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Multiemployer plans

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[Guidance Overview] IRS Employee Plans News No. 2015-13, November 23, 2015
Topics: [1] Notice of public hearing Dec. 18 on proposed regulations for the administration of a multiemployer plan participant vote on an approved suspension of benefits under the MPRA; [2] Taxpayers born before July 1, 1945 must receive payments from your IRAs and workplace retirement plans by Dec. 31; [3] Free webcast Dec. 8 about the latest activities in Employee Plans Examinations; [4] Form 2848 Instructions. (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Hearing Notice: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits under the Multiemployer Pension Reform Act
"This document provides notice of public hearing on proposed regulations relating to the administration of a multiemployer plan participant vote on an approved suspension of benefits under the Multiemployer Pension Reform Act of 2014 (MPRA) ... The public hearing is being held on Friday, December 18, 2015, at 10 a.m. The IRS must receive outlines of the topics to be discussed at the public hearing by Monday, November 30, 2015." (Internal Revenue Service [IRS])
[Opinion] Bill Would Protect Multiemployer Plan Participants from Benefit Cuts
"The Teamsters Union has been working with several members of Congress to develop legislation that would prevent massive cuts to some pension beneficiaries.... S.1631 and House Resolution 2844, the Keep Our Pension Promises Act, sponsored by Sanders in the Senate and Kaptur in the House, not only would restore the anti-cutback rule but also would help prevent multiemployer pension plans from failing by making pension obligations a higher priority in bankruptcy proceedings, which would reduce the number of plans that become 'orphaned.' The bill also creates a legacy fund within the Pension Benefit Guaranty Corporation by closing two tax loopholes that only benefit the wealthiest members of society." (The Columbus Dispatch)
Central States Rescue Pain Puts Spotlight on Retirees' Representative
"With many Central States Pension Fund retirees facing severe cuts to their retirement benefits, the person appointed to represent them as part of the process for the fund's rescue proposal has drawn bitter criticism from some of the fund's participants.... The controversy highlights some of the issues other financially troubled multiemployer plans may face as they seek to use provisions in a law passed in late 2014 allowing them to suspend benefits." (Bloomberg BNA)
Ninth Circuit: Company May Be Subject to Withdrawal Liability Under 'Successorship Doctrine'
"[T]he court explained that it had imposed liability for the seller's delinquent ERISA contributions on the purchaser because '[a]bsent the imposition of successor liability, present and future employer participants in the union pension plan will bear the burden of [the predecessor's] failure to pay its share,' which would threaten the health of the plan while the purchaser reaps a windfall.... The Ninth Circuit explained that although the composition of the workforce is important in successorship cases involving the duty to bargain under the National Labor Relations Act (NLRA), that factor is not of special relevance when considering MPPAA withdrawal liability." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. No. 12-17675 (9th Cir. Sept. 11, 2015)] (Trucker Huss)
Milliman Multiemployer Pension Funding Study: Fall 2015 (PDF)
"The aggregate funded percentage for multiemployer plans was estimated to be 79% as of June 30, 2015, compared with 80% as of December 31, 2014. For most multiemployer pension plans, the 2015 investment experience through June 30, 2015, has underperformed expected returns, and that doesn't take into account the turmoil in the investment markets since then. Over one-half of the total underfunding for multiemployer plans continues to be attributable to the 200-plus plans that are less than 65% funded. With a return through June 30 of about 2%, it will take a 3% return for the last six months of 2015 to sustain the June 30 funded percentage as of December 31, 2015." (Milliman)
Resources for Central States Pension Fund Retirees
"The Pension Rights Center has posted this page to serve as a retiree resource hub for materials related to the Central States Pension Fund's application to the U.S. Department of the Treasury to reduce retiree benefits under the Multiemployer Pension Reform Act of 2014. This page will be updated on an ongoing basis." (Pension Rights Center)
[Opinion] Chamber of Commerce Comment Letter to IRS on Administration of Multiemployer Plan Participant Vote on an Approved Suspensions of Benefits Under MPRA (PDF)
"Electronic ballot packages should be allowed for participants that have affirmatively chosen electronic delivery.... The proposal states that all ballot packages must be delivered by paper. While the Chamber recognizes the importance of ensuring delivery of these packages, we believe this requirement exceeds what is necessary.... The Chamber encourages the IRS to provide a model ballot." (U.S. Chamber of Commerce)
[Official Guidance] Text of Treasury Department Comment Request for Central States Pension Plan Application to Reduce Benefits
"On September 25, 2015, the Board of Trustees of the Central States Pension Plan submitted an application for approval to reduce benefits under the Central States Pension Plan.... Treasury is publishing this notice in the Federal Register, in consultation with PBGC and the Department of Labor, to solicit public comments on all aspects of the Central States Pension Plan application, including with respect to the interpretation of section 432(e)(9)(D)(vii) of the Internal Revenue Code that is reflected in the application. Comments are requested from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of the Central States Pension Plan. Consideration will be given to any comments that are timely received by Treasury." (U.S. Department of the Treasury)
Central States Rescue Plan: Gut-Wrenching Decisions for All
"[Thomas C. Nyhan, executive director and general counsel of the fund,] said it was 'impossible for me to see a path' for legislation with Republicans in control of Congress 'to appropriate taxpayer dollars to support union pension plans,' but that 'should something like this ever materialize, I guarantee you that we will be the first' in line 'to try to take advantage of it.'... Even if legislative action was realistic, it would likely be too late when viewed from the retirees' perspective. There is speculation that at least one suicide can be attributed to the impending benefit cuts." (Bloomberg BNA)
Teamster Pensions Go Off Road
"Central States is the poster child for underfunded pension plans. According to the fund's 2014 annual report, it has projected assets of about $17 billion to cover projected liabilities of $35.2 billion. Whereas four workers generated employer contributions that supported one retiree in 1980, today one worker supports five retirees. Executive director Thomas Nyhan said the fund pays $3.46 in benefits for every $1 dollar employers contribute, a pace that is expected to drain the fund within 10 years." (Pittsburgh Post-Gazette)
[Official Guidance] Central States Pension Plan Application for Benefit Suspension
"The Central States, Southeast and Southwest Areas Pension Plan application proposing benefit suspensions ... is organized by the items specified in Rev. Proc. 2015-34.... The application includes, among other items, the Description of Benefit Suspension and the Certification to Avoid Insolvency.... [The] application is currently being reviewed and the review is expected to take several months.... Treasury will consider comments on the application that are timely received from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of Central States. Click here to submit a comment on the application." [Page includes links to 50 individual documents comprising the application.] (U.S. Department of the Treasury)
[Official Guidance] Treasury Requests Comments on Central States Pension Plan Application for Benefit Reduction
"We're committed to ensuring an open and fair process.... We understand that any reductions in benefits resulting from this application under the Kline-Miller law will have a real impact on people's lives. We're focused on ensuring that the voices of those affected are heard. We encourage plan participants to provide feedback on this application, as we review it to determine whether it meets the requirements set by Congress." (U.S. Department of the Treasury)
Proposed Cuts to Teamster Pensions Draws Fire from Retirees, Who Vow Action
" 'I was in shock as to what percentage they wanted,' [said] Mike Walden, 66, chairman of Northeast Ohio Committee to Protect Pensions who worked 31 years for now-defunct Roadway Express and retired 2010... [H]is pension would be cut from around $2,900 a month to around $1,450. 'They (Central States) had said the average reduction was supposed to 22 percent. I have not spoken to anybody whose cut is 22 percent. Most were in the 50 to 60 percent range. To me, their summary is very misleading,' Walden said." (Logistics Management)
[Guidance Overview] ACA Reporting Requirements for Multiemployer Plans
"The 2014 version of the Instructions for Forms 1094-C and 1095-C required ALEs that contribute to a multiemployer plan on behalf of full-time employees to obtain information from the multiemployer plan about covered employees. In addition to creating a myriad of logistical problems for contributing employers, this created compliance concerns regarding the HIPAA privacy rules. As a solution, the IRS's 2015 draft Instructions directed contributing employers to use Code 1H (no offer of coverage) on Form 1095-C, Line 14 for any month in which the employer claimed the multiemployer plan transition relief made available in the preamble to the final Code Section 4980H regulations." (The Wagner Law Group)
[Opinion] Teamsters Applaud Introduction of Pension Accountability Act By Sen. Portman
"The Pension Accountability Act seeks to fix changes to multiemployer pension law that were attached to the omnibus spending bill passed in December. The Multi-employer Pension Reform Act (MPRA) allows the Treasury Department to overrule any vote taken by pension participants on proposed cuts in large plans. Portman's bill would change that part of the law by making any vote by participants binding and not subject to overrule by the Treasury Department. The legislation would also change the law so that only those ballots returned in any vote are counted." (Teamsters)
[Opinion] Proposed Retiree Benefit Cuts by the Central States Pension Fund Are a 'Pension Demolition Plan'
"The Pension Rights Center has said from the beginning that the Fund could have taken other steps to truly rescue the Fund. But rather than do the work needed to find better solutions, the Fund took the easy way out: cutting the benefits of the most vulnerable -- the very people Congress intended to protect when it passed ... ERISA in 1974.... We are getting calls and letters from desperate retirees, who have been told that their benefits will be cut by between 50 to 70 percent. While many of them knew they would be getting letters about proposed pension cuts, they have been completely blindsided by how deep these cuts are." (Pension Rights Center)
Buyer Beware: Seventh Circuit Lowers Hurdle to Make Claim for Withdrawal Liability Under the Successorship Doctrine
"Prior court decisions going back over 40 years have established that the successorship doctrine is applicable to employment-related liabilities. However, as [this case] demonstrates, in the context of multiemployer plan liabilities, courts may be more willing to find successor liability in order to further the MPPAA's policies of protecting remaining contributors to a multiemployer plan." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Dechert LLP via Lexology)
Central States Pension Fund Submits Plan for Reducing Benefits
"Within 30 days of receiving an application to suspend benefits, Treasury will publish the Rescue Plan and request comments from contributing employers, unions, participants and other parties.... Treasury must approve or deny Central States' application within 225 days of the submission.... Within 30 days of an application's approval, the IRS must administer a vote for participants and beneficiaries to approve or reject the proposed benefit suspensions.... If a majority of participants and beneficiaries vote to reject the suspension, the plan sponsor may again apply for benefit suspensions.... [B]ased on the filing date for the Rescue Plan, if it is approved, it would be implemented on or around July 1, 2016." (McGuireWoods LLP)
Website Now Online: Central States Pension Fund Rescue Plan
"This site is an easy-to-navigate clearinghouse of comprehensive, important and up-to-date information regarding the status of Central States Pension Fund's proposed pension rescue plan, submitted under the Multiemployer Reform Act of 2014 (MPRA).... A detailed description of each of [the] proposed pension rescue plan components is available ... [1] Timing; [2] Re-employment phase-out; [3] Future accruals for active participants; [4] Early retirement; [5] Terminated status participants; [6] Orphans; [7] UPS transfer group; [8] All other participants; [9] Age protections; [10] Disability protections; [11] Spousal/survivor benefits." (Central States Pension Fund)
Pension Fund May Cut Benefits for 273,000 Workers and Retirees
"The proposal, which still needs approval from the Treasury Department, will spare retirees age 80 or older from any cuts as well as anyone receiving disability protections. And reductions would be less severe for those older than 75 or widows and widowers receiving spousal benefits. While they vary, cuts will average about 23% and could happen as soon as July." (
Teamsters' Pension Fund Warns 400,000 of Cuts
"Any reorganization of the decades-old Central States Pension Fund would take months and would probably be a brutal battle as workers, retirees, union leaders and employers all seek to protect competing interests.... [The] plan has caused consternation for many years, because if it failed, it could wipe out a federal insurance program that now pays the benefits of a million retirees. If the reorganization ultimately proves successful, however, it could serve as a model for other retirement plans with similar, seemingly intractable financial problems." (The New York Times; subscription may be required)
Central States Pension Fund Announces Proposed Pension Cuts
"Retirees have questions about these proposed cuts and what the letter means.... [H]ere is what we can tell you right now. [1] Check the calculation.... [2] If you are a Central States' retiree, participate in the plan's town hall meeting.... [3] Ask your members of Congress to support the Keep Our Pension Promises Act.... [4] Contact local media.... [5] Spread the word ... [6] Add your voice to our story bank.... [7] Timeline." (Pension Rights Center)
[Opinion] Comment Letter to PBGC on Annual Financial and Actuarial Information Reporting; Changes to Waivers (PDF)
"[If] a plan has at least 500 participants, it should be permitted to use non-stabilized rates to determine it meets the dollar threshold. While this may create additional expense for the plan, it will generally be less expensive and onerous than complying with the reporting requirements. In addition, the PBGC should consider increasing both the dollar threshold and the participant count." (U.S. Chamber of Commerce, American Benefits Council, and Financial Services Roundtable)
Ninth Circuit Hammers Out New Successorship Liability Test Under MPPAA
"Two circuits now agree that asset purchasers can be liable for withdrawal liability as successors. No circuit court has taken the opposite position. And the Ninth Circuit has set forth how it would focus on where a new company's customer base is derived for purposes of determining successorship. In light of this, employers need to assume that if they are a successor they will be subject to the predecessor employer's withdrawal liability." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Seyfarth Shaw LLP)
Third Circuit: PPA Surcharges Not Included in Withdrawal Liability
"C&S Wholesale Grocers argued that a [PBGC] opinion letter suggested that an average of the contribution rates in its three CBAs should be used to determine its withdrawal liability from the IBT Local 863 Pension Fund. However, the court said it would not consider the argument since it found that the plain language of the MPPAA required otherwise." [Bd. of Trustees of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers, Inc., No. 14-1956 (3d Cir. Sept. 16, 2015)] (PLANSPONSOR)
Central States Pension Fund Prepares to Slash Hundreds of Thousands of Workers' Pensions
"The cuts in monthly payments to workers covered by Central States will vary from nothing (for about one-third of the group) to more than 60 percent (the highest losses will be suffered by many in a group of about 28,400 Teamsters whose employers had abandoned their employees, usually via bankruptcy and closure). The average loss for all participants will be 22.6 percent of retirement pay on which they had counted, according to the summary prepared by the fund trustees." (In These Times)
Central States Teamsters Pension Fund Seeks Permission to Cut Benefits
"The pension fund had assets of $17.8 billion as of Dec. 31, and is projected to become insolvent in 2026.... The rescue plan application was submitted on Sept. 25 to the Treasury Department, which will post it shortly and allow for public comments. Treasury officials have up to 225 days to review an application, and once approved, 30 days to administer a participant vote on the proposed benefit reductions. The law requires the Treasury Department to approve an application if a plan's potential claims would cost the PBGC $1 billion or more." (Pensions & Investments)
Ninth Circuit Holds That Asset Sale Successor May Be Liable for Predecessor Multiemployer Plan Withdrawal Liability Without Assumption of Liability
"Even though the purchaser (a former salesman of the predecessor employer) purchased only 30 percent of the predecessor's assets at public auction and none of its customer lists or goodwill, and used his own experience and contacts to hire the predecessor's former employees and contact customers, the court remanded the case back to the district court to determine whether there was sufficient continuity of the predecessor's business (most notably, continuity of the customer base) to be a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Haynes and Boone, LLP)
Developments of Interest to Sponsors of Multiemployer Retirement Plans, Q4 2015 (PDF)
Topics include: Ratio of benefit payments to contributions; Investment trends; Key developments and statistics; and Selected strategies for managing multiemployer retirement plans. (Segal Consulting)
More Withdrawal Liability for Unsuspecting Business Owners
"In other successor employer situations, the courts have noted that a buyer who is being tagged with successor liability could protect itself by indemnification or through a reduction in the purchase price.... [In]this case, the owner of the new business had no such opportunity.... On the other hand, the court noted that certain documents in the case were filed under seal, including the business plan of the new business.... It could be that there was some evidence of coordination or collusion between the old business and new business that would otherwise justify the decision." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015) (Stinson Leonard Street)
Asset Purchasers Face Increased Exposure for the Multiemployer Pension Debts of Sellers
"[T]he Court gave no consideration to the seeming lack of an asset purchase agreement between the parties.... Second, the predecessor probably never would have been assessed any withdrawal liability but for the alleged successor's actions to start his own company.... [This case] represents a disturbing expansion of the successor liability doctrine to both create withdrawal liability (by imputing the purchaser's actions to the asset seller) and also to hold the purchaser liable for the withdrawal liability created as a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Jackson Lewis P.C.)
Text of PBGC FY 2014 Projections Report (PDF)
57 pages. "After updating the model, and incorporating the premium increases and other provisions under MPRA, but assuming no plans elect suspensions or partitions, PBGC's projected 2024 multiemployer deficit averages $44.3 billion discounted to today's values. The solvency of the multiemployer program fund is extended by three years; the multiemployer program fund is more likely than not to run out of money in 2025 rather than 2022." [Also available: press release and Frequently Asked Questions.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] PBGC Issues Final Regs on Reportable Events
"[1] Changes to Safe Harbors Based on Financial Soundness: ... The low-default-risk safe harbor ... The well-funded plan safe harbor ... [2] Other Changes to Waiver Provisions Under Final Regulations: Public company waiver ... Controlled group situations ... Small-plan waivers ... [3] Other Changes Under Final Regulations: Active-participant reductions ... Failure to make required minimum funding payments ... Inability to pay benefits when due ... Form 200 reporting." (McGuireWoods LLP)
[Official Guidance] Text of PBGC Correction to Final Regs on Electronic Filing Requirements for Multiemployer Plans
"The [PBGC] published ... a final rule to amend its regulations to require electronic filing of certain multiemployer notices. This document corrects two inadvertent errors in the amendatory language." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Duties of Plan Sponsor Following Mass Withdrawal
"Plan sponsors of multiemployer pension plans terminated by mass withdrawal give notices to PBGC and plan participants about plan insolvency and benefit reductions; notices to participants about electing benefit options; and requests to PBGC for financial assistance or permission to distributee benefits in different amounts or forms than otherwise allowed. PBGC uses information submitted to it to make statutory determinations and estimate the need for financial assistance to plans. Participants use information sent to them to make personal financial decisions." [Forms submitted for approval: [1] Application for Financial Assistance -- Recurring, [2] Application for Financial Assistance -- Initial, [3] Notice of Insolvency Benefit Level, and [4] Notice of Insolvency. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Notice of Insolvency, Notice of Insolvency Benefit Level
"These notices, mandated by section 4245(e) of [ERISA], provide information PBGC needs to estimate cash requirements for financial assistance to troubled mutliemployer pension plans, and other interested parties need for financial planning or to bargain over contribution increases. Multiemployer plans in reorganization that are or may become insolvent give these notices." [Forms submitted for approval: [1] Notice of Insolvency, and [2] Notice of Insolvency Benefit Level. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Notice of Failure to Make Required Contributions
"To implement a statutory requirement, PBGC requires contributing sponsors and parents of parent-subsidiary controlled groups of which a contributing sponsor is a member to submit Form 200 to notify PBGC of failures to make required payments. PBGC uses this information to make decisions regarding enforcement of statutory liens." [The form submitted for approval is Form 200, Notice of Failure to Make Required Contributions. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Reportable Events
"Under PBGC regulations implementing ... ERISA, plan administrators and contributing sponsors must notify PBGC of certain reportable events. The reporting requirements give PBGC timely notice of events that indicate plan or contributing sponsor financial problems. PBGC uses the information provided in determining what, if any, action it needs to take." [Forms submitted for approval: [1] Form 10, Post-Event Notice of Reportable Events, and [2] Form 10-Advance, Advance Notice of Reportable Events. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] PBGC Issues Final Reportable Events Regs That Provide Additional Reporting Waivers
"[T]he PBGC believes that the new safe harbors are simpler, more flexible and easier to comply with than those provided in the proposed regulations. The PBGC anticipates that approximately 94% of plans and sponsors will be exempt from many reporting requirements under the final regulations. With the addition of the safe harbors and the shift in emphasis to a plan's risk of default, the final regulations provide pension plan sponsors with more waivers from the reporting requirements and are expected to result in a net reduction in reporting." (Practical Law)
[Official Guidance] Text of PBGC Final Regs: Electronic Filing Requirements for Multiemployer Plans
"This final rule requires the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281. This final rule does not involve any conforming amendments reflecting the Multiemployer Pension Reform Act of 2014 (MPRA). The rule affects only notices to PBGC (not notices to participants or other parties)." (Pension Benefit Guaranty Corporation [PBGC])
IRS Hearing on Multiemployer Plan Benefit Suspensions Features Impassioned Voices (PDF)
"Generating particular interest was how the vote will be conducted, with many ... advocating that the IRS and Treasury reconsider the ban on paper ballots.... [One witness] said that many of the people who are served by multi-employer plans aren't computer literate and many may even still have rotary phones. He suggested that the agencies consider evaluating the need for paper ballots based on the industry, as some may be more suited for electronic voting than others." (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)
Asset Purchasers Face Escalating ERISA Liability Exposure
"Citing 7th Circuit ERISA precedent, the 9th Circuit recently expanded that successor principle ... The risk of potential successor withdrawal liability is particularly significant in cases where the asset purchaser essentially 'picks up business' where the predecessor left off.... The court noted that five of eight union employees worked in the same business location for the predecessor and successor companies, with the hiatus of some not being dispositive." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015)] (Paul Hastings LLP)
Text of Ninth Circuit Opinion Clarifying Factors for Determining Successor Liability for Construction Industry Employer (PDF)
35 pages. "Agreeing with the Seventh Circuit, the panel held that ... the most important factor in assessing whether an employer is a successor for purposes of withdrawal liability is whether there was substantial continuity in the business operations between the predecessor and the successor, as determined in large part by whether the new employer has taken over the economically critical bulk of the prior employer's customer base.... The panel held that the district court erred in weighing continuity of the workforce as the most important factor, and, moreover, applied an incorrect test to determine whether there was continuity of the workforce." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees. v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015) (U.S. Court of Appeals for the Ninth Circuit)
[Opinion] Testimony of Pension Rights Center to Treasury on Proposed Rules for Retiree Benefits Cuts Under MPRA
"Most of the retirees you are hearing from are participants in the Central States Teamsters plan. That is because their trustees have told them that their pensions are about to be cut. Estimates are that there are hundreds of thousands of other retirees who will also be affected. They just don't know it yet.... MPRA is unprecedented, overturning 40 years of law by allowing trustees to reduce the benefits of retirees in ongoing plans. It has also established a dangerous precedent that could lay the foundation for cuts in earned pensions well beyond the multiemployer sphere." (Pension Rights Center)
Retirees Call on Policymakers to Stop the Clock on Cuts to Their Multiemployer Pensions
"Retirees from Colorado, Illinois, Iowa, Massachusetts, Michigan, Missouri, Nebraska, North Carolina, Ohio, Tennessee, and Wisconsin came to testify at a Treasury hearing on regulations regarding the cuts, to lobby their Members of Congress, and to speak out at a press conference on Capitol Hill.... The vast majority of the people testifying at the hearing were retirees who would be harmed by cuts to their benefits. Pension Rights Center Director Karen Ferguson told Treasury, 'MPRA is unprecedented, overturning 40 years of law by allowing trustees to reduce the benefits of retirees in ongoing plans. It has also established a dangerous precedent that could lay the foundation for cuts in earned pensions well beyond the multiemployer sphere.' " (Pension Rights Center)
More Ways to be Hit With Multiemployer Pension Plan Withdrawal Liability
"ManWeb claimed that it could not be responsible for Old Company's obligation because the withdrawal liability did not arise until after the sale was completed.... The court concluded that the federal policy in this case was to provide protection to multiemployer plans in the event an employer withdraws. Although ManWeb did not have notice of the exact amount of the withdrawal liability since that could not be assessed until after the withdrawal occurred, ManWeb was aware that there was likely to be withdrawal liability." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Stinson Leonard Street)
[Guidance Overview] Detailed Voting Procedures Prescribed by IRS for Suspension of Benefits in Multiemployer Plan
"There must be a separate benefit package for each voter containing the voter's address and the individualized impact statement.... The regulations require voting to be collected and tabulated using an automated voting system that allows votes to be cast either electronically or through an interactive voice telephone system using a toll-free number." (Cheiron)
[Guidance Overview] Multiemployer Plan Benefit Suspension Voting Procedures Released (PDF)
"The IRS administers the vote, but they can choose to delegate distribution of the ballots and tabulation of the votes to one or more service providers.... The DOL has a role to play in the process as well. The IRS allocated the responsibility to the DOL to compose the statement in opposition to the proposed suspension compiled from comments received on the proposed suspension." (Buck Consultants at Xerox)
Asset Purchasers May Acquire Multiemployer Plan Withdrawal Liability as 'Successors'
"The Seventh Circuit ... found that the purchaser was aware of the seller's potential withdrawal liability owed to the plan because it engaged in due diligence and prepurchase negotiations and addressed withdrawal liability responsibility through an indemnification clause in the asset purchase agreement. The court reasoned that 'equity' mandated imposing common law notions of successor liability to multiemployer pension plans for the seller's withdrawal liability; otherwise, a 'liability loophole' would exist in this context if the notice requirement excluded contingent liabilities." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Morgan Lewis)
[Guidance Overview] IRS Issues Guidance on Participant Voting Requirement for Benefit Suspensions under MPRA
"The Guidance permits the Treasury, in consultation with the PBGC and the DOL, to establish additional policies and procedures to facilitate the vote, such as establishing a process for an eligible voter to challenge the vote.... The MPRA requires a ballot to contain a statement in opposition compiled from comments received during the approval process. The Guidance provides that this statement will be prepared by the DOL. The statement must be written in a manner that is readily understandable to the average plan participant and in a manner to ensure parity with the statement in support of the suspension." (McGuireWoods LLP)
Tables Provide Summary of Multiemployer Actuarial Certifications Received by IRS (PDF)
"The charts [in this document] are comparisons of the certification information received each year by status... The [first] chart reflects a sharp increase in plans in Critical Status occurring in 2009, most likely due to economic issues. Subsequent years show some, but not full recovery.... The [second] chart reflects a sharp increase in plans in Seriously Endangered Status occurring in 2009, most likely due to economic issues. Subsequent years show decreasing percentage with 2013 rates lower than 2008." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Temporary Regs: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA
"A participant vote requires the completion of three steps. First, a package of ballot materials is distributed to eligible voters. Second, the eligible voters cast their votes and the votes are collected and tabulated. Third, the Treasury Department (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension.... [T]he Treasury Department is permitted to designate a service provider or service providers to facilitate the administration of the vote.... Because the ballot for each eligible voter is accompanied by a unique identifier, the plan sponsor cannot itself distribute the ballot. Instead, the plan sponsor is responsible for furnishing a list of eligible voters so that the ballot can be distributed on the plan sponsor's behalf.... [B]allot packages be distributed no later than 30 days after the application has been approved and specify that the voting period begins on the ballot distribution date.... The temporary regulations do not provide for the collection of votes using paper ballots ... Within 7 days after the end of the voting period ... the Treasury Department (in consultation with the PBGC and the Labor Department) will either certify that a majority of all eligible voters has voted to reject the suspension or, if a majority of eligible voters did not vote to reject the suspension, issue a final authorization to suspend." (Internal Revenue Service [IRS])
EPCU Interim Report: Multiemployer Actuarial Certification Projects
"The purpose of this project is to collect and document actuarial certifications for multiemployer defined benefit plans required to be filed by PPA of 2006 and IRC Section 432.... MECA Project: 2008 was the first plan year certifications were required. At that time over 75% of the plans were in 'Green Status' indicating they were 'Neither Endangered nor Critical'. By 2009, the percentage of cases in 'Green Status' dropped to 31.80%; revealing a nearly complete reversal of plan funding. This was most likely due to the effects of the economic crisis. The 2012 filings show a significant improvement with 57.59% of certifications reporting their funding as 'Green Status'. Plans in the Critical, Seriously Endangered, or Endangered Status started to decline in number, which is a direct result of Legislative action under WRERA." (Internal Revenue Service [IRS])
Buyer Beware! Multiemployer Pension Plan Successor Liability Following an Asset Sale
"Recently ... the Seventh Circuit [held] that an asset purchaser could be liable for a seller's withdrawal liability triggered as a result of an asset sale, provided that the purchaser had known of the seller's 'contingent' withdrawal liability that would be triggered by the sale.... The court's reasoning that equity mandates imposing common law notions of successor liability to multiemployer pension plans is questionable given the ERISA Section 4204 exception to the general rule that a sale of assets otherwise would trigger a complete or partial withdrawal for the seller." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Morgan Lewis, via Lexology)
[Opinion] Pension Rights Center Comments to IRS on Rules for Retiree Benefit Cuts in Financially Troubled Multiemployer Pension Plans (PDF)
10 pages. "[This letter provides] specific comments intended to help improve the proposed regulations in seven substantive areas: [1] plan eligibility to suspend benefits; [2] post-suspension maintenance of records showing ongoing compliance with suspension conditions; [3] equitable allocation of benefit suspensions; [4] rules relating to disability benefits; [4] rules relating to benefits to alternative payees; [6] rules relating to participant voting; [7] rules relating to benefit improvements; [8] method of communicating with participants; and [9] the selection and function of the retiree representative." (Pension Rights Center)
[Opinion] Comments by American Academy of Actuaries on Proposed Regs on Suspensions of Benefits (PDF)
"The level of resources required could serve to discourage some plan sponsors from pursuing benefit suspensions, particularly because they cannot be certain that their applications will be approved. This concern would be most acute for small plans.... [The authors] suggest that the final regulations clarify that the actuary should base the projections to certify that the proposed suspensions are sufficient to avoid insolvency on the market asset value as of the end of the calendar year quarter preceding the date of certification." (American Academy of Actuaries)
[Opinion] Pension Rights Center Comments to PBGC on Partition Rules for Financially Troubled Multiemployer Plans (PDF)
"[These] comments will focus on five issues that bear directly on participants: [1] the content of the participant notices; [2] deficiencies in the required elements of the plan application; [3] the need for the PBGC to provide adequate technical and financial resources to the Participant and Plan Sponsor Advocate; [4] whether the statute makes benefit suspensions an absolute prerequisite for partition; and [5] how Title I of ERISA interacts with new Section 4233." (Pension Rights Center)
Ninth Circuit: Multiemployer Plan Calling Unpaid Contributions 'Plan Assets' Does Not Make Persons Controlling Contribution Payments ERISA Fiduciaries
"The Ninth Circuit recently held that a multiemployer pension plan cannot label unpaid contributions as 'plan assets' so as to impose ERISA fiduciary status on persons controlling the payment of employer contributions to the plan.... [T]he court rejected the reasoning of the Second and Eleventh circuits, which have held that unpaid [multiemployer plan] contributions can be plan assets if the plan documents expressly define plan assets to include unpaid contractually required contributions." [Bos v. Board of Trustees, No. 13-15604 (9th Cir. July 30, 2015)] (McGuireWoods LLP)
[Guidance Overview] Draft Instructions to IRS 2015 Forms 1094-C and 1095-C Give Clear Guidance to ALEs Contributing to Multiemployer Plans (PDF)
"Employers who contribute to a multiemployer plan that complies with the multiemployer interim guidance, can use the 1H/2E codes to report on employees for which it makes contributions to the plan. If such an ALE has other employees that are not covered by the multiemployer plan, it must also report those employees using the 1094/1095-C series forms. If such other employees are covered by an insured plan, the insurance company would do the reporting required under Part III of Form 1095-C." (United Actuarial Services, Inc.)

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