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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations amount is the present value of vested benefits as of December 31, 2021, including the present value of the vested benefits that are expected to be restored effective January 1, 2034. The plan sponsor then determines Employer As proportional share of the value of the suspended benefits. The plan uses the static value method. The value of the suspended benefits equals the present value, as of December 31, 2018, of the benefits accrued as of December 30, 2018, that would otherwise have been expected to have been paid, but for the benefit suspension, during the 15year period beginning December 31, 2018, and ending December 31, 2033.
The portion of this present value allocable to Employer A is added to the unfunded vested benefits allocable to Employer A under section 4211 of ERISA.
c. Partial Withdrawals PBGC invited public comment on whether the examples in the proposed rule are helpful and whether there are additional types of examples that would help plan sponsors with these calculations. Two commenters stated
that the provided examples are helpful and suggested that PBGC provide examples involving partial withdrawals.
One commenter asked for clarification with examples of the simplified method for adjustable benefit reductions as applied to partial withdrawals. Section 4206 of ERISA and 29 CFR part 4206
provide rules for determining the amount of an employers liability for a partial withdrawal and, in the case of a subsequent withdrawal, for determining the amount of the reduction of the employers liability for the prior partial withdrawal. PBGC appreciates the comments requesting examples involving partial withdrawals and provides the following example using the simplified method in 4211.16.
Example: Assume the following:
1 The employers allocable amount of unfunded vested benefits determined under section 4211 of ERISA is $1,000,000.
2 The employers proportional share of the value of the adjustable benefit reduction is $100,000 after 8 years of amortization of the original amount.
3 The employers proportional share of the value of the benefit suspension is
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$250,000 the employers partial withdrawal occurs 3 years after the effective date of the benefit suspension.
To calculate the employers withdrawal liability amount, under 4211.16b, the amounts in 1 through 3 above are added together for a sum of $1,350,000. Based on the sum, a de minimis reduction would not apply.
The sum is then adjusted in accordance with the rules for adjustment of partial withdrawal under section 4206 of ERISA. Thus, in this example, the employers proportional share of the value of the adjustable benefit reduction and proportional share of the value of the benefit suspension are disregarded in determining the withdrawn employers partial withdrawal liability assessment amount.
4. Chart of Simplified Methods To Determine Employers Proportional Share of the Value of a Benefit Suspension and an Adjustable Benefit Reduction The following chart provides a summary of the simplified methods discussed above:

EMPLOYERS PROPORTIONAL SHARE OF THE VALUE OF A BENEFIT SUSPENSION OR AN ADJUSTABLE BENEFIT REDUCTION
Value of benefit allocation fraction Benefit suspension
tkelley on DSKBCP9HB2PROD with RULES

Method
Adjustable benefit reduction Static value method
Adjusted value method
Value of Benefit Suspension or Adjustable Benefit Reduction.

Withdrawals in years 110 after the benefit suspension: Present value of the suspended benefits as authorized by the Department of the Treasury in accordance with section 305e9 of ERISA calculated as of the date of the benefit suspension or the last day of the plan year coincident with or following the date of the benefit suspension.

Withdrawals in year 1 after the suspension: Same as Static Value Method.
Withdrawals in years 210 after the suspension: The present value, determined as of the end of the plan year before a withdrawal, of the benefits not expected to be paid in the year of withdrawal or thereafter due to the benefit suspension.

Allocation Fraction ..

For all three methods, the Allocation Fraction is the amount of the employers required contributions over a 5-year period divided by the amount of all employers contributions over the same 5-year period. The Allocation Fraction is determined in accordance with rules to disregard contribution increases under 4211.4 and permissible modifications and simplifications under 4211.1215.

Five-Year Period for the Allocation Fraction.

Five consecutive plan years ending before the plan year in which the benefit suspension takes effect.

Five consecutive plan years ending before the employers withdrawal.

Choice of 5 consecutive plan years ending before the employers withdrawal or the plan year in which the adjustable benefit reduction takes effect.

Adjustments to DeSame as Adjusted Value Method, but nominator of the using the 5-year period for the Static Allocation Fraction.
Value Method. In addition, if a plan uses a method other than the presumptive method, the denominator after the first year of the 5-year period is decreased by the contributions of any employers that withdrew from the plan and were unable to satisfy their withdrawal liability claims in any year before the employers withdrawal.

The denominator is increased by any employer contributions owed with respect to earlier periods which were collected in the 5-year period and decreased by any amount contributed by an employer that withdrew from the plan during the 5-year period, or, alternatively, adjusted as permitted under 4211.12.

Same as Adjusted Value Method if using 5 consecutive plan years before the employers withdrawal.
If using alternative 5-year period, same as Static Value Method, but using the 5 consecutive plan years before the plan year in which the adjustable benefit reduction takes effect.

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Unamortized balance of the value of the adjustable benefit reduction using the same assumptions as for UVBs for purposes of section 4211
of ERISA and amortization in level annual installments over 15 years.

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