PBGC Releases SFA Merger FAQs on Withdrawal Liability

The Pension Benefit Guaranty Corporation (PBGC) Special Financial Assistance (SFA) Program released FAQs regarding withdrawal liability modifications for a merged building and construction industry SFA plan. PBGC answers some other common questions related to mergers involving SFA plans.

PBGC has received questions from practitioners about whether the withdrawal liability modifications described in ERISA Section 4211.36 (b) [restarting initial liabilities] (c) [amortizing initial liabilities] or (d) [changing the allocation fraction] may  be adopted by building and construction industry plans requesting approval under ERISA Section 4262.16(f) for a merger involving a plan that received SFA.

In response, PBGC has published examples to illustrate how the Section 4211.36(d)(1) & (2) modifications reduce volatility in the withdrawing employer’s post-merger withdrawal liability assessment across a range of scenarios, as compared to the allocation method specified under Section 4211.32 (presumptive method).