liability of substantial employer for withdrawal

liability of substantial employer for withdrawal Sec. 4063. (a) Except as provided in subsection (d), the plan administrator of a plan under which more than one employer makes contributions— (1) shall notify the corporation of the withdrawal of a substantial employer from the plan, within 60 days after such withdrawal, and (2) request that the corporation determine the liability of such employer under this subtitle with respect to such withdrawal. The corporation shall, as soon as practicable thereafter, determine whether such employer is liable for any amount under this subtitle with respect to the withdrawal and notify such employer of such liability. (b) Except as provided in subsection (c), an employer who withdraws from a plan to which section 4021 applies, during a plan year for which he was a substantial employer, and who is notified by the corporation as provided by subsection (a), shall be liable to the corporation in accordance with the provisions of section 4062 and this section. The amount of such employer’s liability shall be computed on the basis of an amount determined by the corporation to be the amount described in section 4062 for the entire plan, as if the plan had been terminated by the corporation on the date of the employer’s withdrawal, multiplied by a fraction— (1) the numerator of which is the total amount required to be contributed to the plan by such employer for the last 5 years ending prior to the withdrawal, and (2) the denominator of which is the total amount required to be contributed to the plan by all employers for such last 5 years. In addition to and in lieu of the manner prescribed in the preceding sentence, the corporation may also determine the liability of each such employer on any other equitable basis prescribed by the corporation in regulations. Any amount collected by the corporation under this subsection shall be held in escrow subject to disposition in accordance with the provisions of paragraphs (2) and (3) of subsection (c). (c)(1) In lieu of payment of his liability under this section the employer may be required to furnish a bond to the corporation in an amount not exceeding 150 percent of his liability to insure payment of his liability under this section. The bond shall have as surety thereon a corporate surety company which is an acceptable surety on Federal bonds under authority granted by the Secretary of the Treasury under sections 6 through 13 of title 6, United States Code. Any such bond shall be in a form or of a type approved by the Secretary including individual bonds or schedule or blanket forms of bonds which cover a group or class. (2) If the plan is not terminated within the 5-year period commencing on the day of withdrawal, the liability of such employer is abated and any payment held in escrow shall be refunded without interest to the employer (or his bond cancelled) in accordance with bylaws or rules prescribed by the corporation. 88 Stat. 1031 (3) If the plan terminates within the 5-year period commencing on the day of withdrawal, the corporation shall— (A) demand payment or realize on the bond and hold such amount in escrow for the benefit of the plan; (B) treat any escrowed payments under this section as if they were plan assets and apply them in a manner consistent with this subtitle; and (C) refund any amount to the employer which is not required to meet any obligation of the corporation with respect to the plan. (d) The provisions of this subsection apply in the case of a withdrawal described in subsection (a), and the provisions of subsections (b) and (c) shall not apply, if the corporation determines that the procedure provided for under this subsection is consistent with the purposes of this section and section 4064 and is more appropriate in the particular case. Upon a showing by the plan administrator of a plan that the withdrawal from the plan by any employer or employers has resulted, or will result, in a significant reduction in the amount of aggregate contributions to or under the plan by employers, the corporation may— (1) require the plan fund to be equitably allocated between those participants no longer working in covered service under the plan as a result of their employer’s withdrawal, and those participants who remain in covered service under the plan; (2) treat that portion of the plan funds allocable under paragraph (1) to participants no longer in covered service as a termination; and (3) treat that portion of the plan fund allocable to participants remaining in covered service as a separate plan. (e) The corporation is authorized to waive the application of the provisions of subsections (b), (c), and (d) of this section to any employer or plan administrator whenever it determines that there is an indemnity agreement in effect among all other employers under the plan which is adequate to satisfy the purposes of this section and of section 4064.