Multiemployer Critical Status Issues

[AndyH]

Any experienced multiemployer practicioners out there?

Questions:

1. Plan goes from green to critical. When does the 5% surcharge start, 30 days after the employers are notified of the status, or at the start of the rehab period (which can be much later)?

2. How is the 5% computed, being 5% of "the amount otherwise required". What is "the amount otherwise required"?

3. Where does the 5% come from, the employer's pocket? Or can it be mandatorily passed along to the employees?

4. When is the 5% due, concurrently with regular remittances, or by the minimum funding deadline?

Thanks for any help.

[Guest 409 eh?]

Any experienced multiemployer practicioners out there?

Questions:

1. Plan goes from green to critical. When does the 5% surcharge start, 30 days after the employers are notified of the status, or at the start of the rehab period (which can be much later)?

2. How is the 5% computed, being 5% of "the amount otherwise required". What is "the amount otherwise required"?

3. Where does the 5% come from, the employer's pocket? Or can it be mandatorily passed along to the employees?

4. When is the 5% due, concurrently with regular remittances, or by the minimum funding deadline?

Thanks for any help.

1. The surcharge starts 30 days after the employer is notified.

2. 5% of the hourly/weekly amount attributable to the pension under the CBA. So, if the CBA says the ER contributes $1/hour for pension, it's now $1.05.

3. I'm not sure on this one from a statutory perspective (I don't think it's answered), but at least some practitioners are using this as a bargaining item with the union.

4. Due with regular remittances.

[AndyH]

Thanks for the reply.

Are you aware of any written guidance on 2 and 4?

My question relative to 2 has to do with whether or not the contribution must be credited for the plan year containing the hours worked, as opposed to using part of the 8.5 months to finish funding the prior year. And there seems to be some question as to whether that is permitted. It does seem clear that the surchare applies for contributions for the year that was certified as critical.

[Guest 409 eh?]

I'm not aware of any guidance on the statute. I agree that the language in 432(e)(7) is a bit ambiguous ("obligated to make a contribution for the initial critical year") but I'm betting every Fund interprets that as "obligated to make a contribution during the initial critical year..." The lack of guidance of course makes it difficult to argue...