Assessed Withdrawal Liability as Plan Asset

[JessFSA]

If a withdrawn employer has been assessed a specific amount as its withdrawal liability, do you treat that amount as a plan asset (receivable) or just treat each payment as a contribution at the time it is made?

[Jim Dexter]

For funding purposes, you don't count the contribution as an asset until it's received (see Internal Revenue Code § 431(b)(7)(A)).

For withdrawal liability purposes, you need to look at the rules for the specific withdrawal liability method. For example, if you're using Rolling-5, you reduce the unfunded vested benefits by "the value as of the end of such year of all outstanding claims for withdrawal liability which can reasonably be expected to be collected..." (see ERISA § 4211©(3)(A)). Note that this would be the present value of expected payments -- not the withdrawal liability amount under § 4211 which could be significantly different, particularly if you're hitting the 20-year payment cap. On the other hand, if you're using the presumptive method you don't count withdrawal liability contributions in the assets until after the payments are made.

[Guest robertwa]

I have a related question: Are withdrawal liability payments treated the same as regular contributions towards minimum funding requirements? I.e. should they appear in line 3 of the Schedule MB?