Cessation of Operations ERISA 4062(e) situation

[Guest VTM]

Facts: controlled group of corporations; one member to be sold to an outside party; before the stock sale, this member is ceasing accruals for its employees who participate in the plan; 40% of the active participants are affected by the cessation of accruals

Question: Is this single employer subject to the provisions of ERISA 4062(e)? If so, what are the requirements for notifying the PBGC of this event? (The employer is exempt from providing a Form 10 notification.) Has anyone ever encountered a situation where this provision applied?

Thanks in advance for any help on this matter.

[Guest AEA]

I'm curious what ended up happening with your situation. I have almost the same situation, but a Form 10 was filed. Now, we have a two-page request from the PBGC for information on the plan, the sale, and the company and I am wondering whether the company is required to provide some of these items. For example, the reason for selling the subsidiary, the terms of the sale, how the proceeds will be used, 3 years of financial statements for the company and the subsidiary.

Can the PBGC really require this information to be submitted?

[Guest Victoria Pelletiere]

After discussions with all parties involved, we decided that there was not a 4062(e) application for our situation. I've dealt with the PBGC in distress terminations. If they ask for information, they want it.

[Kirk Maldonado]

For the convenience of others, here are the relevant portions of section 4062(e):

If an employer ceases operations at a facility in any location and, as a result of such cessation of operations, more than 20 percent of the total number of his employees who are participants under a plan established and maintained by him are separated from employment, the employer shall be treated with respect to that plan as if he were a substantial employer under a [multiple employer plan] * * *.