Substantial Cessation of Operations Liability for Defined Benefit Plans (ERISA § 4062(e))


This practice note addresses the potential employer liability and notice obligations under section 4062(e) of the Employee Retirement Income Security Act (ERISA). These obligations arise when there is a cessation of operations at a facility that results in the termination of employment of a threshold percentage of retirement-plan-eligible employees. When advising clients who are closing or selling a facility, you should consider whether any cessation of operations will cause the employer to incur an accelerated pension funding liability and, if so, the alternatives available for addressing the liability under this ERISA provision.