Multiemployer 432 Flashcards
For multiemployer plans, what is the funded percentage?
- AVA/AAL
- AAL uses unit credit funding method and valuation assumptions
When is a multiemployer plan in endangered status (ignoring the endangered but safe rule)?
The plan is not in critical status and the plan has EITHER
- Funded Percentage < 80%
- Accumulated funding deficiency for plan year or next 6 plan years (allowing for amortization extensions)
For multiemployer plans, when would a plan be endagered, but safe?
A plan is endangered but safe if the plan is currently in endangered status, but:
- Not in critical/endangered status in prior year
- Projected not to be in endagered status at the end of the 10th year following current plan year.
When is a multiemployer plan in seriously endangered status (ignoring the endangered but safe rule)?
If the plan is not in critical status and the plan has BOTH
- Funded Percentage < 80%
- Plan has accumulated funding deficiency for plan year or next 6 plan years (allowing for amortization extensions)
When can a plan ELECT to be in critical status?
- Plan not in critical status, but projected to be in critical status in any of the next 5 years
- Elect within 30 days of actuarial certification
After ELECTING to be in critical status, what are the special rules for emerging from critical status?
No special rules - must emerge the same as if they entered critical status.
When is a multiemployer plan in critical and declining status?
If a plan is in critical status and protected to become insolvent within:
- next 15 plan years
- next 20 plan years if and only if
- Funded Percentage < 80% OR
- Inactive Participants/Active Participants > 2
For multiemployer plans, when must the plan actuary certify the plan status (i.e. endangered, critical…) and whether the plan is making the status to funding improvement?
By 90th day of plan year.
If the plan is certified endangered or critical, who must be notified and when?
If you elect to be in critical status do you need to provide this certification?
Within 30 days after certification, must provide notice of status to
- Participants
- Bargaining Parties
- PBGC
- DOL
If you elect critical status, must still provide notice and provide notice to Secretary of Treasury.
If the plan is “endangered/safe” who must be notified and when?
Within 30 days of the certificaation, must provide notice that the plan is not endangered to the:
- PBGC
- bargaining parties
If the plan is not in critical status, but is projected to be in critical status in any of the next X years, you must provide a notice to Y within Z days after certification. What are X, Y, and Z
X = 5
Y = PBGC
Z = 30 days
How many days after the start of the plan year must you adpot the funding improvement plan for an endangered plan? a critical status plan?
Both 330 days
For a multiemployer plan, what is the required increase in the funding percentage by the end of funding improvement period for endangered plans.
final FP = “initial” FP + 33%(100% - FP)
For a multiemployer plan, what is the required increase in the funding percentage by the end of funding improvement period for seriously endangered plans.
final FP = “initial” FP + 20%(100% - FP)
What is the requirement for funding deficiency during the funding improvement plan period for multiemployer plans?
Must avoid accumulated funding deficiency for the last plan year of the funding improvement period.
How long is the funding improvement period for
- Endangered
- Seriously Endangered
- Critical Status Plan
10 years for endangered plans
15 years for seriously endangered plans
10 years for critical plan
When must the funding improvement plan start?
Begins on 1st day of the 1st plan year after the of earlier of
- 2nd anniversery of adoption date for funding improvement plan
- Expiration of collective bargaining agreements in effect on due date for actuarial certification of endangered status for initial determination year. CBA must cover at least 75% of active participants at that due date.
Once the funding improvement plan is adopted (effective), what is the restriction on amendments?
(Note that’s 2 questions)
Cannot adopt amendment which increase benefits
- Exception 1: plan amendment needed for plan to remain qualified
- Exception 2: (Once improvement plan if effective) funding improvement plan is in place and the increase in benefits is paid by additional contributions
Once the funding improvement plan is adopted, what is the restriction on CBA?
The plan sponsor is not allowed to enter into a collective bargaining agreement that
- reduces the rate of contributions, or
- suspends contributions, or
- excludes younger or newly hired employees from participation
Critical Status Rehabilitation Plan Definition
Actions or range of options formulated to enable plan to no longer be in critical status at the end of the rehabilitation period
If plan can not reasonably be expected to emerge from critical status by the end of the rehabilitation period, the rehabilitation plan must define measures to emerge from critical status at a later time, or to forestall insolvency
For a plan in critical status, what are the restrictions on FOP?
- Cannot pay in excess of the SLA + Social Security supplement
- Mandatory Cashout is ok
- No Annuity Purchase
How do you emerge from critical status if you don’t have amortization extentensions?
- No longer satisfy critical status definition
- Plan not projected to be insolvent in next 30 years
- Plan is not projected to have accumulated funding deficiency for that year, or any of the 9 next plan years
- Including amortization extensions
- Ignoring the shortfall funding method
How does critical status emergence and reentry change if you have automatic amortization extentensions?
Plan exits critical status if:
- Plan not projected to be insolvent in next 30 years
- Plan is not projected to have accumulated funding deficiency for that year, or any of the 9 next plan years
- Including amortization extensions
- Ignoring the shortfall funding method
Plan will reenter if they fail to meet either of the above in a subsequent year.
Multiemployer Critical Status Criteria 1
The funded percentage < 65% AND
The sum of the MVA and PV of expected contributions for the current year and the next six years <
than the present value of the expected future non-forfeitable benefits projected to be payable in the current year and the next six years.
