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Participant wants to name trust as participant


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i know he cant do it but i have to give them an explanation. the best i can come up with is that ERISA provides that participants must either be employees or former employees and that a trust cant be a participant because it is not an employee. only an actual person can be either an employee or a participant. does anyone have anything better??

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And what does it mean when the trust "dies"? Could the trust also become disabled?

When does the trust become age 70-1/2?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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ithe best i can come up with is that ERISA provides that participants must either be employees or former employees

That is the approach I would take. See ERISA 3(2)(A).

(2)(A) Except as provided in subparagraph (B), the terms "employee pension benefit plan'' and "pension plan'' mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program--

(i) provides retirement income to employees, or

(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,

regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.

(emphasis added)

...but then again, What Do I Know?

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He may be trying to put all of his assets in trust - to avoid probate or creditors maybe - and he thinks he can put his plan interest in trust. I think the answer you've already stated is correct - only employees can be participants - perhaps also you could point to the anti-assignment/exclusive benefit rule. Naming the trust as the participant would be an impermissable assignment of a plan interest.

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And I might add that ERISA Section 3 already referenced by WDIK also in (6) says, "The term "employee"

means any individual employed by an employer."

But heck, if they won't listen to you, invite them to retain ERISA counsel to confirm your opinion. Usually when they have to start paying for advice, they shut up in a hurry.

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  • 1 year later...

Under reg 1.401(a)(13(b) benefits cannot be assigned. Under ©(1) assignment includes any direct or indirect arrangment whereby a party acquires from the partaicipant a right or interest enforceable against the plan to all or any part of benefits that will be paid to the participant.

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