Predecessor Employer

[Guest VEBA Las Vegas]

Participant works for an employer that participates in multiemployer plan A. Leaves to work for an employer that participates in multiemployer plan B. Fifteen years later (after participant has experienced a break in service with plan A), plan A merges into plan B.

I am trying to get participant credit for his service under plan A. Anyone have thoughts on whether ERISA 210(b)(1)/IRC 414(a) provides a potential argument for this proposition? (210(b)(1): if employer maintains a plan of a predecessor employer, service for such predecessor shall be treated as service for the employer.)

A stretch, but does is pass the blush test?

[SoCalActuary]

What does the document say? A merged plan has to address the issues, and lawyers are paid to address the interpretation.

[Guest VEBA Las Vegas]

Ah, I should have included that detail. The merger document clearly excludes the participant from receiving credit for his service under plan A. I am crafting an argument that this outcome violates ERISA. In other words, despite the document, the new plan must give participant credit for his service under the old plan.

[SoCalActuary]

vesting is a big issue here. Partially vested people should continue to get credit for both plans. If he left plan A with no vesting, probably no luck after 15 years break. If he was fully vested, your argument is moot. Was partial vesting involved?

However, in multi-employer plans, other issues also matter, such as credits for early retirement, disability eligibility, etc. Break in service issues make also get in the way.

Which service are you trying to protect?

[mbozek]

The predcessor plan provisions of ERISA/IRC 414(a) only apply to an employer who maintains the plan of a predecessor employer. A multiemployer plan is a plan maintained pursuant to a collective bargaining agreement between a union and one or more employers under IRC 413(a) and is subject to separate rules for crediting service. Since the employer does not maintain the CB plan the predecessor plan provisions do not apply to a merger of CB plans. The reason for this distinction is that crediting service under another CB plan after a merger would result in the merged plan having financial liabilites which were not negotiated for by the participating employers.

[Guest VEBA Las Vegas]

SoCal -- I am trying to protect service under plan A. Participant had 8 years of service and the plan had a 10 year cliff for vesting, so he was not vested prior to the break in service (and, as you can imagine, he definitely experienced a break in service).

mbozek -- I have looked at 413 (and considered these provisions as well). The DOL regs indicate that for purposes of participation, vesting and benefit accrual, a multiple employer plan shall be treated as if all maintaining employers constitute a single employer so long as an employee is employed in covered service. The regs also define "multiple employer plan" as including multiemployer plans.

If all of the employers maintaining a CB plan constitute a single employer for purposes of vesting, and the employers who maintained plan A subsequently constitute some of the employers maintaining plan B (i.e., post-merger), can it be argued that, for purposes of vesting, the plan B employers are "predecessor employers" to the employers that maintained plan A?

Again, a stretch, but I am trying to be creative. After all, Plan B did get Plan A's assets.

[mbozek]

How can the prior service with A be counted as prior vesting service under the merged plan if employee had a break in svc from A greater than his years of prior Svc before the merger of the two plans? See reg. 1.411(a)-6©(1)(iii). Under the vesting rules, the prior svc with A would not be taken into account if the employee returns to work with A or its sucessor.

[SoCalActuary]

If I were judging this, the facts you gave would lead to forfeiture of the 8 years. He left non-vested, had a break beyond 8 yrs parity, and therefore forfeited. The only way it could change is if the union negotiated to grant the service credits. Does your participant have enough political clout with the union? If not, no go.

[Guest VEBA Las Vegas]

SoCal: rank and file member with no juice.

mbozek: this is why I am looking to ERISA 210(b) to bridge the gap for these 15 years. I found an opinion from the M.D. Fla. that dealt with a similar situation for a single employer plan. Employee works for Bank A and terminates service to work for Bank B. Employee experiences a break in service under the rules for Bank A's plan. Bank A subsequently merges into Bank B and Bank A's plan merges into Bank B's plan.

EE subsequently applies for retirement benefit and Bank B plan administrator does not give him credit for service under Bank A's plan. Court concluded that under 210(b), the administrator had to treat employee as if he had worked for Bank B during his period of service for Bank A. Thus, under this analysis, ee never experienced a break in service.

Good law for me, but not in the context of a multiemployer plan.

BTW, thanks to both of you for responding to my posts -- I am preparing an internal appeal (thankfully, no Rule 11 issues) and this helps me evaluate just how far I am reaching (and, from what I gather, I am grasping at straws.)