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severance plans


Guest kelsey

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Guest kelsey

What makes a severance plan an ERISA plan and have the requirement for a 5500 filing?

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A governmental plan is never subject to ERISA, regardless of whether it is a severance plan or some other kind of plan. In the case of most other employers, ERISA Reg. § 2510.3-2(B) governs whether the plan is a severance plan or not. You can click on the link to see the regulation, then just scroll down to (B).

By the way, for anyone who is not already aware, up-to-date copies of most ERISA and IRS regulations on employee benefits can be searched or browsed by going to http://benefitsattorney.com/regulations/.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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The regulation addresses only the distinction between pension plans and severance plans. A severance plan can be an ERISA plan even though it is not a pension plan. Many (perhaps most)severance arrangements are not ERISA severance plans. First, one must have a "plan," which many courts have interpreted to require a scheme of administration and possibly some discretionary or judgment aspect. A simple severance pay formula, uniformly applied, is not an ERISA severance plan in various federal circuits. But a severance agreement, applied to only one person, has also been held to be an ERISA plan. No pat answers to this question!

But if you are a government, no ERISA concerns. Beware state and local law.

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