"Settlement" of withdrawal liability

[Guest Douglas]

Does anyone have any thoughts as to whether it would be permissible to enter into an agreement with a construction industry employer to waive his assessed withdrawal liability so long as he paid contributions that he would have paid on behalf of his employees during the period from which he initially withdrew from the plan and the time at which he signs a contract with the union again? In other words, for all practical purposes, the agreement would create the fiction that he never withdrew from the Fund in the first place.

[Effen]

during the period from which he initially withdrew from the plan and the time at which he signs a contract with the union again

Are you saying they would continue to pay into the plan during the course of their current agreement and then stop?

Why would the workers want money withheld from their wages and sent to the fund without getting any benefit for it?

Why would the plan let the employer walk away at the end of the contract?

I think you might be able to do anything the trustees accept, but why would they accept this?

[Guest Douglas]

during the period from which he initially withdrew from the plan and the time at which he signs a contract with the union again

Are you saying they would continue to pay into the plan during the course of their current agreement and then stop?

Why would the workers want money withheld from their wages and sent to the fund without getting any benefit for it?

Why would the plan let the employer walk away at the end of the contract?

I think you might be able to do anything the trustees accept, but why would they accept this?

This particular empoyer abrogated the contract approximately four years ago. However, he continued to perform covered work, thereby incurring a substantial withdrawal liability assessment. The proposal on the table is that the fund waive the withdrawal liability in lieu the employer paying a lump sum of money on behalf of his employees equal to the contributions that he would have been required to pay had he never abrogated the contract four years ago.

[Guest Sieve]

Breach of fiduciary duties by Trustees?

[Effen]

First, I'm not a lawyer, but how can he abrogate a contract? Isn't that a bargaining issue?

It sounds like you are saying he wants the fund to treat him like he never abrogated the contract and accept his contributions for the last 4 years, but I don't see how that exempts him from withdrawal, unless he is going to continue to be a contributing employer, in which case he never withdrew.

The payment of the 4 years of contributions is completely separate from the withdrawal liability. I still don't see what the fund is getting out of this as satisfaction of the withdrawal liability.

Let’s say I have a club and you wanted to join. You agree to pay me $X each year and $Y of you leave the membership. At some point you decide you don't want to be in the club, so you just stop paying me. I annually remind you that you owe me $X and that if you don't pay, you will owe my $Y as well. Finally, four years later you say you will pay me the $X for the four years as satisfaction of the $Y. I say, no, you owe me BOTH $X and $Y. I may be willing to forgive the $X (assuming you never used the club during the time), but the $Y must be paid.

Then again, Trustees can do whatever they want, but I agree with the goalie, it would probably be a breach of fiduciary duty to accept it, unless the 4 years of contributions was more than his withdrawal liability.

Obviously, this is a fight for the lawyers.

[mal]

Take a look at the abatement regulations. They seem to suggest that the interim withdrawal liability payments between the time the employer left the plan and then reentered must be paid. It allows future payments to be abated.

Absent a timely application for abatement, I think the Board has to continue to collect EWL payments on the schedule set forth by the actuary.

http://edocket.access.gpo.gov/cfr_2002/jul...29cfr4207.3.htm