Pension Plan Terminations — Single Employer Plans (Portfolio 357)

Description

Bloomberg Tax Portfolio, Pension Plan Terminations — Single Employer Plans, No. 357, addresses the issues that arise in connection with the standard, distress and involuntary terminations of single-employer qualified defined benefit and defined contribution plans and in connection with the partial termination or spinoffs of such plans. This Portfolio also discusses the ERISA fiduciary and tax implications of plan termination.

Among the more important of these issues are the requirements that apply to the termination of a defined benefit plan under Title IV of ERISA. This Portfolio discusses the litigation which has occurred involving the priority of PBGC’s claims for employer liability upon the termination of pension plans in the bankruptcy context. The interplay between Title IV of ERISA and the Bankruptcy Code, including court decisions, is examined. Outside of bankruptcy situations, the Portfolio also considers threatened involuntary plan terminations in the context of pending corporate transactions arising from the PBGC’s “early warning” program.

A number of questions with respect to the qualification of a plan under the Internal Revenue Code arise when a plan is terminated, and such questions, together with the issues of whether a plan has been partially terminated and the effect thereof, are discussed.

Table of Contents

I. Introduction
II. Plan Terminations Under ERISA
III. Standard Terminations
IV. Distress Termination
V. Involuntary Termination
VI. Termination of Defined Contribution Plans
VII. IRS Tax Qualification of Terminated Plan
VIII. Collective Bargaining Considerations
IX. Liabilities to PBGC
X. Bankruptcy Considerations
XI. Employer Deductions
XII. Taxation of Distributions to Participants or Reversions to the Employer
XIII. Partial Plan Termination