Employee

[Kitty]

Nm. Seeking legal counsel.

[BG5150]

Are these mandatory after-tax contributions, perchance?

[Effen]

In a multiemployer plan the "employer" contribution is often defined as a $/hour or $/unit contribution. The "employees/members" often consider this to be their money that comes out of their pocket. However, legally, these are NOT employee contributions. They are employer contributions. The union negotiates the rate the employer contribute, but the members of the union do not have any options. The money that is being contributed is classified as employer contributions, not employee contributions. This is not necessarily the employers sole obligation. If they choose or negotiate out of the plan, they could also be required to contribute a withdrawal liability which depending on the funded status of the plan, could be substantial.

Bottom line, although the union (not the members) are trading compensation for contributions, they are employer contributions, not employee contributions. There is also a lot of disinformation spewed by both sides during negotiations. My experience is that the business agents doing the negotiating often have only a very basic understanding of the plan and how it works and often say things that are not true.

[Effen]

I know how it works, and I hear what you are saying, but it sounds to me like bad communication and understanding on the part of the employer. The money contributed to a multiemployer plan is considered an employer contribution, even though the members theoretically vote at meetings to take less pay and put more in the plan.

If they chose not to put more in the plan, the plan trustees would eventually take action to either reduce benefits, or pressure the bargaining parties to put more into the plan via the CBA.

Beyond that, you will need a lawyer to explain the mechanics inside the Code.