Multiple Employer Plans

[Guest Patrick Foley]

What is the risk to an employer in a multiple employer plan due to funding problems of other employers in the plan? The IRS multiple employer plan regulation requires that the plan be a "single plan," meaning that all plan assets are available to pay all benefits. However, the funding regulations under the Pension Protection Act apply all the rules to multiple employer plans (established after 1988) on a segregated basis, including Code Section 436. At what point (if any) does the "single plan" requirement override segregation of funding obligations or otherwise "bite" other employers due to one employer's inability to fund?

Thanks!