, § 411(b), Sept. 26, 1980, 94 Stat. 1293, 1308; Pub. L. 101–239, title VII, §§ 7891(a)(1), 7894(d)(1)(A), (4)(A), Dec. 19, 1989, 103 Stat. 2445, 2449; Pub. L. 109–280, title II, § 201(c)(1), Aug. 17, 2006, 120 Stat. 868.) Editorial Notes REFERENCES IN TEXT Section 409 of title 26, referred to in subsec. (a)(7), means section 409 of Title 26, Internal Revenue Code, prior to its repeal by Pub. L. 98–369, div. A, title IV, § 491(b), July 18, 1984, 98 Stat. 848, applicable to obliga- tions issued after Dec. 31, 1983. This chapter, referred to in subsec. (a)(10), was in the original ‘‘this Act’’, meaning Pub. L. 93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified prin- cipally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables. AMENDMENTS 2006—Subsec. (d). Pub. L. 109–280 struck out heading and text of subsec. (d). Text read as follows: ‘‘Any amount of any financial assistance from the Pension Benefit Guaranty Corporation to any plan, and any re- payment of such amount, shall be taken into account under this section in such manner as determined by the Secretary of the Treasury.’’ 1989—Subsec. (a)(4)(A), (6). Pub. L. 101–239, § 7891(a)(1), substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Inter- nal Revenue Code of 1954’’, which for purposes of codi- fication was translated as ‘‘title 26’’ thus requiring no change in text. Subsec. (a)(7). Pub. L. 101–239, § 7894(d)(4)(A), sub- stituted ‘‘section 409 of title 26 (as effective for obliga- tions issued before January 1, 1984)’’ for ‘‘section 409 of title 26’’. Subsec. (a)(8). Pub. L. 101–239, § 7894(d)(1)(A)(i), struck out ‘‘or’’ after semicolon at end. Subsec. (a)(9). Pub. L. 101–239, § 7894(d)(1)(A)(ii), sub- stituted ‘‘; or’’ for period at end. Subsec. (a)(10). Pub. L. 101–239, § 7894(d)(1)(A)(iii), sub- stituted ‘‘any’’ for ‘‘Any’’. 1980—Subsec. (a)(10). Pub. L. 96–364, § 411(b), added par. (10). Subsecs. (c), (d). Pub. L. 96–364, § 304(a), added subsecs. (c) and (d). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–280, title II, § 201(d), Aug. 17, 2006, 120 Stat. 868, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [enacting section 1084 of this title and amending this section] shall apply to plan years beginning after 2007. ‘‘(2) SPECIAL RULE FOR CERTAIN AMORTIZATION EXTEN- SIONS.—If the Secretary of the Treasury grants an ex- Page 449 TITLE 29—LABOR § 1082 tension under section 304 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1084] and section 412(e) of the Internal Revenue Code of 1986 [former 26 U.S.C. 412(e)] with respect to any application filed with the Secretary of the Treasury on or before June 30, 2005, the extension (and any modification thereof) shall be applied and administered under the rules of such sec- tions as in effect before the enactment of this Act [Aug. 17, 2006], including the use of the rate of interest deter- mined under section 6621(b) of such Code [26 U.S.C. 6621(b)].’’ EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7891(a)(1) of Pub. L. 101–239 ef- fective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7891(f) of Pub. L. 101–239, set out as a note under section 1002 of this title. Section 7894(d)(1)(B) of Pub. L. 101–239 provided that: ‘‘The amendments made by subparagraph (A) [amend- ing this section] shall take effect as if included in sec- tion 411 of the Multiemployer Pension Plan Amend- ments Act of 1980 [Pub. L. 96–364].’’ Section 7894(d)(4)(B) of Pub. L. 101–239 provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall take effect as if originally included in section 491(b) of Public Law 98–369.’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–364 effective Sept. 26, 1980, except as specifically provided, see section 1461(e) of this title. REGULATIONS Secretary authorized, effective Sept. 2, 1974, to pro- mulgate regulations wherever provisions of this sub- chapter call for the promulgation of regulations, see section 1031 of this title. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION For applicability of amendment by Pub. L. 109–280 to a multiemployer plan that is a party to an agreement that was approved by the Pension Benefit Guaranty Corporation prior to June 30, 2005, and that increases benefits and provides for certain withdrawal liability rules, see section 206 of Pub. L. 109–280, set out as a note under section 412 of Title 26, Internal Revenue Code. § 1082. Minimum funding standards (a) Requirement to meet minimum funding standard (1) In general A plan to which this part applies shall sat- isfy the minimum funding standard applicable to the plan for any plan year. (2) Minimum funding standard For purposes of paragraph (1), a plan shall be treated as satisfying the minimum funding standard for a plan year if— (A) in the case of a defined benefit plan which is a single-employer plan (other than a CSEC plan), the employer makes contribu- tions to or under the plan for the plan year which, in the aggregate, are not less than the minimum required contribution deter- mined under section 1083 of this title for the plan for the plan year, (B) in the case of a money purchase plan which is a single-employer plan, the em- ployer makes contributions to or under the plan for the plan year which are required under the terms of the plan, (C) in the case of a multiemployer plan, the employers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated fund- ing deficiency under section 1084 of this title as of the end of the plan year, and (D) in the case of a CSEC plan, the employ- ers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated funding deficiency under section 1085a of this title as of the end of the plan year. (b) Liability for contributions (1) In general Except as provided in paragraph (2), the amount of any contribution required by this section (including any required installments under paragraphs (3) and (4) of section 1083(j) of this title or under section 1085a(f) of this title) shall be paid by the employer respon- sible for making contributions to or under the plan. (2) Joint and several liability where employer member of controlled group If the employer referred to in paragraph (1) is a member of a controlled group, each mem- ber of such group shall be jointly and severally liable for payment of such contributions. (3) Multiemployer plans in critical status Paragraph (1) shall not apply in the case of a multiemployer plan for any plan year in which the plan is in critical status pursuant to section 1085 of this title. This paragraph shall only apply if the plan sponsor adopts a reha- bilitation plan in accordance with section 1085(e) of this title and complies with the terms of such rehabilitation plan (and any up- dates or modifications of the plan). (c) Variance from minimum funding standards (1) Waiver in case of business hardship (A) In general If— (i) an employer is (or in the case of a multiemployer plan or a CSEC plan, 10 percent or more of the number of employ- ers contributing to or under the plan are) unable to satisfy the minimum funding standard for a plan year without tem- porary substantial business hardship (sub- stantial business hardship in the case of a multiemployer plan), and (ii) application of the standard would be adverse to the interests of plan partici- pants in the aggregate, the Secretary of the Treasury may, subject to subparagraph (C), waive the requirements of subsection (a) for such year with respect to all or any portion of the minimum fund- ing standard. The Secretary of the Treasury shall not waive the minimum funding stand- ard with respect to a plan for more than 3 of any 15 (5 of any 15 in the case of a multiem- ployer plan) consecutive plan years.