ERISA Title IV

[Guest Carol the Writer]

I have a defined benefit client who is a chiropractor with fewer than 25 participants. Is he subject to PBGC premium payments, coverage, regulation, etc? Thanks.

[David MacLennan]

I believe he would be exempt, unless his business is substantially something other than providing medical/health services. For example, if he sells dietary supplements, and this is more than half his business income, then he would be covered under PBGC insurance. You can always ask for a coverage determination if in doubt.

[david rigby]

Probably, but be careful. Relevant statute is ERISA sections 4021(b)(13) and 4021©(2). Note the requirement in 4021(b)(13) that the plan cannot have had more than 25 participants at any time after the enactment of ERISA.

[Guest Carol the Writer]

Thank you very much. I'm confident that's my answer.

[flosfur]

The question has been answered adequately but just to add to the discussion...

Chiropractors are specifically defined as "professional individuals" in ERISA 4021©(2)(B) and as such are exempt from PBGC coverage [4021(b)(13)], if # of "active" participants (not all participants) is 25 or less.

Therefore, other than the # of "active" participants requirement, I don't think the sources of income affect a chirpractor's PBGC coverage.

However, if one was to request for PBGC's determination on coverage for a business run by a professional not listed in 4022©(2)(B), the PBGC would want to know a rough breakdown of the income sources.

I had to apply for such a determination for Pharmacists, Enrolled Agents and others not listed in the ERISA statute - I was told that 70% or more of the income must be derived from the profession related activity.

[David MacLennan]

I would be surprised if the source of income doesn't matter, even for those on the list of professions. "A professional service employer is any entity (it need not be a corporation) owned or controlled by professional individuals, as defined in § 4021©(2)(B). where both the entity and the professional individuals are engaged in the performance of the same professional service. " (PBGC Op Ltr 75-20) Does being on the list of professions confer any special status - according to PBGC opinion letters it shouldn't, since they refer to it as just a sample list of representative professional service employers. However, it may (wrongly) confer special status to PBGC employees, so flosfur may be correct in the practical sense.