1980
MPPAA established withdrawal liability under ERISA
For union contractors, pension withdrawal liability is the financial risk hiding in plain sight — often the largest obligation on the balance sheet, and one almost no one reserves for. Ironclad helps you quantify your exposure and fund it before it becomes a crisis.
Multiemployer pension plans are common throughout union construction. Under ERISA, when a contributing employer withdraws from an underfunded plan — through a sale, a labor-force reduction, decertification, or ceasing operations — it inherits a proportional share of the plan’s unfunded vested benefits. That obligation, called withdrawal liability, is typically substantial.
Most contractors don’t plan for it, don’t reserve for it, and don’t understand their exposure until a demand letter arrives. By then, the options have narrowed.
A complete withdrawal occurs when the contribution obligation permanently ceases. A partial withdrawal can be triggered by a roughly 70% decline in contribution base units — not just a business sale.
Special rules apply where a plan primarily covers construction employees. Withdrawal is generally triggered only if the contribution obligation permanently ceases and covered work continues without contributing within five years. The exception changes the timing — it does not erase the liability.
All trades or businesses under common control are jointly and severally liable. Rental properties, side businesses, and other entities under common ownership may be exposed to a single assessment.
Plans must demand payment as soon as practicable, and employers must begin paying within 60 days — often on a “pay first, dispute later” basis. Missed payments can accelerate the full balance and trigger litigation and liens.
Plan determinations are presumed correct under a demanding standard, and disputes must go to mandatory arbitration within strict timelines. Challenging the number requires specialized ERISA counsel.
When a contractor is preparing to sell and a withdrawal liability assessment surfaces late in diligence, it can collapse a deal or force a steep discount. For an exit or succession, this is the item most likely to derail the transaction.
If you haven’t had an independent assessment, you don’t truly know your exposure.
Plans require payment to begin within 60 days. Without a funding mechanism, it becomes an immediate cash-flow problem.
Controlled-group rules can reach beyond the company to rental properties, side businesses, and related entities.
Knowing about the liability is not the same as having a plan to pay it.
If you’re contemplating a sale or succession, this is the issue most likely to discount or derail the deal.
An initial assessment gives you a clear picture of where you stand — and confirmation either way.
Ironclad uses permanent life insurance strategies — including Corporate-Owned Life Insurance (COLI) — as a tax-advantaged mechanism to help contractors proactively fund and ultimately satisfy withdrawal liability. Properly structured, this approach can convert a balance-sheet threat into a manageable, controllable strategy.
Every strategy is calibrated to your specific liability exposure, cash-flow profile, and time horizon. Actual structure, tax treatment, and suitability depend on your circumstances.
A four-phase engagement that pairs ERISA legal counsel with insurance and capital-markets advisory — so the legal exposure and the funding mechanism are handled together, not in silos.
Review of plan participation, collective bargaining agreements, contribution history, and controlled-group structure to identify current and contingent exposure and model potential scenarios.
A customized COLI or permanent life insurance strategy — carrier selection, product comparison, premium structuring, and accumulation modeling calibrated to your exposure and cash flow.
Policy acquisition, employee notice and consent under IRC §101(j), premium scheduling, and annual reviews as plan health, contribution rates, and your business trajectory change.
When a withdrawal event occurs or is being planned, counsel handles demand review, arbitration, and negotiation while the funding mechanism is activated — simultaneously.
Most advisors see only part of the picture. Ironclad was built specifically to close the gap between identifying the liability and actually funding it.
× Advise on the liability — but can’t place the insurance that funds it.
× Sell products — but can’t navigate ERISA arbitration.
× See the exposure on the books — but lack both capabilities.
✓ Assesses exposure, designs the funding, and handles the legal fight — under one roof.
This is a strategic conversation between operators. Ironclad is led by builders who have grown and exited companies in unionized, inspection-heavy industries — we sit on the same side of the table as you.
If you contribute to a multiemployer defined-benefit pension plan — or advise contractors who do — withdrawal liability is an occupational reality worth quantifying.
Start with a brief, confidential conversation. We’ll help you understand your potential exposure and whether a funding strategy makes sense for your situation. No pitch — an honest assessment of where you stand and what your options are.
Complete the form and a member of our team will follow up directly to schedule your confidential assessment.