Change from single employer benefit plan to multiemployer benefit plan

[Guest Diane M. Stolz]

What is the procedure for changing from a single employer defined benefit plan to a multiemployer plan? What statutes or regulations apply; do you have to terminate the original plan?

[Guest Keith N]

I think we need some more details. I'm not sure what you mean by "changing from a single employer defined benefit plan to a multiemployer plan". Are you trying to "merge" a single ER plan into a multiemployer? Do you mean multiemployer or multiple employer?

Generally a multiemployer plan is sponsored by a local or national labor organization, like the Steelworkers or Ironworkers. Why would a company (single er) change their plan to a multiemployer plan?

I have been involved in a the merger of single ER plan into an existing multiemployer plan if that is what your trying to do.

[Guest Diane M. Stolz]

Yes, exactly. The company at present has a defined benefit plan with both union and non-union workers. It wants to merge the union workers into a multiemployer plan. I can find little information on the practical or legal aspects of this. Maybe there is another approach and I am not asking the right question. The upshot is the employer wants a change from a defined benefit plan.

[Guest Keith N]

The merger process can be very complecated and everyone from both sides must be in complete agreement and willing to share information.

I agree that there is little to nothing as far as regulatory guidance so we just proceeded like it was a normal merger.

You said the company wants to merge.... what does the union think? What kind of past service benefits is the union willing to provide for the amount of assets transfered? My experience is that the multiemployer plan is generally willing to treat the transfering participants as "new members" and provide no past service benefit (and no assets). This generally kills the idea since the members would not want to split their benefit in two plans, giving up the potential for any past service increases in the new plan, and the employer hasn't really transfered any liability.

It may be easier to discuss this over the phone. Send me an email with your phone number and we can talk about it if you want.