M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund
Case Overview
M&K Employee Solutions v. Trustees of the IAM National Pension Fund addresses the correct 'measurement date' for calculating an employer's withdrawal liability under ERISA when withdrawing from a multiemployer pension plan. ERISA requires withdrawing employers to pay their share of unfunded vested benefits, but the statute's measurement date provisions can produce vastly different liability amounts depending on which date is used. The case turns on technical ERISA accounting rules with substantial financial stakes.
Decision
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Opinion of the Court
The Facts
Under ERISA, an employer withdrawing from a multiemployer pension plan must pay withdrawal liability. The liability is calculated based on the plan's unfunded vested benefits (UVBs) as of a 'measurement date.' M&K disputed whether the actuarial assumptions used to calculate those UVBs had to be selected on or before the measurement date, or whether they could be selected later.
The Issue
Whether ERISA's withdrawal liability provisions require actuarial assumptions underlying the UVB calculation to be selected on or before the measurement date, or whether the plan can select them later.
M&K argued that the statute's 'as of' language requires assumptions to be set as of that date. The Trustees argued that the statute permits assumptions to be selected at any time so long as the values are calculated as of the measurement date.
The Rules
Withdrawal liability must be calculated based on the plan's unfunded vested benefits (UVBs) 'as of' the measurement date. The statute does not set a deadline for selecting the actuarial assumptions used in that calculation.
Related withdrawal liability provisions do not establish a deadline for actuarial assumption selection tied to the measurement date.
The Application
Pension withdrawal liability is technical. Employers pay based on the plan's unfunded obligations. To calculate that obligation, you need actuarial assumptions: discount rates, mortality rates, etc. The statute says the liability is based on UVBs 'as of' the measurement date. M&K read that to mean the assumptions had to be locked in as of that date. But the statute says 'as of,' not 'selected on or before.' The values are calculated as of a date; the assumptions can come later.
The statute does not set a deadline for assumption selection. If Congress intended one, it would have said 'selected on or before the measurement date.' It did not. Allowing flexibility in assumption selection makes practical sense: the plan administrator may need time to gather data and finalize the calculations. The statute permits that flexibility so long as the final UVB values reflect the measurement date.
The Conclusion
**The Supreme Court held that §1391 and §1393 do not require actuarial assumptions to be selected on or before the measurement date.** Withdrawal liability calculations must be based on UVBs as of that date, but the assumptions can be selected later. The judgment was rendered for the Trustees.
The decision permits pension plans reasonable flexibility in calculating complex withdrawal obligations.
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Case Analysis
Overview
A case in which the Court held that under ERISA, pension plans may calculate an employer's withdrawal liability using actuarial assumptions selected after the statutory measurement date.
Summary
A case in which the Court held that under ERISA, pension plans may calculate an employer's withdrawal liability using actuarial assumptions selected after the statutory measurement date.
Facts
Under ERISA, an employer withdrawing from a multiemployer pension plan must pay withdrawal liability. The liability is calculated based on the plan's unfunded vested benefits (UVBs) as of a 'measurement date.' M&K disputed whether the actuarial assumptions used to calculate those UVBs had to be selected on or before the measurement date, or whether they could be selected later.
Facts
Under ERISA, an employer withdrawing from a multiemployer pension plan must pay withdrawal liability. The liability is calculated based on the plan's unfunded vested benefits (UVBs) as of a 'measurement date.' M&K disputed whether the actuarial assumptions used to calculate those UVBs had to be selected on or before the measurement date, or whether they could be selected later.
Issue
What is the correct 'measurement date' under ERISA § 1381 for calculating a withdrawing employer's withdrawal liability in a multiemployer pension plan? Does ERISA require the plan to use the plan year end immediately preceding the withdrawal, or may the plan use an earlier actuarial valuation date?
Issue
What is the correct 'measurement date' under ERISA § 1381 for calculating a withdrawing employer's withdrawal liability in a multiemployer pension plan? Does ERISA require the plan to use the plan year end immediately preceding the withdrawal, or may the plan use an earlier actuarial valuation date?
Rule
ERISA § 1391 requires that withdrawal liability be calculated based on the plan's unfunded vested benefits as of the 'measurement date,' which ERISA defines as the last day of the plan year ending before the date of withdrawal. Actuarial determinations of a plan's unfunded vested benefits must use a measurement date consistent with the statutory framework; departure from the statutory date distorts the liability calculation and may unfairly disadvantage either the withdrawing employer or remaining participants.
Withdrawal Liability Calculation
**29 U.S.C. §1391** 10 11 Withdrawal liability must be calculated based on the plan's unfunded vested benefits (UVBs) **'as of' the measurement date**. The statute does not set a deadline for selecting the actuarial assumptions used in that calculation.
Analysis
Pension withdrawal liability is technical. Employers pay based on the plan's unfunded obligations. To calculate that obligation, you need actuarial assumptions: discount rates, mortality rates, etc. The statute says the liability is based on UVBs 'as of' the measurement date. M&K read that to mean the assumptions had to be locked in as of that date. But the statute says 'as of,' not 'selected on or before.' The values are calculated as of a date; the assumptions can come later.
Related Provisions
**29 U.S.C. §1393** 12 13 Related withdrawal liability provisions do not establish a deadline for actuarial assumption selection tied to the measurement date.
Conclusion
**The Supreme Court held that §1391 and §1393 do not require actuarial assumptions to be selected on or before the measurement date.** Withdrawal liability calculations must be based on UVBs as of that date, but the assumptions can be selected later. The judgment was rendered for the Trustees.
The decision permits pension plans reasonable flexibility in calculating complex withdrawal obligations.
Statutory 'As Of' Language
Pension withdrawal liability is technical. Employers pay based on the plan's unfunded obligations. To calculate that obligation, you need actuarial assumptions: discount rates, mortality rates, etc. The statute says the liability is based on UVBs 'as of' the measurement date. M&K read that to mean the assumptions had to be locked in as of that date. But the statute says 'as of,' not 'selected on or before.' The values are calculated as of a date; the assumptions can come later.
Flexibility in Actuarial Timing
The statute does not set a deadline for assumption selection. If Congress intended one, it would have said 'selected on or before the measurement date.' It did not. Allowing flexibility in assumption selection makes practical sense: the plan administrator may need time to gather data and finalize the calculations. The statute permits that flexibility so long as the final UVB values reflect the measurement date.
Conclusion
**The Supreme Court held that §1391 and §1393 do not require actuarial assumptions to be selected on or before the measurement date.** Withdrawal liability calculations must be based on UVBs as of that date, but the assumptions can be selected later. The judgment was rendered for the Trustees. 14 15 The decision permits pension plans reasonable flexibility in calculating complex withdrawal obligations.
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