Most Minnesota business owners have never heard the phrase “withdrawal liability.” The ones who have usually heard it the same way: in a letter, with a number in it, after the deal closed.
On May 21, 2026, a unanimous Supreme Court made that number somewhat harder to see coming.
The setup
Say your business pays into a multiemployer pension plan — the kind negotiated through a union and funded by a lot of employers in the same trade. If you stop contributing, federal law can make you pay your share of the plan’s shortfall on the way out. That’s withdrawal liability. It comes from the Multiemployer Pension Plan Amendments Act, bolted onto ERISA.
The amount turns on the plan’s unfunded vested benefits: what it’s promised versus what it actually 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) is the standard that applied here: the calculation uses “actuarial assumptions and methods which, in the aggregate, are reasonable (taking into account the experience of the plan and reasonable expectations) and which, in combination, offer the actuary’s best estimate of anticipated experience under the plan”. (The other route, § 1393(a)(2), uses assumptions set by PBGC regulation. It wasn’t at issue here.)
The assumption that matters most is the discount rate, the interest rate that turns decades of future pension promises into one number today. Move it a point and the liability moves by millions.
The question, and the answer
Nobody disputed that the liability is measured as of a fixed past date. The fight was over whether the assumptions behind that measurement had to exist by that date too.
The employers’ argument made some sense. If the statute freezes the measurement at the end of the prior plan year, the actuary ought to use the assumptions in place then — not ones picked later, after everybody knows which employers left and what the markets did.
Justice Jackson, writing for a unanimous Court, didn’t buy 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.
What’s left is what § 1393(a)(1) says: the assumptions have to be reasonable in the aggregate, and together they have to offer the actuary’s best estimate of the plan’s anticipated experience. Those are real limits. But you fight about them in arbitration, with experts on both sides. You can’t check it from public documents before you sign a purchase agreement.
Why Minnesota businesses should care more than most
Minnesota isn’t 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%. We’re meaningfully more unionized than the country as a whole, and the concentration is heaviest right 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 a lot of Minnesota members. 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 shows up on no balance sheet.
And you don’t have to go out of business to trigger it. 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 comes with a big asterisk, and it’s one of the most important things a Minnesota contractor can know. ERISA has 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 really stops and stays stopped is generally outside it. There’s a parallel special rule at § 1383(d) for employers primarily in long- and short-haul trucking, household goods moving, and public warehousing. That one turns on a PBGC determination or a bond or escrow.
So if you’re in construction or trucking — the two industries most likely to be reading this in Minnesota — the first question isn’t “did I stop contributing.” It’s “which special rule applies, and what happens in the next five years.”
What changed in practice
Before M&K, an employer at least had a colorable argument that the actuary was stuck with the assumptions that existed on the measurement date — assumptions the employer could, in principle, have looked at while deciding whether and when to leave.
After M&K, the plan’s actuary may adopt new assumptions after the withdrawal has already happened and apply them to the measurement. Your protection isn’t timing anymore. It’s reasonableness and the actuary’s best estimate, tested after the fact.
That hands real leverage to plan trustees. For a Minnesota employer, it makes these matter more than they used to:
-
Ask before you act, not after. Under ERISA, a participating employer can request an estimate of withdrawal liability from the plan. An estimate isn’t a cap, and after M&K it’s even less of one. But it beats learning the number from a demand letter. Ask while you still have options.
-
Structure matters enormously. Whether a sale is an asset purchase or a stock purchase, and whether the buyer takes on the collective bargaining agreement and the contribution obligation, can decide whether a withdrawal happens at all. That’s one more reason the asset-versus-stock decision isn’t a tax question with a legal footnote. It’s a legal question with a tax footnote.
-
The clock on disputing the number is brutally short. Withdrawal liability demands come with statutory deadlines to request review and to start arbitration, and missing them can forfeit the challenge entirely — including the reasonableness challenge 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.
What it means for you
This decision won’t change what most Minnesotans do on Monday morning. It changes what one group of Minnesota business owners — the ones with a union contract and a pension contribution line on the monthly payroll — should be finding out before they make a move that looks routine.
The number in that letter was always uncertain. Now the Court has told you some of that uncertainty gets settled after you’ve already committed.
If your business pays into a multiemployer pension plan and you’re thinking about a sale, a succession plan, a cut in union work, or retirement, the order you take those steps in can matter more than the steps themselves. 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. 264 (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 and the actuary’s best estimate); 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.