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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
A pension fund failed to show that a real estate partnership was a member of a controlled group responsible under ERISA for the withdrawal liability of a bankrupt slaughterhouse, the U.S. Court of Appeals in Richmond (CA-4) has ruled in Teamsters Joint Council No. 83 of the Virginia Pension Fund v. Weidner Realty Associates. However, on remand the fund will be able to pursue its contention that an asset transfer arranged by the slaughterhouse's owners constituted an impermissible attempt to evade withdrawal liability under ERISA §4212(c).
A father and son were the sole partners in a partnership that owned a parcel of New York land that housed a slaughterhouse. The slaughterhouse in turn was owned by a corporation whose sole shareholder was the son. The fund notified the real estate partnership and the slaughterhouse that they were jointly liable for withdrawal liability. The fund won summary judgment against the slaughterhouse, but the district court ruled that the land partnership was not under common control with the slaughterhouse.
Common control
The appellate court agreed that common control did not exist between the land partnership and the slaughterhouse. The son, who controlled the slaughterhouse, controlled only 50% of the land partnership, per the terms of the partnership agreement. Applicable rules (see Reg. §1.414(c)-2(b)(2)(i)(C)) define a "controlling interest" in a partnership as ownership of at least 80% of the capital interest of the partnership. The court rejected the fund's contention that use of the term "capital interest" in another part of the partnership agreement changed the commonly-used IRS definition of that term to attribute a controlling interest to the son.
Evasion of liability
With regard to the asset transfer, however, the appellate court stated that the district court erred when it declined to rule on the asset transfer agreement's validity because it was executed after the date of withdrawal. Nothing in ERISA §4212(c) suggests that it applies only to pre-withdrawal efforts to avoid liability. On remand, the district court must address the merits of the fund's claim on this issue.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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