Most Minnesota business owners have never heard the phrase “withdrawal liability.” The ones who have heard it usually heard it the same way — in a letter, with a number in it, arriving after the deal closed.
On May 21, 2026, a unanimous Supreme Court made that number somewhat harder to predict in advance.
The setup
If your business contributes to a multiemployer pension plan — the kind negotiated through a union and funded by many employers in the same trade — and you stop contributing, federal law can require you to pay your share of the plan’s shortfall on the way out. That payment is called withdrawal liability, and it comes from the Multiemployer Pension Plan Amendments Act, layered onto ERISA.
The amount turns on the plan’s unfunded vested benefits — what it has promised versus what it holds. Two provisions do the work:
- 29 U.S.C. § 1391 measures those unfunded vested benefits “as of the end of the plan year preceding the plan year in which the employer withdraws.” That date is the measurement date.
- 29 U.S.C. § 1393(a)(1) requires that the calculation use “actuarial assumptions and methods which, in the aggregate, are reasonable (taking into account the experience of the plan and reasonable expectations).”
The single most consequential assumption is the discount rate — the interest rate used to translate decades of future pension promises into a present-day number. Move it a point and the liability moves by millions.
The question, and the answer
Everyone agreed the liability is measured as of a fixed past date. The fight was over whether the assumptions used in that measurement also had to exist by that date.
The employers’ argument had a certain logic: if the statute freezes the measurement at the end of the prior plan year, the actuary should be using the assumptions in place then — not assumptions selected later, with the benefit of knowing which employers had left and what the markets had done since.
Justice Jackson, writing for a unanimous Court, rejected it. The holding: ERISA’s withdrawal-liability provisions do not require the actuarial assumptions underlying the calculation to be selected on or before the measurement date. An actuary for an underfunded multiemployer plan may calculate an employer’s withdrawal liability using assumptions adopted after the measurement date.
The statutory constraint that remains is the one in § 1393(a)(1): the assumptions must be reasonable in the aggregate. That is a real limit. It is also a limit that is litigated through arbitration and expert testimony, not one an employer can verify from public documents before signing a purchase agreement.
Why Minnesota businesses should care more than most
Minnesota is not an average state on this.
The Bureau of Labor Statistics reported that in 2025, union members were 14.1% of Minnesota’s wage and salary workers — about 386,000 people — against a national rate of 10.0%. Minnesota is meaningfully more unionized than the country as a whole, and the concentration is heaviest in exactly the industries where multiemployer plans dominate: construction, trucking and warehousing, grocery and retail food, and building trades.
Minnesota employers participate in plans like the Minnesota Teamsters Construction Division Pension Fund, the regional carpenters’ and building-trades funds, and national funds with substantial Minnesota membership. A twelve-employee mechanical contractor in Anoka County and a family trucking company in Duluth can both be sitting on a six- or seven-figure contingent liability that appears on no balance sheet.
Withdrawal liability is not triggered only by going out of business. It can be triggered by:
- Selling the company — depending on how the transaction is structured
- Losing the union contract or decertification
- A permanent decline in contribution levels — a partial withdrawal
- Shifting work to a non-signatory entity
- Winding the business down, depending on the industry and what happens next
That last one carries a large asterisk, and it is one of the most important things a Minnesota contractor can know. ERISA contains a building-and-construction-industry special rule at 29 U.S.C. § 1383(b): an employer in that industry incurs a complete withdrawal only if it ceases the obligation to contribute and either continues performing covered work in the area, or resumes such work within five years. A contractor who genuinely stops and stays stopped is generally outside it. There is a parallel special rule at § 1383(d) for employers primarily in long- and short-haul trucking, household goods moving, and public warehousing, which turns on a PBGC determination or a bond or escrow.
So for the two industries most likely to be reading this in Minnesota — construction and trucking — the threshold question is not “did I stop contributing.” It is “which special rule applies, and what happens in the next five years.”
What changed practically
Before M&K, an employer had at least a colorable argument that the actuary was locked into the assumption set that existed on the measurement date — a set the employer could, in principle, have looked at while deciding whether and when to withdraw.
After M&K, the plan’s actuary may adopt new assumptions after the withdrawal has already happened and apply them to the measurement. The employer’s protection is no longer timing. It is only reasonableness, tested after the fact.
That shifts real leverage to plan trustees, and it makes three things more important for Minnesota employers:
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Ask before you act, not after. Under ERISA, a participating employer can request an estimate of withdrawal liability from the plan. An estimate is not a cap, and after M&K it is even less of one — but it is far better than learning the number from a demand letter. Do it while you still have options.
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Structure matters enormously. Whether a sale is an asset purchase or a stock purchase, and whether the buyer assumes the collective bargaining agreement and the contribution obligation, can determine whether a withdrawal occurs at all. This is one more reason the asset-versus-stock decision is not a tax question with a legal footnote — it is a legal question with a tax footnote.
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The clock on disputing the number is brutally short. Withdrawal liability demands come with statutory deadlines to request review and to initiate arbitration, and missing them can forfeit the challenge entirely — including the reasonableness challenge that M&K leaves as the employer’s main remaining defense. The payment obligation generally begins while the dispute is pending. “Pay now, dispute later” is the design.
The honest summary
This is not a decision that changes what most Minnesotans do on Monday morning. It is a decision that changes what a specific set of Minnesota business owners — the ones with a union contract and a pension contribution line in their monthly payroll — should be finding out before they make a decision that looks routine.
The number in that letter was always uncertain. The Court has now confirmed that some of the uncertainty resolves after you have already committed.
If your business contributes to a multiemployer pension plan and you are contemplating a sale, a succession plan, a reduction in union work, or retirement, the sequence of those steps can matter more than the substance. Send us a message or call 612-470-6529.
Sources: M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, 608 U. S. ___ (2026) (Jackson, J.), No. 23–1209, argued January 20, 2026, decided May 21, 2026; 29 U.S.C. § 1391 (measurement date) and § 1393(a)(1) (actuarial assumptions reasonable in the aggregate); U.S. Bureau of Labor Statistics, “Union Members in Minnesota — 2025” (Midwest Information Office) and “Union Members — 2025” (national rate 10.0%). This article is general commentary on a published decision and federal statutes, not legal advice, and reading it does not create an attorney–client relationship. Withdrawal liability exposure depends on the specific plan, the specific collective bargaining agreement, and the specific transaction. No outcome is promised or implied.