86-21

September 29, 1986

REFERENCE:

4203(a)  Complete Withdrawal.  Definition of Complete Withdrawal

4205 Partial Withdrawals

>4205(b)(2)(A)>

OPINION:

This responds to your request for the opinion of the Pension Benefit Guaranty Corporation on several questions regarding

the calculation of withdrawal liability with respect to partners and the application of section 4205 of the Employee

Retirement Income Security Act, as amended (ERISA), to circumstances you present.

Your first set of questions relates to partnerships that share vacum coolers used to prevent spoilage of newly harvested *

* * You represent that due to the cost and immobility of vacuum coolers, employers typically enter into agreements for

the use of the coolers. Each employer has its own employees and its obligation to contribute to the Pension Trust is

determined by its own collective bargaining agreement. A vacuum cooler partnership has its own employees and collective

bargaining agreement. Your questions concern withdrawal liability of such a partnership for operations under its collective

bargaining agreement.

You state that vacuum cooler arrangements are very fluid, with each partner's percentage during any given season

depending on the amount of * * * it processes through the vacuum cooler. Because * * * growers often change their fields

from year to year, it is not unusual for members of a vacuum cooler partnership to change on a yearly basis or even for

such a partnership to be formed for a single season only. You assert that the unfunded vested benefit liability of

continuing partnerships may be partly attributable to hours worked by partnership employees for the benefit of former

Your first set of questions assumes that a partnership that is obligated to contribute to a multiemployer plan withdraws

from the plan. You ask first whether the former members of the partnership are liable for any withdrawal liability. It is our

opinion that an employer that is a partnership does not completely withdraw from the plan, as described in ERISA section

4203(a), until the partnership dissolves or otherwise permanently ceases to have an obligation to contribute under the plan.

At that time, withdrawal liability should be assessed against only the partners at the time of the withdrawal. Former

members of the partnership are not liable for any withdrawal liability.

You next ask whether the partnership's withdrawal liability is determined exclusively by the collective bargaining

agreement(s) in force at the time of withdrawal and whether partners at the time of withdrawal are solely liable for any

withdrawal liability. Withdrawal liability is determined by the collective bargaining agreements of the partnership during the

period used to calculate withdrawal liability under the allocation method used by the plan. Partners at the time of withdrawal

are solely liable for any withdrawal liability.

Your next question is whether the partnership's unfunded vested benefits are reduced by the unfunded vested benefits

attributable to former partners. Unfunded vested benefits attributable to former partners are not deducted from the

partnership's unfunded vested benefits, unless responsibility for its period of participation is expressly assumed by a

former partner. Since the partnership included those partners at the time the unfunded vested benefits were accrued, the

partnership's unfunded vested benefits at the time of withdrawal should also include the unfunded vested benefits

attributable to the former partners.

You also ask how withdrawal liability should be allocated among partners in the type of partnership described above.

ERISA does not address the allocation of withdrawal liability among individual members of the employer, e.g., trades or

business under common control, or partners. Rather, all members of the employer at the time of the withdrawal are jointly

and severally liable for the withdrawal liability.

Your final question in this set concerns the ability of the plan to assign unfunded vested benefits to an individual partner.

Since the partnership is the employer, withdrawal liability must be assessed against it alone. Unfunded vested benefits

attributable to individual partners may not be assigned to them by the plan and later used to increase their withdrawal

liability in a new or related business.

Your second set of questions concerns * * * growers. You represent that * * * have traditionally been harvested in the

field, taken to a packing shed and from the packing shed to the market. You indicate that recently a trend toward packing

in the field has developed, which eliminates the need for the packing shed. This trend has resulted in the replacement of

shed packing employees with field packing employees. While shed employees are unionized and covered by your pension

plan, you represent that most field packing employees are non-unionized and those who are unionized are covered by

another pension plan.

Edward R. Mackiewicz

General Counsel