Withdrawal liability

[Guest benefits_fan]

Question: I'm working with an employer that is part of a multiemployer fund. The fund is composed of multiple separate plans - I'll call them Plan A and Plan B. The employer contributes to the fund through both plans. If the employer closes the only location for which it contributes under Plan A, will the employer incur withdrawal liability even though it continues to contribute to the fund through Plan B? Basically, the question is whether a withdrawal occurs as to the specific plan under which contributions are made, or whether it occurs as to the fund as a whole.

Relevant ERISA provisions are cast in terms of "plan" rather than "fund":

A complete withdrawal occurs when an employer either (1) permanently ceases to have an obligation to contribute under the plan; or (2) permanently ceases all covered operations under the plan. 29 USC 1383(a).

Any insight is much appreciated!

[jpod]

I don't have any specific information for you. However, if the two plans are separate ERISA plans, each a MEPPA plan, I can't think of anything to support an argument that you somehow aggregate the two plans in applying the W/D rules.

[JanetM]

Not enough info given. You say it is multiemployer plan, then you say multiple plans. This doesn't make sense. Multiemployer plan is normally a union sponsored plan that employers opt to participate in. You do aggregate all entities who participate who are in a control group.

Depending on the facts, this could be partial termination.

[jpod]

benefits_fan did use the term "multiple plans," but I have the impression that he/she used it to describe two MEPPA plans investing through a single trust. In other words, the employer is obligated to contribute to two MEPPA plans funded through a commingled/master trust, and then withdraws from one plan but not the other. benefits_fan, please confirm or clarify.

[Guest benefits_fan]

benefits_fan did use the term "multiple plans," but I have the impression that he/she used it to describe two MEPPA plans investing through a single trust. In other words, the employer is obligated to contribute to two MEPPA plans funded through a commingled/master trust, and then withdraws from one plan but not the other. benefits_fan, please confirm or clarify.

You're correct. Basically, there are two "plans" which really translate to differing benefit schedules for different classes of employees. The employer contributes to one "fund" for employees under both "plans." The terminology is confusing because ERISA refers to "multiemployer plan." Case law uses the term "plan" and "fund" interchangeably. I believe that the withdrawal liability is owed to the "fund" and as long as the employer is required to contribute to the "fund" there is no complete withdrawal. I looked into the partial withdrawal situation, but due to the small numbers involved and the lack of a transfer, I do not think this is a partial withdrawal.

[jpod]

This issue requires research, but off-the-cuff I am inclined to disagree with you. Both Section 4201 and Section 4203 describe a complete w/d in terms of a "plan." Presumably, the single fund exists solely for convenience of investing, but there are separate ERISA plans requiring separate accounting of the assets in the fund attributable to the two plans.

If the employer gets a letter/bill from Plan A, you'll know what Plan A's interpretation is.

[JanetM]

What does the plan say? SPD or other materials? You don't seem to know what you have and you don't want to assume the worst case senario.