Brian Haynes

Section 4225(a) requires that there be a bona fide sale of all or substantially of the "employer's" assets in a arms'-length sale to an unrelated party. Where you have another member of the selling and signatory employer's control group (here a company that owns the building that was leased to the signatory employer), must there be a sale of assets of both the signatory operating company and the related real estate company for Section 4225(a) to apply? I think the issue is whether under ERISA the concept that all companies in the control group are deemed to be the same employer applies to Section 4225(a) so that all companies in the control group must be sold. I have not found any precedent for this but this does not sound correct to me. If any one has any thoughts, they would be most appreciated. Thanks.

I have a client that is a closely held business that sold all of its business assets related to its union business and was assessed withdrawal liability by a pension fund. We argued that the asset sale limitation under Section 4225(a) limited the assessment to 30% of the company's liquidation or dissolution value. The fund is taking the position that the company is not entitled to this limitation because it did not sell "all or substantially all of its assets" as required by Section 4225(a). Of course, the company did not sell its cash and A/R but also did not sell its minority stock ownership in a different closely held company (it would be very difficult to sell this minority interest to anyone). Based on this, the Fund is saying that since Section 4225(a) on its face requires a sale of "all or substantially all of the assets," the limitation does not apply. If the company had sold its minority stock interest in the other company it would have sold more than 85% of all its assets. Even without this stock sale, the company did sell 100% of its operating business assets. I have researched this and could only find one older arbitration case where the arbitrator held that non-operating business assets should be excluded in determining whether all or substantially all of the company's assets have been sold. Does anyone have any experience with this? Thanks in advance.

Thank you.

Under the proposed SECURE Act, RMDs will be limited to a 10-year pay-out for noneligible beneficiaries. A life expectancy pay-out will still be available for eligible beneficiaries (spouse, minor children, disabled individuals, chronically ill individuals and those not more than 10 years older than the IRA Owner). I am having trouble determining whether the current RMD rule that provides that if a non-individual beneficiary is named (estate, charity or non-look through trust), and if the IRA Owner dies before his/her required beginning date, then post-death RMD payments must be distributed within 5 years. Under the SECURE Act, would this 5 year pay-out rule be increased to 10 years if a non-individual is the beneficiary? Thanks.

On behalf of a client, I received the same MUA. The fund at issue wanted to take advantage of the MPRA provision which allows a fund heading towards critical status to affirmatively elect Red Zone status preemptively. This fund apparently did this so it could eliminate some early retirement type subsidies and then the next year, it will go back into endangered status and will not make the same election. I advised my client to go ahead and sign to avoid the 5/10% surcharges.

As a general rule, shares of stock can be sold to a buyer without triggering withdrawal liability. This is considered a mere corporate change and does not result in liability provided the corporation remains obligated to contribute to the pension fund. If the sale of stock is consummated with a principal purpose to evade or avoid withdrawal liability, the pension fund can argue under Section 4212(c) of ERISA that the transaction was an asset sale that results in withdrawal liability. There are a number of cases under Section 4212(c) that involve stock sales. Check your Collective Bargaining Agreement and any Participation Agreement with the pension fund to determine what the notification obligations are regarding the sale.

I represent an employer that contributes to a multiemployer pension fund. The fund wants to utilize Revenue Procedure 2010-52 and submit an application to the IRS for a 10-year amortization extension. In connection with that application, the fund is asking my client to send directly to the IRS certain financial information about the employer. My client is concerned about maintaining confidentiality of its financial information (it is closely held) and wonders whether it should decline to provide the information so that the fund enters critical status where the trustees have some better options for addressing the funding shortfall. Does anyone have any thoughts on this? Thanks. .

We know that if a pension fund has had a mass withdrawal termination, employers must pay their withdrawal liability payments without the benefit of the 20-year cap on payments (redetermination liability). Such employers are referred to as "infinity payers" and may have to continue making payments for decades. However, it is my understanding that there is a practical limitation on the length of the infinity payments. This occurs when the pension fund no longer has any living participants and beneficiaries so that there are no longer any pension payments being made and no reason for the associated pension trust to continue. Upon such trust termination, it is my understanding that employers no longer have to continue making withdrawal liability payments. Does anyone have any authority that confirms this understanding? I am having trouble finding it athough it makes sense and several actuaries so believe. Thanks.

Just an additional after-thought: Although somewhat unclear under the case law, be careful if the contributing employer and the subcontractor are considered either a "joint or single employer" under the labor laws. If this is the case, the work by the subcontractor (being performed without an obligation to contribute to the pension fund) may be attributed to the employer and Section 4203(b) may have been violated.

My client received a notice and demand for withdrawal liability. The notice states that the employer can either pay off the assessment in a lump sum payment (made within 10 days of receipt of the Fund's notice) or commence making interim payments in January of 2015. My client wants to negotiate a lump sum payment. My concern is that if a lump sum is not paid within the 10 day period specified by the Fund, is the employer harmed by having to negotiate a lump sum payment with some interest accruing? My thinking is that interest does not start accruing until the first interim payment is due in January of 2015 so that the employer should have until that time to negotiate and pay a discounted lump sum amount. I understand that Section 4219©(4) allows an employer to pay off the liability without penalty, but with accrued interest, if any. Any thoughts on why the Fund states that the lump sum must be paid in 10 days? Thanks.

It is my understanding that it is also possible to go to federal district court and ask the judge to appoint an employer trustee. In extreme cases and as a last resort, union trustees have resorted to this procedure.

Funds seem to vary on whether they can waive and release any future mass withdrawal liability claims. Some Funds take the position that it would violate public policy to waive a future contingent liability event that is to be statutorily imposed (especially when not supported by additional consideration). Some Funds allow such a waiver but will do so only if the employer pays an additional amount to support that wavier. For example, a lump-sum settlement for a complete withdrawal made without the benefit of any 20-year cap or for an additional negotiated amount. All in all, most Funds will not release such claims but it is always worth trying to obtain.

Check Watsonville Frozen Food, 877 F.2d 1415 and Wisconsin UFCW Unions, 348 F.Supp.2d 1005.

As wel know, the Central States Pension Fund Trustees have adopted a hybrid method for calculating withdrawal liability which for current contributing employers, allows them to pay their liability now and switch to the direct attribution method. I am familar with this change. However, it is my understanding that the Trustees amended their hybrid method at the end of November 2012 to provide some new rules as to how a mass withdrawal event impacts those employers who have elected the hybrid method, Is anyone familar with this change. I assume it is a favorable result, in line with the Trustees' desire to encourage employers to switch to the direct attribution method. Any help would be most appreciated.

Thank you. I have also posted my question in his Column.