Estimate of Withdrawal Liability

[Brian Haynes]

As added by the Pension Protection Act, Section 101(l) of ERISA requires the Trustees of a Pension Fund to provide an estimate of the dollar amount of withdrawal liability. The Section then states that the Trustees may impose a reasonable charge to cover the "cost of copying, mailing and other expenses involved in furnishing the notice." This language seems to only allow the Trustees to charge for the expenses of sending the notice and does not allow a charge for the actuarial fees in preparing the amount of withdrawal liability. Is this right? I have a Pension Fund that wants to charge $2,500 for the actuarial fees in preparing the estimate (which seems excessive in any event). Thanks.

[Peter Gulia]

Brian, my clients are facing similar demands.

As you noted, the statute allows the plan to “make a reasonable charge to cover … other costs of furnishing” the withdrawal-liability estimate. ERISA § 101(l)(3).

A plan could argue that its “other” expenses of furnishing a withdrawal-liability estimate include the plan’s expense for professional services that would not have been used but for the plan’s need to respond to these requests.

A requesting employer could argue that “furnishing” must be construed according to the canon of ejusdem generis (“of the same kind or class”) so that the category of “other” costs includes only those that are sensibly similar to the copying and mailing costs that lead the phrase.

It might take a while to get to the arguments. A multiemployer plan’s administrator assumes that a requester won’t pay you or me to brief a Federal lawsuit to compel a delivery of a withdrawal-liability estimate on payment of no more than a proper amount (or a return of the improper portion of a charge).

But you might have the right situation that makes it worthwhile to pursue an interpretation.

Let’s talk next week.