M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund<\/a>, No. 23-1209 (May 21, 2026).<\/p>\nM & K Employee Solutions resolved a circuit court split on a narrow issue: Whether the actuarial assumptions (including the critical interest rate assumption) underlying the calculation of withdrawal liability must be selected prior to the date as of which the withdrawal liability is determined under the Employee Retirement Income Security Act (ERISA).<\/p>\n
Background<\/p>\n
Withdrawal liability is a statutory exit tax that is triggered when an employer\u2019s obligation to contribute to a multiemployer pension plan (MEPP) completely or partially ceases. Once triggered, the liability represents a withdrawn employer\u2019s allocable share of the MEPP\u2019s unfunded vested benefits (UVBs).<\/p>\n
UVBs are calculated as of the last day of the plan year preceding the year of the withdrawal, referred to as the \u201cMeasurement Date.\u201d Since UVBs represent the excess of liabilities over assets and liabilities represent the present value of the MEPP\u2019s future benefit payment obligations, the interest rate used to calculate withdrawal liability bears an inverse relationship to the amount of UVBs. In other words, a lower withdrawal liability interest rate will generate higher UVBs and therefore higher withdrawal liability.<\/p>\n
The petitioners in M & K Employee Solutions were four employers who had each withdrawn from the IAM National Pension Fund during the 2018 plan year. Under ERISA, their withdrawal liability would be determined \u201cas of\u201d the last day of the 2017 plan year: Dec. 31, 2017. Finalizing the Fund\u2019s 2016 actuarial valuation in November 2017, the Fund actuary determined that a 7.5% withdrawal liability interest rate represented his \u201cbest estimate of anticipated experience under the plan\u201d as required by the statute. Two months later (in January 2018), the actuary published its 2017 valuation and lowered the Fund\u2019s withdrawal liability interest rate to 6.5%. This change had the effect of increasing the Fund\u2019s UVBs from $500 million (as of the Dec. 31, 2016, Measurement Date) to $3 billion (as of the Dec. 31, 2017, Measurement Date.) Each employer\u2019s withdrawal liability similarly ballooned (for example, from $1.8 million to $6.2 million for one employer) as a result.<\/p>\n
Consequently, each employer challenged the Fund\u2019s calculations under the mandatory arbitration regime applicable to withdrawal liability. Based primarily on the U.S. Court of Appeals for the Second Circuit\u2019s decision in National Retirement Fund v. Metz, 946 F.2d 146 (2d Cir. 2020), each arbitrator held that a MEPP actuary must select actuarial assumptions for withdrawal liability purposes prior to the applicable Measurement Date.<\/p>\n
Two consolidated district court actions subsequently vacated the arbitral awards, holding that actuaries could lawfully use assumptions selected after the Measurement Date to calculate withdrawal liability. In a consolidated appeal, the D.C. Circuit in 2024 affirmed (92 F. 4th 316) the lower court decisions.<\/p>\n
The Supreme Court granted review to resolve the split between the D.C. and Second Circuits.<\/p>\n
M & K Employee Solutions<\/p>\n
The Supreme Court held that withdrawal liability can be calculated based on actuarial assumptions selected after the Measurement Date. Its decision was based primarily on two provisions of ERISA.<\/p>\n
The first, ERISA Section 4211 (29 U.S.C. \u00a71391), specifies the various methods that a MEPP can use to calculate withdrawal liability. Although this section does not refer to actuarial assumptions (let alone specify when they must be adopted), the employers relied on the statutory directive that \u201cwithdrawal liability be calculated based on the MEPP\u2019s UVBs \u2018as of\u2019 the measurement date.\u201d The Supreme Court distinguished actuarial assumptions from \u201chard data\u201d (such as the number of plan participants) and explained that actuarial assumptions are \u201cpredictive judgments\u201d about \u201cfuture performance\u2014tools actuaries use to calculate the plan\u2019s UVBs.\u201d The Court thus found that actuarial assumptions cannot be \u201cin effect\u201d as of the Measurement Date as the employers had urged.<\/p>\n
The Court moved on to the second provision, ERISA Section 4213 (29 U.S.C. \u00a7 1393), the section that governs use of actuarial assumptions for calculating withdrawal liability. Not only does Section 4213 not require that assumptions be selected prior to the Measurement Date, it \u201cprovides no deadline at all.\u201d The Court found this omission significant in light of the inclusion of a deadline in a different section of the statute (ERISA Section 4219, 29 U.S.C. \u00a7 1399) requiring that the amortization period for withdrawal liability payments be determined based on the interest rate assumption used in the most recent actuarial valuation. The Court presumed that Congress\u2019 omission of a similar limit for the assumptions used to calculate withdrawal liability was intentional. The Court also found that ERISA Section 4213\u2019s requirement that the assumptions represent the actuaries\u2019 \u201cbest estimate of anticipated experience\u201d further supported the conclusion that assumptions do not have to be selected prior to the Measurement Date. The Court determined that requiring actuaries to use assumptions selected before the Measurement Date (and potentially based on \u201cstale data\u201d) would conflict with this statutory \u201cbest estimate\u201d requirement.<\/p>\n
The employers advanced two other arguments. First, they argued that the statute prohibits retroactivity, citing ERISA Section 4214 (29 U.S.C. \u00a7 1394). This section prohibits the use of any \u201cplan rule or amendment\u201d adopted after an employer withdraws. Actuarial assumptions are not plan rules or amendments, however; accordingly, the Court found the Congressional choice not to enact a similar retroactivity rule in ERISA Section 4213 \u201cstrongly suggests that actuarial assumptions are not subject to any such limitation.\u201d Lastly, the employers advanced a policy argument, asserting that allowing MEPPs to retroactively choose assumptions \u201cwill open the door to manipulation.\u201d The Court quickly disposed of this, finding that policy concerns cannot trump the best interpretation of a statute.<\/p>\n
Implications<\/p>\n
Although the Supreme Court\u2019s ruling in M & K Employee Solutions significantly impacts the employers in this case financially, future application is expected to be limited. The Court decided a narrow issue: Whether ERISA requires pension plans to assess withdrawal liability based on actuarial assumptions adopted before the Measurement Date. Even if the Court had found in favor of the employers, MEPP actuaries could still lawfully change assumptions on or one day prior to the Measurement Date.<\/p>\n
Significantly, the Court expressly noted that employers can challenge any assumption in arbitration, including the critical interest rate assumption. The Supreme Court\u2019s holding does not change best practices for employers with potentially significant MEPP exposure \u2014 to minimize such exposure by closely monitoring contribution amounts and obligations and regularly obtaining withdrawal liability estimates.<\/p>\n
Please contact the authors with any questions about M & K Employee Solutions or any other withdrawal liability matters.<\/p>\n","protected":false},"excerpt":{"rendered":"Takeaways Resolving a circuit split, the U.S. Supreme Court in M & K Employee Solutions held that actuarial…\n","protected":false},"author":2,"featured_media":667337,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-667336","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/667336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=667336"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/667336\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/667337"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=667336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=667336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=667336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}