29 U.S.C. § 1405

Limitation on withdrawal liability

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(a) Unfunded vested benefits allocable to employer in bona fide sale of assets of employer in arms-length transaction to unrelated party; maximum amount; determinative factors(1) In the case of bona fide sale of all or substantially all of the employer’s assets in an arm’s-length transaction to an unrelated party (within the meaning of section 1384(d) of this title), the unfunded vested benefits allocable to an employer (after the application of all sections of this part having a lower number designation than this section), other than an employer undergoing reorganization under title 11 or similar provisions of State law, shall not exceed the greater of—(A) a portion (determined under paragraph (2)) of the liquidation or dissolution value of the employer (determined after the sale or exchange of such assets), or(B) in the case of a plan using the attributable method of allocating withdrawal liability, the unfunded vested benefits attributable to employees of the employer.(2) For purposes of paragraph (1), the portion shall be determined in accordance with the following table:

If the liquidation or distribution value of the employer after the sale or exchange is—	The portion is—
Not more than $5,000,000	30 percent of the amount.
More than $5,000,000, but not more than $10,000,000	$1,500,000, plus 35 percent of the amount in excess of $5,000,000.
More than $10,000,000, but not more than $15,000,000	$3,250,000, plus 40 percent of the amount in excess of $10,000,000.
More than $15,000,000, but not more than $17,500,000	$5,250,000, plus 45 percent of the amount in excess of $15,000,000.
More than $17,500,000, but not more than $20,000,000	$6,375,000, plus 50 percent of the amount in excess of $17,500,000.
More than $20,000,000, but not more than $22,500,000	$7,625,000, plus 60 percent of the amount in excess of $20,000,000.
More than $22,500,000, but not more than $25,000,000	$9,125,000, plus 70 percent of the amount in excess of $22,500,000.
More than $25,000,000	$10,875,000, plus 80 percent of the amount in excess of $25,000,000.

(b) Unfunded vested benefits allocable to insolvent employer undergoing liquidation or dissolution; maximum amount; determinative factorsIn the case of an insolvent employer undergoing liquidation or dissolution, the unfunded vested benefits allocable to that employer shall not exceed an amount equal to the sum of—(1) 50 percent of the unfunded vested benefits allocable to the employer (determined without regard to this section), and(2) that portion of 50 percent of the unfunded vested benefits allocable to the employer (as determined under paragraph (1)) which does not exceed the liquidation or dissolution value of the employer determined—(A) as of the commencement of liquidation or dissolution, and(B) after reducing the liquidation or dissolution value of the employer by the amount determined under paragraph (1).(c) Property not subject to enforcement of liability; precondition

To the extent that the withdrawal liability of an employer is attributable to his obligation to contribute to or under a plan as an individual (whether as a sole proprietor or as a member of a partnership), property which may be exempt from the estate under section 522 of title 11 or under similar provisions of law, shall not be subject to enforcement of such liability.

(d) Insolvency of employer; liquidation or dissolution value of employerFor purposes of this section—(1) an employer is insolvent if the liabilities of the employer, including withdrawal liability under the plan (determined without regard to subsection (b)), exceed the assets of the employer (determined as of the commencement of the liquidation or dissolution), and(2) the liquidation or dissolution value of the employer shall be determined without regard to such withdrawal liability.(e) One or more withdrawals of employer attributable to same sale, liquidation, or dissolutionIn the case of one or more withdrawals of an employer attributable to the same sale, liquidation, or dissolution, under regulations prescribed by the corporation—(1) all such withdrawals shall be treated as a single withdrawal for the purpose of applying this section, and(2) the withdrawal liability of the employer to each plan shall be an amount which bears the same ratio to the present value of the withdrawal liability payments to all plans (after the application of the preceding provisions of this section) as the withdrawal liability of the employer to such plan (determined without regard to this section) bears to the withdrawal liability of the employer to all such plans (determined without regard to this section).(Pub. L. 93–406, title IV, § 4225, as added Pub. L. 96–364, title I, § 104(2), Sept. 26, 1980, 94 Stat. 1243; amended Pub. L. 109–280, title II, § 204(a)(1), (2), Aug. 17, 2006, 120 Stat. 886, 887.)Editorial NotesAmendments

2006—Subsec. (a)(1)(B). Pub. L. 109–280, § 204(a)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the unfunded vested benefits attributable to employees of the employer.”

Subsec. (a)(2). Pub. L. 109–280, § 204(a)(1), added table and struck out former table which provided for a portion of: 30 percent of the amount if the liquidation or dissolution value of the employer after the sale or exchange is not more than $2,000,000; $600,000, plus 35 percent of the amount in excess of $2,000,000, if the employer’s liquidation or dissolution value is more than $2,000,000, but not more than $4,000,000; $1,300,000, plus 40 percent of the amount in excess of $4,000,000, if the employer’s liquidation or dissolution value is more than $4,000,000, but not more than $6,000,000; $2,100,000, plus 45 percent of the amount in excess of $6,000,000, if the employer’s liquidation or dissolution value is more than $6,000,000, but not more than $7,000,000; $2,550,000, plus 50 percent of the amount in excess of $7,000,000, if the employer’s liquidation or dissolution value is more than $7,000,000, but not more than $8,000,000; $3,050,000, plus 60 percent of the amount in excess of $8,000,000, if the employer’s liquidation or dissolution value is more than $8,000,000, but not more than $9,000,000; $3,650,000, plus 70 percent of the amount in excess of $9,000,000, if the employer’s liquidation or dissolution value is more than $9,000,000, but not more than $10,000,000; and $4,350,000, plus 80 percent of the amount in excess of $10,000,000, if the employer’s liquidation or dissolution value is more than $10,000,000.

Statutory Notes and Related SubsidiariesEffective Date of 2006 Amendment

Pub. L. 109–280, title II, § 204(a)(3), Aug. 17, 2006, 120 Stat. 887, provided that: “The amendments made by this subsection [amending this section] shall apply to sales occurring on or after January 1, 2007.”

Notes of Decisions

Cited in 47 cases (3 in the last 5 years), 1982–2025 · leading case: Local 478 Trucking & Allied Indus. Pension Fund v. Jayne, 778 F. Supp. 1289 (D.N.J. 1991).

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Local 478 Trucking & Allied Indus. Pension Fund v. Jayne, 778 F. Supp. 1289 (D.N.J. 1991). · cites it 15× “Willard Jayne contended the amount asserted in the Proof of Claim was excessive for failing to apply reductions provided to insolvent employers undergoing liquidation pursuant to 29 U.S.C. § 1405 . Id. On 27 June 1990, the Fund and the Trustees commenced a suit against…”

In Re Affiliated Foods, Inc., 249 B.R. 770 (Bankr. W.D. Mo. 2000). · cites it 6× “The Committee cites 29 U.S.C. § 1405 (b) 14 as the basis for separately classifying and subordinating fifty percent of Central States’ Claim.”

Trs. of the Amalgamated Ins. Fund v. McFarlin's, Inc., 789 F.2d 98 (2d Cir. 1986). · cites it 2× “The Fund next argues that, regardless of the foregoing, at least 50% of an insolvent employer’s withdrawal liability is entitled to priority under § 4225(b) of the MPPAA, *105 29 U.S.C. § 1405 (b). We disagree. Section 1405(b) provides that in the case of withdrawal by an…”

Ilgwu Nat'l Ret. Fund, Sol C. Chaikin & Joseph Moore v. Levy Bros. Frocks, Inc., 846 F.2d 879 (2d Cir. 1988). · cites it 2× “§ 1391 , and certain limitations on liability are set forth in 29 U.S.C. § 1405 . When an employer withdraws, from a multiemployer plan, the plan sponsor, that is, the entity maintaining the plan, must determine the amount of the employer’s withdrawal liability, notify the…”

Combs v. W. Coal Corp., 611 F. Supp. 917 (D.D.C. 1985). · cites it 3× “Defendant contends that 29 U.S.C. § 1405 governs the calculation of withdrawal liability for Western/Stockton.”

Canario v. Lidelco, Inc., 782 F. Supp. 749 (E.D.N.Y 1992). · cites it 4× “Lidelco claims that 29 U.S.C. § 1405 , limits the withdrawal liability of Lidelco to 30 percent of its liquidation value, and that the undisputed liquidation value of Lidelco is zero.”

Joseph P. Connors, Sr. v. P & M Coal Co., 801 F.2d 1373 (D.C. Cir. 1986). · cites it 2× “13 , As Judge Greene’s Sun-Up opinion also indicates, the Trustees’ reading of “employer” to include owner-officers produces a “puzzling” result in light of the provisions of section 4225 of ERISA, 29 U.S.C. § 1405 , which place limitations on withdrawal liability in the case of…”

Matter of Lissner Corp., 115 B.R. 604 (N.D. Ill. 1990). · cites it 3× “At some point during these discussions, Bobo indicated that the Trustee might seek to reduce the C-10 claim pursuant to § 4225(b) of the MPPAA, 29 U.S.C. § 1405 (b). Section 1405(b) reduces the withdrawal liability of an insolvent employer whose assets are being liquidated to 50…”

Old Blast, Inc. v. Operating Engineers Local 324 Pension Fund, 663 F. App'x 454 (6th Cir. 2016). · cites it 2× “See 29 U.S.C. § 1405 (b) (stating that the unfunded vested benefits allocable to an insolvent employer shall not exceed 50 percent of the unfunded vested benefits allocable to the employer and that portion of the 50 percent which does not exceed value of employer).”

Dorn's Transp., Inc. v. I.A.M. Nat'l Pension Fund, 578 F. Supp. 1222 (D.D.C. 1984). · cites it 2× “Congress further saw fit to balance the burdens to be assumed by the plans and the withdrawing employers, where an employer withdrawal was caused by insolvency ( 29 U.S.C. § 1405 (b)); or by a sale of assets ( 29 U.”

Trs. of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc., 692 F.3d 127 (2d Cir. 2012). “…ability to withdraw from pension plans in critical status. See PPA § 204(a)(2) (codified at ERISA § 4225(a)(2), 29 U.S.C. § 1405 (a)(2)) (changing the calculation of the limitation on withdrawal liability where the employer company is sold); PPA § 204(b)(1) (codified at…”

In Re Granada Wines, Inc., 26 B.R. 131 (Bankr. D. Mass. 1983). · cites it 3× “The debtor relies on 29 U.S.C. § 1405 (b) in claiming that it is only liable for 50% of the Pension Fund’s claim.”

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