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CCH® PENSION AND BENEFITS — 7/31/07

Procedures for election of multiemployer plan status issued by PBGC

The Pension Benefit Guaranty Corporation (PBGC) has issued a notice establishing procedures for eligible plans to elect to be a multiemployer plan for purposes of ERISA and the Code, pursuant to ERISA §3(37)(G) . Eligible plans include those that previously elected to be treated as a single-employer plan and otherwise satisfy ERISA’s criteria for a multiemployer plan.

ERISA §3(37(G) , which was added by section 1106 of the Pension Protection Act of 2006 (P.L. 109-280) and was subsequently modified by a technical correction provision contained in spending legislation signed in May 2007 (P.L. 110-28), allows certain single-employer plans to elect to be multiemployer plans pursuant to procedures prescribed by the PBGC.

Eligibility and election requirements

A plan may elect to be a multiemployer plan if the plan previously made an irrevocable election to be a single-employer plan pursuant to ERISA §3(37) (E) and ERISA §4303 and, absent that election, the plan would have been a multiemployer plan under ERISA §3(37) for each of the last three plan years ending on or before August 17, 2006.

The election will only be effective if a written notice of the election is filed by the plan with the PBGC on or before August 17, 2007; at least 30 days after the plan administrator has provided notice of the pending election to each plan participant, beneficiary, each labor organization representing such participants or beneficiaries, and each employer that has an obligation to contribute to the plan; and the PBGC approves the election. An election approved by the PBGC will be irrevocable and will be effective for all purposes under ERISA and the Code as of the first day of the first plan year for which the plan elects multiemployer status, starting with any plan year beginning on or after January 1, 1999, and ending before January 1, 2008.

Checklist provided

The PBGC will approve the election if it determines that a plan has complied with the procedures set forth in the notice. The notice contains a checklist of documents and information needed to meet the requirements for the election. The information to be provided includes the plan document, summary plan description, plan amendments and an identification of the plan administrator and the employers required to contribute to the plan. The PBGC may audit a plan to verify any information or representation made and may revoke its approval if the plan is unable to verify the representations made or information provided.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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