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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The Pension Benefit Guaranty Corporation (PBGC) has granted a request from LA Team Co. LLC for an exemption from ERISA's bond/escrow requirement with respect to its February 2004 purchase of the Los Angeles Dodgers Baseball Team from Los Angeles Dodgers, Inc.
ERISA §4204(a)(1)(B) provides that the sale of assets by an employer that contributes to a multiemployer pension plan, in this case the Major League Baseball Players Benefit Plan, will not constitute a complete or partial withdrawal from the plan if certain conditions are met. One of these conditions is that the purchaser post a bond or deposit money in escrow for the five-plan-year period beginning after the sale.
According to the representations made by the purchaser, the seller was obligated to contribute to the plan for certain employees of the sold operations. The purchaser agreed to contribute to the plan for substantially the same number of contribution base units as the seller. The seller agreed to be secondarily liable for any withdrawal liability it would have had with respect to the sold operations (if not for ERISA §4204) should the purchaser withdraw from the plan within the five plan years following the sale and fail to pay its withdrawal liability. The amount of the bond/escrow required is $2,466,666.67. The estimated amount of the unfunded vested benefits allocable to the seller with respect to the operations subject to the sale could be as high as $32,300,000. The transaction had to be approved by Major League Baseball, which required that the debt-equity ratio of the purchaser be no more than 60 percent. Based on the facts and representations made in connection with the request for exemption, the PBGC granted the request for an exemption from the bond/escrow requirements of ERISA.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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