withdrawing from a multiemployer plan

[Guest jigpsu]

I was wondering if anyone had experience with the ability of an employer to withdrawal from a multiemployer plan. Before withdrawal liability is assessed, may an employer contract out of a plan if they choose to stop making contributions? I am hoping someone can point me to a good source of information on the subject. Thanks.

[Bill Ecklund]

You have reversed the sequence of employer withdrawal. Withdrawal liability would never be assessed if the employer still has an obligation to contribute to the plan. Normally, an employer could not “choose” to stop making contributions. The collective bargaining agreement provides an obligation to contribute to the plan. If the employer negotiates that contribution obligation out of the CBA, then that constitutes a statutory withdrawal and withdrawal liability would be assessed. There is no way to avoid that. The library at the International Foundation of Employee Benefits Plan has quite a few articles on the subject. Their website is www.IFEBP.org

[Guest mjb]

What do you mean by contract out? The employer who signs a Multi employer participation agreement is legally obligated to pay the withdrawal liability, to the extent the employer has assets. There are exeptions such as in an asset sale where the buyer assumes the withdrawal liability of the seller but these arrangments require the expertise of benefits counsel.