Moe Howard Posted February 6, 2003 Share Posted February 6, 2003 Employer invites a local insurance agent to his business to sell his employees "supplemental policies" (such as accident, short-term disability, cancer policy, and life). Employer will pay none of the premiums. Employees will pay all the premium via payroll withholding. The employer's only involvement is witholding the monthly premims from employees' paychecks "PRE-TAX" and then mailing the premium to the insurance company. MY QUESTION: Are these ERISA plans ? Doesn't the "pre-tax" aspect (as opposed to after-tax) make these plans ... ERISA plans (even though the employer's involvement is very limited) ? Link to comment Share on other sites More sharing options...
KJohnson Posted February 6, 2003 Share Posted February 6, 2003 If he incorporates this into his 125 Plan, which I would assume that he would have to do to make them pre-tax, then it sounds like it would have the indicia of corporate sponsorship to make it an ERISA plan (even though the 125 itself may not be an ERISA plan). I think there are some prior threads regarding DOL's Advisory Opinions with regard to this question. Link to comment Share on other sites More sharing options...
KIP KRAUS Posted February 7, 2003 Share Posted February 7, 2003 I was not aware that employees could pay for individual insurance policies on a pre-tax payroll deduction basis. Link to comment Share on other sites More sharing options...
Sandra Pearce Posted February 7, 2003 Share Posted February 7, 2003 I believe when the employer allowed the agent in to offer a product to be paid through the employer's payroll, the employer has sponsored that plan. Any life insurance of over 50,000 provided would be taxable to the employee if it were paid for a a part of a 125 plan with pre-tax dollars. Link to comment Share on other sites More sharing options...
vebaguru Posted February 15, 2003 Share Posted February 15, 2003 First you describe an employer permitting an agent to solicit plans that would clearly qualify as "voluntary benefits" (after-tax and non-ERISA). Then you describe them as "pre-tax". Which is it? The only way to reconcile the information you provided is to assume that the agent was soliciting participation in insurance contracts pursuant to a 125 plan. As such, it would normally be an ERISA plan. K Johnson is correct, above. But what is the point of the question? Are you trying to decide whether to go to Federal or state court? Are you waiting for an SPD that complies with DOL Regs? Or are you trying to figure out whether you should be able to get an answer to a question in writing within 30 days? Link to comment Share on other sites More sharing options...
Kirk Maldonado Posted February 16, 2003 Share Posted February 16, 2003 VEBAGuru: I thought that the DOL held, In DOL Advisory Opinion 96-12A, that a premium only plan is not subject to ERISA. Kirk Maldonado Link to comment Share on other sites More sharing options...
vebaguru Posted February 17, 2003 Share Posted February 17, 2003 I said "probably" because the facts were not complete enough to know whether or not this was a POP or a full flex. (Most of the 125 plans I see are flex plans.) Are you implying that the premium reduction portions of a full flex plan are exempt from ERISA? Link to comment Share on other sites More sharing options...
E as in ERISA Posted February 17, 2003 Share Posted February 17, 2003 A standalone "125 arrangement" in and of itself is not an ERISA plan. It provides neither a pension benefit or a welfare benefit. It only allows the employees to choose between cash and other nontaxable benefits (most of which are ERISA plans) without constructive receipt. Link to comment Share on other sites More sharing options...
Kirk Maldonado Posted February 18, 2003 Share Posted February 18, 2003 I agree with Katherine. Kirk Maldonado Link to comment Share on other sites More sharing options...
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