The IRS has issued more guidance about the Multiemployer Pension Reform Act (MPRA), which allows, in certain circumstances, the suspension of benefits. At the same time, opponents of the MPRA are trying to persuade Congress to repeal the law.
Suspension of benefits
Under the MPRA, a multiemployer defined benefit (DB) plan in critical or declining status may ask the Treasury Department for permission to suspend benefits. A suspension of benefits is the temporary or permanent reduction of any current or future payment obligation of the plan to any participant or beneficiary under the plan, whether or not in pay status at the time of the suspension of benefits. Generally, a multiemployer DB plan is in critical status if, among other criteria, the plan is projected to become insolvent.
The MPRA requires that qualified participants and beneficiaries vote on the proposed suspension of benefits. The vote will be administered by the Treasury Department, in consultation with the U.S. Department of Labor (DOL) and the Pension Benefit Guaranty Corporation (PBGC). The three agencies will approve the ballot provided by the plan sponsor. Among other criteria, the ballot must include a statement opposing the proposed suspension of benefits. If a majority of plan participants and beneficiaries do not vote to reject the suspension, Treasury will authorize the suspension of benefits.
On September 10, the IRS held a hearing about the MPRA in Washington, D.C., where many speakers voiced their opposition to the law. Retirees and beneficiaries told the IRS that they were fearful that plans would attempt to misuse the MPRA to suspend benefits even though the plans were not in critical or declining status.
At a news conference the same day, Sen. Bernie Sanders, I-Vermont; and Reps. Marcy Kaptur, D-Ohio and Tim Ryan, D-Ohio, highlighted the Keep our Pension Promises Act. Their bill would repeal the MPRA.
T.D. 9735, NPRM REG-123640-15