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Employee Led De-certification - Any Ideas to Avoid/Lessen Withdrawal Liability


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You are stuck on this one since you have permanently ceased obligation to contribute to the plan.

Are you by chance in one of the groups that have some exceptions?

Building and construction

Trucking

Household goods moving

Public warehousing

Retail food

Certain segments of the entertainment industry

JanetM CPA, MBA

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namealready: I am curious and not trying to make a point, but what will be your annual w/l payment as compared to the money you'll save on contributions to the m-employer plan? Also, will you amend your own tax-qualified plans to exclude these workers or will you have a coverage problem if you don't cover them?

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Just because your w/drawal liability will be "off the charts" doesn't mean you will ultimately pay for it. Keep in mind that your actual w/drawal payment is based on the current negotiated contribution rate and is limited to a 20-yr period. Because of these restrictions, it is fairly common that ER's ultimately ends up paying far less than their actual w/drawal liability.

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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name, I agree with the prior posts. Unfortunately, I don't think yours is an unusual situation. I've seen several circumstances where the withdrawal liability payment exceeded the employer's "regular" contributions to the multiemployer fund.

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The formula for calculating the payment is in the statute. It is based on the average of the CBU's over a period of time, multiplied by the highest rate in the CBA. It is intended to somewhat replicate the payment made under the CBA prior to withdrawal. It is an annual payment, but plans can adopt rules to have it paid quarterly or monthly.

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  • 2 months later...

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