Multiemployer Plans — Special Rules, written by Michael G. Kushner, Esq., of Curtis, Mallet-Prevost, Colt & Mosle LLP, examines the laws applicable to multiemployer retirement plans, including the funding and withdrawal liability rules imposed upon defined benefit pension plans under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), as amended, collective-bargaining issues, fiduciary problems, tax issues, administrative issues, and more.  

This Portfolio 

• Discusses how MPPAA was created to address certain problems that ERISA left unresolved
• Includes information on withdrawal liability from multiemployer defined benefit pension plans
• Analyzes insolvency: how you test for it, what the funding consequences of insolvency are, and what benefits are payable by insolvent plans
• Discusses termination of multiemployer plans and Pension Benefit Guaranty Corporation loans and benefit guarantees, including  termination methods and consequences of “freeze” and “conversion” terminations
• Discusses the reorganization status of multiemployer pension plans, including the  funding rules under the Pension Protection Act of 2006 for multiemployer plans in endangered or critical status
• Summarizes related employer and union rights and responsibilities.

Multiemployer Plans — Special Rules allows you to benefit from: 

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area
• Invaluable practice documents including tables, charts and lists
• Plain-English guidance from world-class experts
• Real-world and in-depth analysis that lets you explore various options
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more
• Alternative approaches to both common and unique tax scenarios

This Portfolio is part of the U.S. Income Portfolios Library, a comprehensive series that includes more than 200 Portfolios, which covers every federal tax topic with expert, in-depth analysis, and offer commentary on a wide range of federal taxation topics, including Compensation Planning, Deductions and Credits, Partnerships and Corporations, Special Pass-Through Entities, Corporate Reorganizations, Real Estate, Procedure and Administration, and more.

Detailed Analysis

I. Introduction

A. In General

B. Multiemployer Plan Status

C. Multiemployer Welfare Plans

II. Withdrawal Liability from Multiemployer Defined Benefit Pension Plans

Introductory Material

A. Definitions

1. Definition of a Complete Withdrawal

a. Date of Withdrawal

b. Who Has the Obligation to Contribute?

c. Who Is the Employer?

d. Events That Do Not Trigger Withdrawal Liability

e. Consequences of Asset Sales

2. Definition of a Partial Withdrawal

a. In General

(1) 70% Contribution Decline Rule

(2) Partial Cessation Rule

b. Ullman Rule

c. Special Industry Rules

3. Transactions Taken to Evade or Avoid Liability

B. Calculation of Withdrawal Liability

1. Alternative Formulas

a. Presumptive Rule (20-Pool Rule)

b. Treatment of Declines in Contributions Prior to September 26, 1980

c. Alternative Rules to the Presumptive Rule

(1) Modified Presumptive (Two-Pool) Rule: Slightly Simpler Presumptive Rule

(2) Second Alternative: Pure Rolling-Five Rule (One-Pool) Rule

(3) Attributable Rule

(4) Non-Statutory Alternative Rules

(5) Withdrawal Subsequent to Plan Merger

d. Actuarial Assumptions for Withdrawal Liability

e. “Gap” Interest Dispute

f. Abatement of Complete Withdrawal Liability

2. Calculation of Partial Withdrawal Liability and Abatement

a. Amount of Liability

b. Abatement of Partial Withdrawal Liability

3. Caps, Limitations and Exceptions to Withdrawal or Partial Withdrawal Liability

a. De Minimis Reduction

(1) Mandatory Rule

(2) Discretionary Rule

b. “Free-Look” Rule

c. 20-Year “Cap”

d. Pre-September 27, 1980 Exception

e. Special Sales Limitation

f. Insolvent Employers

g. Individual Exemption

h. Employer Limit upon Withdrawal from More than One Plan

i. Successive Withdrawals

j. Reduction of Complete Withdrawal Liability

k. Transfer of Liabilities

l. Labor Disputes

4. Lost Liability: ERISA § 4204 and Piecemeal Sales

5. Plan Mergers, Spin-offs and Asset Transfers

a. Mergers and Transfers Among Multiemployer Plans

(1) In General

(2) Transfers Pursuant to Change in Bargaining Representative (Change in Union)

b. Partition

c. Transfers Between Multiemployer Plan and Single Employer Plan

d. Asset Transfer Rules

6. How and When Liability is Assessed and Paid

7. Enforcement of Withdrawal Liability

a. Review of Plan Withdrawal Liability Demands

b. Defenses to Withdrawal Liability

c. Procedures, Presumptions and Time Limits

d. Collection of Liability Pending Review

e. Judicial Review and Enforcement

(1) Review of Arbitrator's Decision

(2) Direct Resort to the Courts (Prior to Arbitration)

f. Remedies and Collection

g. Who Is Liable?

h. Power of Trustees to Settle or Compromise

C. Industry-Specific and Entity-Specific Rules

1. The Coal Funds

2. Building and Construction

3. Entertainment

4. Trucking

5. Retail Food

6. Maritime (Great Lakes)

7. Church Plans

8. Other Industries

D. Tax Deductibility of Withdrawal Liability Payments

III. Termination of Multiemployer Plans; PBGC Loans; and Benefit Guarantees

Introductory Material

A. Termination of Plans

1. Termination Methods

2. Consequences of “Freeze” and “Conversion” Terminations

3. Consequences of a “Mass Withdrawal” Termination or Partition by PBGC

B. Insolvency

1. Test for Insolvency

2. Funding Consequences of Insolvency

3. Benefits Payable by Insolvent Plans

4. Financial Aid from PBGC

5. Determinations, Reporting and Disclosure for Insolvent Plans

a. Notice of Insolvency

b. Notice of Insolvency Benefit Level

C. Benefits Guaranteed by PBGC

IV. Administration of Multiemployer Pension Plans

A. Minimum Participation, Coverage and Nondiscrimination Rules

B. Vesting and Breaks in Service

C. Past Service

D. Offsets

E. Suspension of Benefits on Reemployment

F. Service with Employer that Does Not Make Required Contributions

G. “Thirteenth Check” Distributions

H. Code § 415 Limits

I. Minimum Funding

1. General Rules

a. Nature of Funded Plans

b. Amortization Periods

2. Deferral of Net Experience Loss

3. Reasonable Funding Methods

4. Retroactive Plan Amendments to Reduce Accrued Benefits

5. Shortfall Method

6. Special Rules under Code § 412

7. Funding Waivers

8. Additional Funding Requirement and Quarterly Contribution Requirement

9. Reasonableness of Actuarial Assumptions

10. Valuation of Plan Assets

11. Tax an Accumulated Funding Deficiency

12. Notice to Participants and Beneficiaries

13. Minimum Funding Rules for Multiemployer Plans Under the Pension Protection Act of 2006

J. Tax Treatment of Contributions

K. Employer Deductions and Benefit Limits

L. Top-Heavy Rules

M. Fiduciary Duty and Prohibited Transactions

1. Role of the Trustees

2. Co-fiduciary Liability

3. Social Investing and Economically Targeted Investments

4. Key Prohibited Transaction Exemptions

5. Return of Employer Contributions (“Mistake”)

6. Payment of Plan Expenses

7. Plan Assets

N. Participation Agreements and Reciprocity Agreements

O. Collection Actions

P. Benefit Claims - Causes of Action for Benefits

1. LMRA § 302(c)

2. LMRA § 301

3. ERISA Cause of Action

4. Preemption of State Law Claims

Q. Form 5500

R. PBGC Premiums

V. Reorganization Status of Multiemployer Defined Benefit Plans

Introductory Material

A. Test for Reorganization Status

B. Funding Consequences of Reorganization Status

1. Minimum Contribution Requirement

2. Overburden Credit

3. 107% Safe Harbor

C. Effect of Reorganization Status on Benefit Levels

D. Special Reporting and Disclosure Rules for Plans in Reorganization

E. Plan Sponsor's Monitoring Duties

F. Getting Out of Reorganization

G. Assets and Liabilities in Reorganization

H. Additional Funding Rules Under the Pension Protection Act of 2006 for Multiemployer Plans in Endangered or Critical Status

1. Overview and Effective Dates

2. Plans in Endangered Status

a. Funding Improvement Plan

b. Rules for Plan Operation During Adoption and Improvement Periods

3. Plans in Critical Status

a. Rehabilitation Plan

b. Rules for Plan Operation During Adoption and Rehabilitation Period

4. Annual Actuarial Certifications

5. Nonbargained Employee Participation

6. ERISA Enforcement and Compliance

7. Excise Taxes on Failures Relating to Multiemployer Plans in Endangered or Critical Status

VI. Employer and Union Rights and Responsibilities

A. Responsibility for Benefits and Eligibility Rules

B. Disengagement from Multiemployer Bargaining Units

C. Audits

D. Labor Law of Plan Termination and Plant Shutdown

E. Expiration of Collective Bargaining Agreement

F. Taft-Hartley Act § 302(c)(5)

G. Role of Board of Trustees

VII. Alternative to Defined Benefit Liabilities

A. In General

B. Multiemployer § 401(k) Plans

Working Papers

Table of Worksheets

Worksheet 1 UMWA Retirement Funds Interim Reentry Rules

Worksheet 2 Article - Stumbling Over the Dog: Treatment of Withdrawing Employers Under the Multiemployer Pension Plan Amendment Act of 1980

Worksheet 3 Article - Successor Liability for Delinquent MultiEmployer Benefit Plan Contributions

Worksheet 4 PBGC Opinion Letter 2001-2 - Plan Retains Status as Multiemployer Plan Despite Fact that all but one Employer Leaves Plan

Worksheet 5 DOL Prohibited Transaction Class Exemption 76-1 - Class Exemptions from Prohibitions Respecting Certain Transactions in Which Multiemployer and Multiple Employer Plans are Involved

Worksheet 6 Model Annual Funding Notice for Multiemployer Defined Benefit Plans

Worksheet 7 Model Notice of Pending Election of Multiemployer Plan Status

Bibliography

OFFICIAL

Statutes:

Regulations:

Committee Reports:

Additional Legislative History:

Miscellaneous:

Treasury Rulings

Cases:

UNOFFICIAL

Articles and Periodicals:

1992

1993

1995

1999

2001

2002

2006