Chamber of Commerce Seeks Clarity in Regs on Suspension of Benefits

On behalf of the U.S. Chamber of Commerce (the "Chamber"), we submit this letter in response to a call for comments on the Temporary and Proposed Regulations published in the Federal Register on June 19, 2015 pertaining to Suspensions of Benefits Under the Multiemployer Pension Reform Act of 2014 (MPRA).¹

The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than three million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations, and dedicated to promoting, protecting, and defending America's free enterprise system. More than 96% of the Chamber's members are small businesses with 100 or fewer employees, 70% of which have ten or fewer employees. Yet virtually all of the nation's largest companies are also active members. Each major classification of American business -- manufacturing, retailing, services, construction, wholesaling and finance -- is represented. Also, the Chamber has substantial membership in all 50 states. Positions on national issues are developed by a cross-section of Chamber members serving on committees, subcommittees and task forces.

Chamber members also include sponsors of multiemployer pension plans. Consequently, the Chamber has been engaged in multiemployer pension reform including the reforms in the Pension Protection Act of 2006, Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, and most recently the Multiemployer Pension Reform Act of 2014 (MPRA) contained in the Consolidated and Further Continuing Appropriations Act of 2015.

The enactment of the MPRA was welcomed by the Chamber and its employer members that contribute to multiemployer plans. The precarious state of underfunding by many multiemployer plans threatens insolvency for such plans and for the Pension Benefit Guaranty Corporation (PBGC) and is a serious threat to participating employers. Among other changes, MPRA allows for benefit suspensions in certain plans in critical status. While the Chamber believes that more attention to the problem will be necessary, MPRA is a strong first step in addressing these issues.

The Chamber commends the IRS for working quickly to establish the program to allow for benefit suspensions. In response to a request for information issued by the IRS in February of this year, the Chamber submitted comments detailing a number of recommendations and suggestions. We are pleased that the IRS has included a number of our recommendations in its current guidance. Our comments below are offered to strengthen the program as currently drafted.

The Final Rule Should Include a Model Ballot. The Chamber appreciates the inclusion of a model application, application checklist and model notice in Revenue Procedure 2014-34. We believe these tools will ease the application process and promote expediency. For these reasons, we recommend that future guidance also include a model ballot.

Clarification of the Vote Certification is Needed. The temporary regulation states that a determination of whether a plan is systemically important must be made 14 days after the results of the vote are certified.³ However, none of the guidance provides information on the certification process. We request that the certification process be clarified so that interested parties can be aware of the start of the time period.

The Information in Revenue Procedure 2015-34 Should be Included in the Final Rule. The information in Rev. Proc. 2015-34-particularly the model application, application checklist and model notice -- is extremely helpful. We understand that the guidance is a work in progress and that further changes may occur. However, we recommend that once this information is finalized, it should be included in the final rule so that all of the information pertaining to the benefit suspensions program can be found in one place.

The List of Factors in the Initial-Plan-Sponsor Determination and the Annual-Plan-Sponsor Determination Should Be the Same. The temporary rule contains a list of factors for the initial-plan-sponsor determination.⁴ The Chamber recommends that this list of factors also be used for the annual-plan-sponsor determination. Providing the same list of factors will simplify the on-going administrative responsibilities for plan sponsors.

The Final Rule Should Clarify That a Majority Vote Will Be Based on All Eligible Voters. MPRA requires a majority of participant votes to reject a benefit suspension plan accepted by the IRS.⁵ The temporary rule seems to indicate that a majority must be based on all eligible voters -- rather than just returned ballots. However, there is a possibility for ambiguity in the rule. As such, the Chamber recommends that the final rule clarify that a majority vote be based on all eligible voters.

² 80 Fed. Reg.35230, Section 4233.3.

³ 80 Fed. Reg. 35219, Section 1.432(e)(9)-1T(h)((5).

⁴ 80 Fed. Reg. 35217, Section 1.432(e)(9)-1T(c)(3)

⁵ Code section 432(e)(9)(H).