Anti-cutback rule for union employees in a plan covering both union and non-union employees

Say you have a DC plan (ERISA 403(b)) covering both non-union and union employees, with a good faith CBA negotiated, etc., etc.

Plan, by its terms, requires a fixed employer contribution, NO allocation requirements for a plan year.

Employer is in financial difficulties, and union may be willing to renegotiate the CBA to remove or reduce the required employer contribution for 2026. But under the terms of the plan, benefit is already accrued.

I think even if union is willing to open up the CBA and renegotiate, they still can't overcome the ERISA anti-cutback requirements - is there any way around that? I'm not aware of one, but don't really deal with ERISA plans with union involvement. 

Thanks.

Hi Belgarath,

I worked on a defined benefit plan many many years ago that was covered by a Union.  The Union agreed to the retroactive freezing of accruals.  I brought up the anti-cutback rules to the attorneys involved in the negotiations and was told that the CBA took precedence over ERISA regulations.  They did not give me a reference site but they were the attorneys in charge so I did not argue the point.

I agree with Connie in that some attorney's feel the CBA can override 411(d)(6).  I personally do not agree, but like Connie, they are the attorney so let them defend it if necessary.  

I have also worked with attorney's who disagree and would implement that change as soon as administratively feasible, after required 15/90 day notice requirement.  This is obviously the advise I would give, but not my monkey if the attorney feels otherwise.  

I have a little concern over your words, "remove or reduce the required employer contribution".  I assume this is a single employer plan and not a multiemployer plan?  If so, you cannot remove or reduce the required MRC that is determined under Section 430 (i.e. Schedule SB requirements).  You may be able to reduce the negotiated contribution, but that doesn't eliminate the employers obligation to satisfy the requirements of Section 430.  

A few thoughts (none of which is advice):

Before a plan’s sponsor or administrator considers whether ERISA title I’s anti-cutback command might negate a change, one might consider what benefit the plan provides.

That might call for a thorough and careful reading of “the documents and instruments governing the plan”, which might include or exclude all, some, or none of an employer’s collective-bargaining agreements, and might involve surrounding labor-relations law.

This might involve thorough interpretations using several modes of reasoning.

One doubts a lawyer advised that ERISA title I’s anti-cutback command doesn’t apply; rather, the whole of the documents might have defined the benefit not to be cut back. (For example, a seeming accrual might be subject to what results under labor-relations law.)

If some of “the documents and instruments governing the plan” are stated using IRS-preapproved documents, some plans’ administrators interpret documents considering the difficulties and ambiguities that might result the format’s constraints.

Some consider scrivener’s error, mistake, or other reasons for reforming a document.

An individual-account (defined-contribution) plan meant to fit Internal Revenue Code § 403(b) might bear some interpretations different than for other plans.

A plan’s sponsor or administrator might consider which Treasury interpretations of Internal Revenue Code § 411 might (or might not) be relevant authority regarding part 2 of subtitle B of ERISA’s title I. Consider the 1978 Reorganization Plan. But recognize also that a court does not defer to, and might not be persuaded by, an interpretive rule or regulation.

Although many nonlawyer consultants are knowledgeable about the Internal Revenue Code and ERISA’s title I, and are comfortable providing advice about those laws, fewer feel comfortable advising on situations that suggest a possible application or relevance of other law.

All that observed, it’s smart to flag the issue.

Thanks all. Effen, just fyi - this is a DC plan. Like y'all, I'd follow the instruction of the Plan Administrator and the ERISA attorney, with appropriate CYA. I don't believe it will come to this at all, but I like to know in advance as much as possible. Your information was very helpful. 

Oops, sorry.  Then you can ignore my comments.  (I get confused by what Board I am reading since they re-adjusted the order.  I assumed I was on the DB board, but now realize I was on the general board.)