Contributing Employer that Merged its Underfunded Single Employer Plan into Multiemployer Fund Withdrawal Liability Calculation: Treatment of Lump Sum Payment of Underfunded Portion as Employer ContributionUnderfunded

[rocknrolls2]

I represent a multiemployer defined benefit plan. Employer X previously maintained a single employer defined benefit plan for its collectively bargained employees. X negotiated the merger of its plan into the multiemployer plan in 2005. However, because there were certain underfunded portions of benefits under its plan, under a merger agreemenet between the union covering X's employees and X, X agreed to make contributions for the underfunded portion to the multiemployer plan over a 10-year period with interest. Instead, X made a lump sum contribution of the underfunded portion plus interest to the multiemployer plan in 2006.  X withdraws from the plan in 2019. In assessing X for withdrawal liability, the actuary treated the lump sum contribution to the plan as an employer contribution in determining the amount of X's withdrawal liability. X has filed a request for review of the fund's assessment challenging the treatment of the lump sum contribution as an employer contribution. Does the multiemployer plan have a reasonable argument for its treatment of such amount as en employer contribution for purposes of X's withdrawal liability calculation?

[Effen]

On the surface, it was an employer contribution.  As I saw on another question - if it is not an employer contribution, what was it?  If there was nothing specifically stated in the agreement when they made the deposit, I don't know why they would ignore it. 

The employer can appeal and ask the Trustees to reconsider.  If they can demonstrate that they have any documentation that they were told it would not be considered for withdrawal purposes, then they might have an argument.  Unfortunately, they should have thought about this before they made a large payment.