when is it a withdrawal

[JanetM]

Question for you - My company owns multiple companies. We are a control group. Some of the companies have sheet metal workers union employees and are contributing to the SMW national pension fund. None of the union locals are the same - they are all over the country.

Question - If company A closes one facility, keeps two others. Do you look at just the one facility company A closes and see if there is cessation of operation - or - do you look at all facilities company A owns that participate in SMW Plan? Or to you look at company A, B and C locations and use the entire control group?

One Atty is saying you look at partial withdrawal on control group basis - anther says it is by locaton.

HELP!

[J2D2]

My recollection is that it is a combination of the two. First, in your situation, the employer appears to have ceased to have an obligation to contribute for one or more, but less than all, facilities. That means you have a partial withdrawal. Second, the amount of partial withdrawal liability is a portion of the liability the employer would incur for a complete withdrawal.

Vast oversimplification (and subject to my rapidly failing memory) but hope this is helpful.

[mbozek]

Janet-- You need to get the lawyers in one room together to get an answer from them or get them to give you an written opinion This is what lawyers are paid to do-- Partial withdrawals from a multiemployer plan are governed by ERISA 4205. A partial withdrawal occurs when there is either a 70% decline in the employer contributions or there is a partial cessation of the employer's contribution obligation to one or more of the facilities covered under the CB agreement. Section 4205(B) defines both a 70% decline and partial cessation. 70% decline is on an employer wide basis and partial cessation is on a location basis. PBGC reg 4001.2 defines the employer to mean all trades or business under common control. PBGC reg 4001.3 defines all trades or businesses under common control to be those t & b as determined under IRS reg. 414©. The lawyers need to give you an analysis based upon the above regs and the legal precedents/ court decisions to determine how the partial withdrawal regs apply to the employer.

[KJohnson]

From my recollection, in a "facility" partial withdrawal, the employer must either continue to perform work in the jurisdiction of the local's CBA or transfer the work to another location.

Thus, a facility shutdown, without more, will not trigger a "facility partial." (although it may trigger a 70% decline partial). For a facility partial, there must generally be a "run away shop (i.e. work transferred to a facility that does not contribution to the plan) " a decertification of the union, the union agreeing to "bargain out" of the plan at that facility, the employer implementing its last offer that does not include contributions to the plan or some other similar event.

I agree you should get the attorneys to address both criteria under 4205(B).

I also agree that a 70% decline partial would be on a controlled group basis.