Understanding Multiemployer Plans

The Labor Management Relations Act of 1947 (also known as the Taft Hartley Act) allowed for the establishment of multiemployer benefit plans, often referred to as “Taft-Hartley plans.”

A multiemployer plan, not to be confused with a Multiple Employer Plan (MEP), is a collectively bargained plan maintained by more than one employer, usually within the same or related industries, and a labor union. The plan and its assets are managed by a joint board of trustees equally representative of management and labor. The plan trustees are the decision makers who have the fiduciary responsibility to operate the plan in a prudent manner.

Multiemployer plans may vary in size from very few employers to hundreds of employers. The employers agree in the collective bargaining agreement(s) with the union to contribute on behalf of covered employees who are performing covered employment. Contributions may be based on the number of hours worked, the number of shifts worked, or another base negotiated during the collective bargaining process (e.g., employers may be required to pay $2.00 for eacRetirement Plans, The Labor Management Relations Act of 1947, Taft Hartley Acth hour of covered employment performed by a covered employee). Contributions are placed in a trust fund, legally distinct from the union and the employers, for the sole and exclusive benefit of the employees and their families.

Multiemployer plans are designed for workers in industries where it is common to move from employer to employer. Under this structure, participants are allowed to gain credits toward pension benefits from work with multiple employers as long as each employer has entered into a collective bargaining agreement requiring contributions to the plan. For example, service sufficient to meet vesting requirements may be obtained by working for one or many employers. Similarly, service required to be eligible to retire is dependent on service under the plan, not service with any particular employer. Accordingly, employees are able to change employers, without losing eligibility or service toward vesting, provided the new job is with an employer who participates in the same multiemployer plan. For more information on this subject, please contact your plan consultant.

 

 


401(k) Advisors (c) 2012. All rights reserved. 401k-2014-