Multiemployer to single employer plan

[Guest sidalee1]

When a multiemployer plan has only one employer, does it automatically then become a single employer plan just by way of the definition of a multiemployer plan? I thought I read somewhere that once a plan was a multiemployer plan, it always carried the multiemployer label (for PBGC, funding, etc. purposes), but I cannot now find any authority for that (so maybe I dreamed it up). Any guidance would be greatly appreciated!

[Guest Brian4]

ERISA section 3(37) provides that " ... a plan is a multiemployer plan on and after its termination date if the plan was a multiemployer plan under this paragraph for the plan year preceding its termination date." This implies that multiemployer plans can convert to single employer plans after a period of time with only one employer.

However, the current thinking at the PBGC is that a multiemployer plan that has only one employer left stays as a multiemployer plan indefinitely. Note that this reduces the PBGC's risk exposure, since the guarantee limits for multiemployer plans are lower. However, in the past the best information indicated that a plan that had only one employer left could become a single employer plan after the time period passed.

From the 2006 Blue Book:

QUESTION 6

Guaranteed Benefit — Multiemployer plans

Plan M is a multiemployer plan. Because of withdrawals, only one employer is required to make

contributions to Plan M. Is the plan subject to the PBGC’s guarantee limit for multiemployer

plans or the guarantee limit for single-employer plans?

RESPONSE:

The accrued benefit of a participant in Plan M would be subject to the multiemployer guarantee

limit under Section 4022A© of ERISA. See Opinion Letter 01-2.