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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations after the revaluation date due to the benefit suspension. An employers proportional share of the present value of a benefit suspension to which this paragraph c applies using the adjusted value method is determined by multiplying the present value of the suspended benefits by a fraction i The numerator is the sum of all contributions required to be made by the withdrawing employer for the 5
consecutive plan years ending before the employers withdrawal; and ii The denominator is the total of all employers contributions for the 5
consecutive plan years ending before the employers withdrawal, increased by any employer contributions owed with respect to earlier periods which were collected in those plan years, and decreased by any amount contributed by an employer that withdrew from the plan during those plan years.
iii In determining the numerator and the denominator in this paragraph c3, the rules under 4211.4 and permissible modifications under 4211.12 and simplified methods under 4211.14 and 4211.15 apply.
iv If a benefit suspension in 4211.6a3 is a temporary suspension of the plans payment obligations as authorized by the Department of the Treasury, the present value of the suspended benefits in this paragraph c3 includes only the value of the suspended benefits through the ending period of the benefit suspension.
d Benefit reductions. This paragraph d applies to benefits reduced under 4211.6a1 or 2.
1 Value of a benefit reduction. The value of a benefit reduction is i The unamortized balance, as of the end of the plan year before the withdrawal, of;
ii The value of the benefit reduction as of the end of the plan year in which the reduction took effect; and iii Determined using the same assumptions as for unfunded vested benefits and amortization in level annual installments over a period of 15
years.
2 Employers proportional share of a benefit reduction. An employers proportional share of the value of a benefit reduction to which this paragraph d applies is determined by multiplying the value of the benefit reduction by a fraction i The numerator is the sum of all contributions required to be made by the withdrawing employer for the 5
consecutive plan years ending before the employers withdrawal; and ii The denominator is the total of all employers contributions for the 5
consecutive plan years ending before
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the employers withdrawal, increased by any employer contributions owed with respect to earlier periods which were collected in those plan years, and decreased by any amount contributed by an employer that withdrew from the plan during those plan years.
iii The 5 consecutive plan years ending before the plan year in which the adjustable benefit reduction takes effect may be used in determining the numerator and the denominator in this paragraph d. If such 5-year period is used, in determining the denominator, if a plan uses an allocation method other than the presumptive method in section 4211b of ERISA or similar method, the denominator after the first year 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.
iv In determining the numerator and the denominator in this paragraph d, the rules under 4211.4 and permissible modifications under 4211.12 and simplified methods under 4211.14 and 4211.15 apply.
e Example. The simplified framework using the static value method under 4211.16c2 for disregarding a benefit suspension is illustrated by the following example.
1 Facts. Assume that a calendar year multiemployer plan receives final authorization by the Secretary of the Treasury for a benefit suspension, effective January 1, 2018. The present value, as of that date, of the benefit suspension is $30 million. Employer A, a contributing employer, withdraws during the 2022 plan year. Employer As proportional share of contributions for the 5 plan years ending in 2017 the year before the benefit suspension takes effect is 10 percent. Employer As proportional share of contributions for the 5 plan years ending before Employer As withdrawal in 2022 is 11 percent.
The plan uses the rolling-5 method for allocating unfunded vested benefits to withdrawn employers under section 4211 of ERISA. The plan sponsor has adopted by amendment the static value simplified method for disregarding benefit suspensions in determining unfunded vested benefits. Accordingly, there is a one-time valuation of the initial value of the suspended benefits with respect to employer withdrawals occurring during the 2019 through 2028
plan years, the first 10 years of the benefit suspension.
2 Unfunded vested benefits allocable to Employer A. To determine the amount of unfunded vested benefits allocable to Employer A, the plans actuary first determines the amount of
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Employer As withdrawal liability as of the end of 2021 assuming the benefit suspensions remain in effect. Under the rolling-5 method, if the plans unfunded vested benefits as determined in the plans 2021 plan year valuation were $170 million not including the present value of the suspended benefits, the share of these unfunded vested benefits allocable to Employer A is equal to $170
million multiplied by Employer As allocation fraction of 11 percent, or $18.7 million. The plans actuary then adds to this amount Employer As proportional 10 percent share of the $30
million initial value of the suspended benefits, or $3 million. Employer As share of the plans unfunded vested benefits for withdrawal liability purposes is $21.7 million $18.7 million + $3 million.
3 Adjustment of allocation fraction.
If another significant contributing employerEmployer Bhad withdrawn in 2019 and was unable to satisfy its withdrawal liability claim, the allocation fraction applicable to the value of the suspended benefits is adjusted. The contributions in the denominator for the last 5 plan years ending in 2017 is reduced by the contributions that were made by Employer B, thereby increasing Employer As allocable share of the $30
million value of the suspended benefits.
f Effective and applicability dates.
1 Effective date. This section is effective on February 8, 2021.
2 Applicability date. This section applies to employer withdrawals from multiemployer plans that occur in plan years beginning on or after February 8, 2021.
4211.21

Amended
22. In 4211.21, amend paragraph b by removing 4211.12 and adding in its place section 4211 of ERISA.

4211.31

Amended
23. In 4211.31, amend paragraph b by removing set forth in 4211.12
and adding in its place subpart B of this part.
24. Amend 4211.32 by adding paragraph c2iii to read as follows:

4211.32 Presumptive method for withdrawals after the initial plan year.

c
2
iii In determining the numerator and the denominator in this paragraph c, the rules under 4211.4 and permissible simplified methods under 4211.14 and 4211.15 apply.

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