How Binding is 4221 Withdrawal Liability Estimate? Is liability Really Negotiable?

[Alf]

Is a 4221 withdrawal liability estimate binding? The estimate was way off from what was assessed and we are questioning the value of the estimate if it is not binding on the fund in some way.

Also, are the liability assessments REALLY negotiable? It seems like a solvent employer doesn't have any leverage, but we understand that technically, the Trustees may settle claims for withdrawal liabilty. Does it really happen?

[JanetM]

Alf, SMW (sheet metal workers) tell you up front it is an ESTIMATE and if the final calc is different - tough. Guess it depends on exactly what they told you.

As far as being negotiable ............... I have only delt with a few multi's and it depends on the trustees.

SMW are so underfunded they don't negotiate. Thing with negotiating is you have to start paying them what they calculated in ordertto have the right to negotiate.

[Guest BKH]

I have had success negotiating a 10-15% principal discount in the amount of the assessed withdrawal liability by paying it in a lump-sum payment (or over a 1 or 2 year period).

[Alf]

BKH,

That is a great angle. At what point to you approach them? I assume you run it by them without requesting arbitration. Do you make it before the first payment is due (which has always been about 30 days after the demand letter in my experience)?

[Guest BKH]

If I have no defenses to the withdrawal liability assessment, I approach the pension fund before beginning to make interim payments. If I have some colorable arguments, I request a review of the assessment with the pension fund raising my arguments and posturing for a reduction on the merits. After requesting the review, I then approach the pension fund with the discount request if we make a lump-sum payment. If they say no, I commence arbitration and then ask again. The pension fund is usually more receptive to the discount after arbitration has been started. Of course, all of this depends on the particular facts and the client's wishes.

[Guest Brian4]

My experience is Trustees will usually agree to a reduced withdrawal liability for lump sum payments. ERISA 4214(b) says that the Trustees should apply rules uniformly with respect employers, except that the creditworthiness of the employer can be reflected.