luissaha

The change would have to be adopted by the board of trustees. The board is comprised of equal labor and management representatives. The problem I see with the proposed change is that employers may have strong grounds to challenge a withdrawal liability assessment if the only reason for the short year was to "create" a UVBL. On the other hand, as you point out, it could be argued that creating the UBVL was in the best interest of participants and benefiaries.

Let me clarify a bit what is going on in this case. The plan is a multiemployer plan and the actuary (at the request of the board of trustees) was asked if there was anyway that the plan could have an unfunded vested benefit liability. The trustees want this in order to prevent employers from withdrawing from the plan. If there is a UVBL, withdrawing employers would be assessed withdrawal liability. This prospect might keep them in the plan. One idea the actuary proposed was changing the plan year. As of December 31, 2008, there was no UVBL. Thus, if an employer withdrew in 2009, it would not be assessed withdrawal liability. However, with stock market declines in January and February of this year, it looks like there could possibly be a UVBL if the plan year ended in the first or second quarter of 2009. My concern is that I don't think this is an appopriate reason for changing the plan year. Do we need to have some other reason for changing the plan year? I'm not comfortable with the actuary's suggestion.

We work with a calendar year plan and received information that the actuary wants to change the plan year to May 1 through April 30. It appears we would have a short plan year from January 1 through April 30 and would need to file a 5500 for this short year. Do we need some justification from the actuary as to why he wants to do this?

We have a large plan with participating employers mainly in the newspaper/comercial printing industry. One of the newspaper employers is considering shutting down the printing operations at one of its papers and moving those functions to an unrelated employer (i.e. they may "outsource" the printing of the paper). The employer would thus no longer have an obligation to contribute to the plan under the CBA that covers the employees at that newspaper. The employer would still be obligated to contribute for other employees at several other papers. The employer is asking whether the plan would consider the proposed outsourcing to be a partial withdrawal. In order for there to be a partial cessation of the employer's contribution obligation under ERISA section 4205, it appears that in addition to the fact that the employer would no longer have an obligation to contribute under one but fewer than all CBAs, the employer (1) would have to continue to perform printing work in the jurisdiction of the CBA, or (2) transfer such work to another location or to another related entity, or (3) continue to perform printing work at the facility. From what has been described to us by the employer, situations 1 and 3 will not apply. No further printing work will be performed in the jurisdiction of the CBA or at the plant. The issue I have is with situation 2. The employer is arguing that it does not apply because the work is being transferred to an unrelated entity. However, the wording of ERISA Section 4205(b)(2)(A)(i) is a little unclear. Could it be interpreted that a transfer of such work "to another location" is all that is required to trigger a partial withdrawal? Any thoughts would be appreciated.

A large multiemployer defined benefit plan recently discovered that a contributing employer was making contributions to the plan on an after-tax basis. The plan does not allow for after-tax contributions. Obviously, because the plan document does not allow for after-tax contributions, the contributions must be refunded to the employer. The problem here, however, is that the employer had been making after-tax contributions to the plan for over 8 years before the plan's auditor figured out what was happening. Additionally, the language in the collective bargaining agreement could be read to require that the employer make only after-tax contributions to the plan. As such, if the contributions are refunded, the plan may not have any recourse against the employer under the CBA to collect the contributions and the employeees will not have accrued any benefits under the plan. Does anyone have any ideas on how he plan can resolve this situation without the employees losing the benefits they thought they had accrued? Any help would be appreciated.

A plan we work with will be in critical status effective 1/1/09. One issue we have been struggling with is reductions to adjustable benefits. It seems the trustees can reduce adjustable benefits for vested terminated participants without the agreement of the bargaining parties and the reductions can apply to all vested terminated participants whose benefit commencement dates were after the date the actuary certifies that the plan is in critical status. What about active participants? It seems for participants who are active on the date the actuary certifies critical status the plan has to wait until their employers adopt a schedule or the deafault schedule is imposed before adjustable benefits can be reduced. Is this correct? What does the plan do with active participants who retire after the actuary certifies critical status but before the plan adopts a rehabilitation plan? Are these participants treated as active participants or as vested terms?

I agree that this is a mess. I'm not sure, however, that the employer owes the contributions under the CBA. Believe it or not, the CBA actually implies that the contributions would be taken from the employees' wages on an after-tax basis. If the plan tries to recover the contributions from the employer, I'm sure the employer will argue that the CBA required after-tax employee contributions. He was not obligated under the CBA to make the contributions on the employees' behalf. Now that the plan discovered it cannot accept these after-tax employee contributions, there is no requirement that he make the contributions to the plan. The administrator should not have accepted a CBA with this language, but he did. I'm just not sure the plan could prevail in a lawsuit against the employer to recover the contributions when the language in the CBA seems to call for after-tax employee contributions.

Through a payroll audit a large multiemployer defined benefit plan discovered that a participating employer was making improper contributions to the plan for several years. It appears that the employer was requiring employees covered by the CBA to "elect" to participate in the plan and then was taking money from those employees' checks on an after tax basis to make contributions to the plan. The plan does not allow for acceptance of any kind of after tax contributions. Obviously, the plan can no longer accept these contributions. My concern, however, is what the plan is required to do with those contributions it has already received from the employer. Can the plan simply refund the contributions to the employer and notify the participants about what happened and inform them they have not accrued any benefits under the plan? Should the plan approach the IRS regarding the proper correction procedure? Any thoughts would be greatly appreciated.

The settlor v. fiduciary function is an interesting issue in this matter. I have seen case law in the multiemployer plan context which holds that when amending a plan the trustees are acting as settlors and not fiduciaries. Therefore, there could be no breach of fiduciary duty when amending the plan to pay a 13th check to dues paying union members because this would be considered a settlor function. I believe that this decision, however, would expose the Trustees to a possible lawsuit and do not believe it is prudent action to take. I just don't see what the motivivation could be behind this decision other than to increase dues paying members in the union.

Yes, sorry for the confusion on this. The retirees I'm talking about are no longer employed in the industry, but still pay union dues. I guess I should refer to them as dues paying union members. It is my understanding that some retirees continue paying dues even though they are not working.

The plan does not say anything on the subject. We would have to amend the plan to provide for payment of the 13th check. I have a problem with amending the plan to provide for payment of the 13th check to active union members only. I can't find anything exactly on point, but I believe making payment of the 13th check contingent upon active union membership might violate the exclusive benefit rule or possible some provision of the NLRA.

A multiemployer plan that is significantly overfunded is considering paying a "13th check" to current retirees at the end of this year. The labor trustees suggested that to save some money the 13th check should be paid only to retirees who are active members in the union. Apparently, some multiemployer funds have done this, but I see significant issues with making the 13th check contingent upon union membership. This could violate ERISA's exclusive benefit rule and the NLRA as well. Does anyone have any authority on why this should not be done? Any help would be appreciated.

At a recent multiemployer plan meeting, a Trustee asked whether the plan's normal retirement age could be increased from age 65 to Social Security Normal Retirement Age. My initial reaction was that IRC Section 411(a)(8) would not allow allow this as normal retirement age cannot be later than age 65 or the 5th anniversary of a particpant's participation in the plan. However, the plan's consultant stated that he has seen plans that define normal retirement age as Social Security Normal Retirement Age. Is there any support for this? Any help would be appreciated.

We represent a plan that has a few participants, some with significant account balances, who cannot be located. These participants are approaching their required beginning dates and the administrator is getting nervous. He would like to distribute these accounts in accordance with the EBSA guidelines for terminating dc plans with missing pparticipants. Is this possible/advisable? It seems that the EBSA gidelines only apply to terminating plans. If we don't distribute these accounts, is the plan in any potentially difficulty under the RMD requirements? Can we just hold these accounts indefinitely? Any thoughts would be appreciated.

I have a money purchase pension plan that requires distributions of entire account balances before age 70 1/2. The plan also contains the necessary language regarding required minimum distributions. A participant who was past the required beginning date recently applied for retirement and requested a rollover of his account balance to an IRA. (The participant's account balance was not distributed on the required beginning date because the plan had an incorrect birthdate for the participant). The participant was advised by the plan administrator that this was not an eligible rollover distribution because it was a required distribution under 401(a)(9) and plan rules. He was told he would have to take a distribution of his entire account and the money could not be rolled-over. The issue from my point of view is as follows: If the plan has the required minimum distribution language and a provision that calls for distribution of entire account balances before age 70 1/2 there seems to be a conflict. In my opinion, it would be reasonable to calculate the participant's rmd, pay that to him, and roll the remaining account balance directly to the IRA. I guess what I am saying is that if the RMD language is in the plan, shouldn't the participant be allowed to take advantage of these rules? I would appreciate any comments.