401 Chaos Posted October 18, 2011 Report Share Posted October 18, 2011 Looking for advice regarding the termination / dissolution of a MEWA. In particular, we are trying to be sure we have reviewed any and all applicable sources of restrictions on the distribution of remaining trust assets once all MEWA claims have been satisfied and the applicable state department of insurance regulators have signed off on dissolution of the remaining trust assets. In this case, the MEWA was a long-running MEWA established by a bona fide employer organization consisting of a professional trade association limited to employers in a single industry. The MEWA has always been operated as an ERISA welfare benefit plan and has always complied with all applicable state insurance laws and requirements for MEWAs and is working through the termination of coverage period currently. The funds have always been held in trust but the trust was not established as a tax-exempt VEBA under Code Section 501©(9). The MEWA anticipates a fair amount of trust funds remaining after all claims / liabilities have been paid. The remaining employers want to know whether they can get the remaining money and, if so, how it is to be divided or are there various restrictions on how those assets get used (e.g., having to be used for the benefit of participants / employees rather than reverting back to the employers). Would welcome any thoughts on applicable rules or sources of restrictions. Assume the trust agreement and plan documents would be the two most direct sources of restrictions on use of remaining assets. Would also assume the State's MEWA regulations may factor in here if they specifically address the dissolution of MEWAs (unclear there are any express rules on this though). Also assume that ERISA's general fiduciary obligations to act solely in the best interests of plan participants, etc. may factor in here even though the decision to terminate the MEWA was a settlor decision of the Plan Sponsor. (Is there any reason to think that the Trustee's general fiduciary duty with respect to remaining assets and general restrictions on the use of those for participant benefit somehow goes away and the assets revert back following termination of the plan.) Thanks for any thoughts from those that have been through the process before. Link to comment Share on other sites More sharing options...
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