September 2, 2015
Treasury Issues Temporary Rules Governing Participant Vote on Benefit Suspensions in Multiemployer Pension Plans
On August 31, 2015, the Department of the Treasury (Treasury) and the Internal Revenue Service issued proposed and temporary rules providing guidance on the administration of the participant vote required under the benefit suspension provisions of the Multiemployer Pension Reform Act of 2014 (MPRA).
Generally, under MPRA, after a proposed benefit suspension has been approved by Treasury, it must be ratified by a vote of all participants and beneficiaries before Treasury can give its final authorization. A suspension will be approved unless a majority of all participants and beneficiaries vote against it.
The new temporary rules (New Rules) divide the administration of the MPRA participant vote into three steps. As a preliminary matter, Treasury is permitted to designate one or more service providers to perform either or both of the first two steps noted below:
- Distribution of BallotsBallots will be distributed by first-class mail, and either Treasury or a service provider it designates (not the plan) will handle the distribution. Each ballot package will contain a unique identifier assigned to the voter by Treasury or the service provider to preserve participant privacy. A model ballot may be provided in the form of a revenue procedure, notice or other guidance. The plan sponsor is responsible for providing Treasury or the service provider with a list of eligible voters and their mailing addresses. The plan sponsor also is responsible for paying all of the costs associated with printing, assembling and distributing the ballot package, including postage.
- Casting, Counting and Collecting Votes An automated system that collects votes both electronically through a website and telephonically through a toll-free number must be used for the vote. Votes submitted on paper will not be counted. MPRA provides that Treasury must administer the participant vote within 30 days of the date a benefit suspension application is approved. The New Rules interpret this to mean that the voting period must begin within the 30-day period, but the vote need not be completed within that period.
- Determination of the Outcome by Treasury Within seven days after the end of the voting period, Treasury must either certify that a majority of the eligible voters have voted to reject the suspension or issue a final authorization to suspend.
The New Rules are retroactively applicable as of June 17, 2015. Comments on the New Rules must be provided by November 2, 2015.
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