PART 4206—ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A PARTIAL WITHDRAWAL Authority: 29 U.S.C. 1302(b)(3) and 1386(b). Source: 61 FR 34086, July 1, 1996, unless otherwise noted. § 4206.1 Purpose and scope. (a) Purpose. (b) Scope. § 4206.2 Definitions. The following are defined in § 4001.2 of this chapter: Code, employer, ERISA, multiemployer plan, PBGC, plan, and plan year. In addition, for purposes of this part: Complete withdrawal Partial withdrawal Unfunded vested benefits [61 FR 34086, July 1, 1996, as amended at 86 FR 1270, Jan. 8, 2021] § 4206.3 Credit against liability for a subsequent withdrawal. Whenever an employer that was assessed withdrawal liability for a partial withdrawal from a plan partially or completely withdraws from that plan in a subsequent plan year, it shall receive a credit against the new withdrawal liability in an amount greater than or equal to zero, determined in accordance with this part. If the credit determined under §§ 4206.4 through 4206.9 is less than zero, the amount of the credit shall equal zero. § 4206.4 Amount of credit in plans using the presumptive method. (a) General. (b) Unamortized old liabilities. (1) The plan's unfunded vested benefits as of the end of the last plan year ending before September 26, 1980; (2) The annual changes in the plan's unfunded vested benefits for plan years ending after September 25, 1980, and before the year of the prior partial withdrawal; and (3) The reallocated unfunded vested benefits (if any), as determined under section 4211(b)(4) of ERISA, for plan years ending before the year of the prior partial withdrawal. (c) Employer's allocable share of old liabilities. (1) The first fraction is the fraction determined under section 4206(a)(2) of ERISA for the prior partial withdrawal. (2) The second fraction is a fraction, the numerator of which is the amount of the liability assessed against the employer for the prior partial withdrawal, and the denominator of which is the product of— (i) The amount of unfunded vested benefits allocable to the employer as if it had completely withdrawn as of the date of the prior partial withdrawal (determined without regard to any adjustments), multiplied by— (ii) The fraction determined under section 4206(a)(2) of ERISA for the prior partial withdrawal. § 4206.5 Amount of credit in plans using the modified presumptive method. (a) General. (b) Unamortized old liabilities. (1) The plan's unfunded vested benefits as of the end of the last plan year ending before September 26, 1980, reduced as if those obligations were being fully amortized in level annual installments over 15 years beginning with the first plan year ending on or after such date; and (2) The aggregate post-1980 change amount determined under section 4211(c)(2)(C) of ERISA as if the employer had completely withdrawn in the year of the prior partial withdrawal, reduced as if those obligations were being fully amortized in level annual installments over the 5-year period beginning with the plan year in which the prior partial withdrawal occurred. (c) Employer's allocable share of old liabilities. (1) The first fraction is the fraction determined under section 4206(a)(2) of ERISA for the prior partial withdrawal. (2) The second fraction is a fraction, the numerator of which is the amount of the liability assessed against the employer for the prior partial withdrawal, and the denominator of which is the product of— (i) The amount of unfunded vested benefits allocable to the employer as if it had completely withdrawn as of the date of the prior partial withdrawal (determined without regard to any adjustments), multiplied by— (ii) The fraction determined under section 4206(a)(2) of ERISA for the prior partial withdrawal. § 4206.6 Amount of credit in plans using the rolling-5 method. In a plan that uses the rolling-5 allocation method described in section 4211(c)(3) of ERISA, the credit shall equal the amount of the liability assessed for the prior partial withdrawal, reduced as if that amount was being fully amortized in level annual installments over the 5-year period beginning with the plan year in which the prior partial withdrawal occurred. When an employer's prior partial withdrawal liability has been reduced or waived, this credit shall be adjusted in accordance with § 4206.8. § 4206.7 Amount of credit in plans using the direct attribution method. In a plan that uses the direct attribution allocation method described in section 4211(c)(4) of ERISA, the credit shall equal the amount of the liability assessed for the prior partial withdrawal, reduced as if that amount was being fully amortized in level annual installments beginning with the plan year in which the prior partial withdrawal occurred, over the greater of 10 years or the amortization period for the resulting base when the combined charge base and the combined credit base are offset under section 431(b)(5) of the Code. When an employer's prior partial withdrawal liability has been reduced or waived, this credit shall be adjusted in accordance with § 4206.8. [61 FR 34086, July 1, 1996, as amended at 80 FR 55009, Sept. 11, 2015] § 4206.8 Reduction of credit for abatement or other reduction of prior partial withdrawal liability. (a) General. (b) Computation. (1) The numerator of which is the excess of the total partial withdrawal liability of the employer for all partial withdrawals in prior years (excluding those partial withdrawals for which the credit is zero) over the present value of each abatement or other reduction of that prior withdrawal liability calculated as of the date on which that prior partial withdrawal liability was determined; and (2) The denominator of which is the total partial withdrawal liability of the employer for all partial withdrawals in prior years (excluding those partial withdrawals for which the credit is zero). § 4206.9 Amount of credit in plans using alternative allocation methods. A plan that has adopted an alternative method of allocating unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and part 4211 of this chapter shall adopt, by plan amendment, a method of calculating the credit provided by § 4206.3 that is consistent with the rules in §§ 4206.4 through 4206.8 for plans using the statutory allocation method most similar to the plan's alternative allocation method. § 4206.10 Special rule for 70-percent decline partial withdrawals. For the purposes of applying the rules in §§ 4206.4 through 4206.9 in any case in which either the prior or subsequent partial withdrawal resulted from a 70-percent contribution decline (or a 35-percent decline in the case of certain retail food industry plans), the first year of the 3-year testing period shall be deemed to be the plan year in which the partial withdrawal occurred.