| 76-8 |
| January 15, 1976 |
| REFERENCE: |
| 4001(b) Definitions. Employer and Controlled Group |
| 4041 Termination by Plan Administrator |
| 4062(e). Liability of Employer in Single Employer Plans. Closing of Facility Affecting More Than 20% of Plan Participants |
| 4063 Liability of Substantial Employer for Withdrawal |
| OPINION: |
| This is in response to your inquiry of December 8, 1975 and subsequent telephone conversation with * * * of our staff. |
| You requested the Pension Benefit Guaranty Corporation ("PBGC") to determine the applicability of Title IV of the |
| Employee Retirement Income Security Act of 1974 (the "Act") to the sale by your client of one of its subsidiaries. |
| As I understand the pertient facts, * * * and some of its divisions and subsidiaries, all of which are members of a |
| controlled group of corporations within the meaning of Internal Revenue Code § 1563, maintain one trusteed pension plan |
| (the "Plan"). Benefits are payable with respect to each participating employee without regard to the cessation of |
| contributions by the entity that employed that participant. That is, the entire trust fund is obligated for the payment of all |
| benefits under the Plan. * * * a wholly-owned subsidiary of * * * and a participating employer in the Plan, employs |
| approximately 200 of the approximately 6,000 participating employees in the Plan. * * * sold 100% of the stock of * * * on |
| or about November 12, 1975, to a buyer which does not intend to contribute to the Plan. Effective December 31, 1975, |
| the next contribution date, each * * * employee participating in the Plan will be totally vested in his benefits accrued to that |
| date. Such vested benefits will be paid to the * * * participants or held for their benefit by the trustee. |
| Based on the above facts, the withdrawal of * * * from the Plan does not need to be officially reported to the PBGC under |
| Title IV. These events do not constitute a plan termination and, therefore, do not have to be reported to the PBGC under |
| Section 4041 of the Act. Since all the participating employers in the Plan are under common control, Section 4001(b) treats |
| them as a single employer. Section 4062(e) of the Act is not applicable because less than 20% of the participating |
| employees will be separated from employment. The withdrawal also does not constitute any of the reportable events set |
| forth in Section 4043(b). (Section 4063 would not be applicable since it only applies to "a plan under which more than one |
| employer contributes;" it does not apply to a single employer plan). |
| Finally, since the PBGC guarantees the payment of all nonforfeitable benefits under the terms of a plan other than |
| benefits becoming nonforfeitable soley on account of the termination of a plan ("normal vested benefits"), such normal |
| vested benefits of * * * participating employees will be guaranteed by the PBGC upon any ultimate termination of the Plan. |
| We hope this information is of assistance to you. |
| Henry Rose |
| General Counsel |