Bill Ecklund

This would be a PT. As to the common trustees this would be a violation of 406(b)(2). However there are a number of DOL advisory opinion letters that can help you structure this transaction to avoid problems. In addition that are several class exemptions that could come into play. Start with PTE 76-1. Since this involves real estate, you probably want to have a QPAM involved, otherwise your fiduciary liability insurance may not provide coverage.

The rehab plan has to be udated annually, and the contribtuion schedules may have to be changed, but any such changes do not apply to CBA's currently in force until the CBA expires and is renegotiated.

There would only be one partial withdrawal and it would occur on 12/31/2013/

Assuming the trustees have properly adopted the benefit schedule, that goes into effect irrespective of whether the employer has adopted the default schedule or an alternate schedule.

I have never seen a plan offer an estimate over the phone and would ot expect to. It generally doesn,t take too long (up to two weeks) to get an estimate provided that actuaries have completed their work. For some smaller plans it might take a bit longer.

In my experience, it is not common for a plan to automatically mail out the estimate. For plans with lots of contributing employers, it could be expensive to automatically mail out the estimate.

ERISA section 101(l)

Try Chubb

The definition of a “multiemployer plan” is a plan to which more than one employer contributes by reason of a collective bargaining agreement. The fact that there may be non-union employees participating or even non-union employers does not change the characterization of the plan. For example, it is not uncommon to have a trade association that is the sponsor of a multiemployer plan also participate as a contributing employer, even though the association itself is not union. It is highly unusual, however, for a typical multiemployer plan to have other non-union employers participating. Generally, the sponsoring unions do not like to see that. It is very common to have non-bargaining unit employees (NBU’s) participate in a multiemployer plan. If a multiemployer health and welfare plan contains too many NBU’s, it may become a MEWA, which has several ramifications. The plan would only file one 5500, and the plan rules would normally apply to all contributing employers, unless the trustees created separate rules. Any non-union employer participating in such a multiemployer plan should be required to sign a participation agreement, which would set forth the rules under which it participates, and these rules could be different than the rules that apply to the contributing union employers.

Assuming that there is not a 70% CBU decline, the transfer should not result in a partial withdrawal.

You should look at PBGC opinion letter 85-23 which gives the PBGC's interpretation of the regulations regarding default in payment of the withdrawal liability and when the default actually occurs which allows the plan to accelerate.

Yes, the employer must make the monthly payments until the arbitration is completed. Failure to do so allows the plan to accelerate the payments and sue for the entire amount. Also follow strictly the timeliness for requesting review and arbitration. Failure to do so leaves the employer with no defenses.

In the first place, it is up to each Plan to make a determination as to the application of a particular statutory section in connection with a potential partial or complete withdrawal. Having said that, it appears that if the employer does shut down its facility and ends up contracting with an unrelated entity to provide the same product that it previously produced, that would not constitute a partial withdrawal. Obviously, the “controlled group” rules have to be looked at to make sure that the entity truly is an unrelated entity. In PBGC Opinion Letter 86-17, the PBGC opined: It is our opinion that the language in the statute, interpreted in light of this legislative history, indicates Congress’ intent to limit Section 4205(b)(2)(A)(i) to situations in which the same employer continues to perform work in the jurisdiction of the collective bargaining agreement or transfers the same type of work to another one of its own locations. An employer that permanently ceases covered work under one of its collective bargaining agreements and instead contracts to buy the service or products from an independent third party, therefore, does not “transfer such work to another location” within the meaning of Section 4205(b)(2)(A)(i) of ERSIA

Many plans have rules that provide such an arrangement would result in a complete withdrawal from the plan. Central States, for example, does not allow that type of provison in a CBA, nor does the Sheet Metal Workers National Pension Fund. In both cases the employer would be terminated from the plan resulting in the assessment of withdrawal liability. See: Central Hardware v. Central States Pension Fund,770 F.2d 106, 110770 F.2d 106, 110 (8th Cir.1985). In additon the PPA of 2006 precludes this kind of provsion in a CBA under certain circumstances.

You should cerainly ask for a copy of the plan's funding improvement plan and you should find out if the plan has adopted the free look rule.

It probably will make a substantial difference if the employer withdraws on 12/31/08 instead of 1/1/09. If the withdrawal date is 1/1/09, the WL will be calculated as of 12/31/08 (assuming the plan is a calendar year plan). This will include all the investment losses experienced in 2008. If the employer were to withdraw as of 12/30/08, for example, the WL will be calcualted as of 12/31/07.

Is this employer in the Building and Construction Industry? Do both CBA’s still provide for contributions to the DB Plan? I had occasion to address this issue in the Building and Construction Industry several years ago. The local collective bargaining agreement provided for contributions to several classifications of construction workers, including a classification called “classified” workers. The CBA provided for contributions to a DB pension fund on behalf of all classifications of workers. Historically, however, classified workers did not stay around long enough to become vested. As result, the local contractor association and the local union negotiated the classified workers out of the DB plan and created an annuity plan. Within the course of addressing this issue, I spoke with a person at the PBGC, who is regarded as one of the experts in the Building and Construction Industry. There are special rules dealing with reduction of partial withdrawal liability in the Construction Industry. Specifically, ERISA §4208(d)(1) states as follows: An employer to whom §…4203(b)…applies is liable for a partial withdrawal only if the employer’s obligation to contribute under the plan is continued for no more than an insubstantial portion of its work in the craft and area jurisdiction of the collective bargaining agreement of the type for which contributions are required. The PBGC person’s interpretation of Section 4208(d)(1) is that it would only apply in the case where the employer is double breasted. His reading of the Section focuses not on the “insubstantial portion” of the language, but on the following language: …of its work in the craft and area jurisdiction of the Collective Bargaining Agreement of the type for which contributions are required. His position would be that since no contributions are required on behalf of classified workers in the current Collective Bargaining Agreement, the employer’s obligation to contribute is continued for all of the employers work in the craft and area jurisdiction of the Collective Bargaining Agreement. And, therefore, the employer would not be liable for a partial withdrawal from the Plan. This argument does make some sense, especially when you compare the language in Section 4208(d)(1) with the language contained in ERISA Section 4205(b)(2) that describes a partial cessation of the employer’s contribution obligation. Section 4205(b)(2)(A)(i) states that a partial withdrawal occurs when the employer permanently ceases to have an obligation to contribute under one or more but fewer than all Collective Bargaining Agreements, but continues to perform work in the jurisdiction of the Collective Bargaining Agreement of the type for which contributions were previously required… In other words, that Section specifically compares a previous Agreement with the current Agreement. The language in Section 4208(d)(1) only talks about current obligations and does not refer to previous obligations. Under this interpretation, a partial withdrawal would occur if the Collective Bargaining Agreement still required contributions on behalf of classified workers, but the employer was not required to make contributions on behalf of certain or all of its classified workers (by reason of being double breasted).

If you call me at 612-373-8509, I can give you some assistance.

I believe the $1,000,000 limit only applies if the plan holds employer securities.

In some cases it may be a breach of fiduciary duty not to have a larger bond than $500,000. If you have a very large fund and it is possible that a fraud may exceed $500,000, a bond of only that size may be imprudent.

No. PTE 76-1 states: Sec. I. Effective January 1, 1975— (a) The restrictions of sections 406(a) and 407(a) of the Act shall not apply to: (3) A determination by a multiple employer plan to consider a contribution due the plan from any employer any of whose employees are covered by the plan as uncollectable, in whole or in part, and to terminate efforts to collect such contribution, if the following conditions are met: (i) Prior to making such determination, the plan has made, or has caused to be made, such reasonable, diligent and systematic efforts as are appropriate under the circumstances to collect such contribution or any part thereof; and (ii) Such determination is set forth in writing and is reasonable and appropriate based on the likelihood of collecting such contribution or the approximate expenses that would be incurred if the plan continued to attempt to collect such contribution or any part thereof.

See ERISA opinion letter 2006-04A and Walling v. Brady 21 EBC 1437. Both deal with settlor/fiduciary issue.

If the parties fail to agree, the plan must implement the default schedule. The default schedule will be implemented on the earlier of the dare (1) which the Secretary of Labor certifies that the parties are at imnpasse, or (2) which is 180 days after the date on which the CBA expires.

The plan will come up with the options - usually a default schedule and one alternate schedule. The partries to the CBA bargain over which schedule to adopt.