KJohnson

Here is some language that we put in a letter and then had a separate form. Some limited partnerships remain in the Plan. In order to expedite the process of terminating the Plan, the Plan’s highly compensated employees have stated that they will, if necessary, take “in-kind” distributions of these partnership interests. However, the Internal Revenue Code requires that any distribution option that is offered to highly compensated employees (even if they have agreed to such a distribution option reluctantly) must be offered to non-highly compensated employees. Therefore, if you were invested in any “fund” within the Plan that still contains limited partnerships, you have the opportunity to elect an in-kind distribution of your share of that asset. In many instances, limited partnership interests are illiquid. Also, if you have elected to rollover your distribution into an IRA, some IRA custodians will not take possession of assets such as limited partnerships. Accordingly, we urge you to talk with a financial advisor if you feel inclined to take an “in-kind” distribution of a limited partnership interest. If you elect a lump sum and request an in-kind distribution you must complete Exhibit ___. Earl's point is also well taken and you need to be sure you can "break down" the lp units.

How Taxes Work.... Let's put the tax cut on corporate dividends in terms everyone can understand. Suppose that every day, ten men who work at a plumbing business go out for dinner. The business president orders filet mignon and champagne every night costing $30, the supervisor orders duck and wine costing $25, the remaining eight plumbers and helpers always get hamburgers and beer costing $9 dollars each. They each decide to pay for their own meal. That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement-until one day, the restaurant owner threw them a curve (in tax language, a dividend tax cut) After the meal, the restaurant owner said that “since you are all such good customers I'm not going to charge for filet, duck, champagne or wine tonight.” The president and supervisor insisted that they pay the bill as always. So the president and the supervisor got their meals for free. The plumbers and helpers objected saying that—“He gave us the discount because we were all such good customers. In fact, our combined bill each night was well over 50% of the total bill, yet we are getting no benefit. ” That all may be true said the president and the supervisor, but you never have eaten filet and duck and never have had any wine or champagne to drink. Of course, we understand that since you are not rich, you couldn’t afford these things. But, be that as it may, you are still not entitled to any benefit.” “What’s more”, the president chimed in, “the restaurant owner is a friend of mine from the country club.” The plumbers and helpers decided that this was blatantly unfair and went to work for a competing business. They also decided to boycott the restaurant and urged all of their friends to do likewise. In two years both the president and the restaurant owner were out of work. And that, boys and girls, journalists and college instructors, is how the tax cut on dividends works.

There was a 4th Circuit Sheet Metal Plan case in early '03 that found a COLA not to be an accrued benefit in certain circumstances. http://pacer.ca4.uscourts.gov/opinion.pdf/021273.P.pdf -------------------------------------------------------------------------------- 2/5/2003: 4th Cir.: Pension Plan May Eliminate Benefit for Those Retired Before Benefit Was Added (The Segal Company) Excerpt: "In Board of Trustees of the Sheet Metal Workers' National Pension Fund v. Commissioner of Internal Revenue, the U.S. Court of Appeals for the Fourth Circuit ruled that trustees of a pension fund acted legally when they amended the plan to eliminate a cost-of-living adjustment (COLA) for participants who were retired at the time the COLA provision was adopted."

From yesterday's Plansponsor.com's "News Dash". I think you might have to register to look at the link: The Employee Retirement Income Security Act preempts Ohio's slayer statute, and thus federal law must be applied to determine the proper beneficiary of a life insurance policyholder who was murdered by her husband, according to a recent ruling by the Ohio Court of Appeals. Judge Mary DeGenaro said the slayer statute, which states that the property of a murder victim is distributed as if the person who caused the victim's death predeceased the victim, interfered with nationally uniform plan administration, which is one of ERISA's goals, and thus was similar to the statute in Egelhoff v. Egelhoff, which the US Supreme Court found was preempted by ERISA. MORE. http://www.plansponsor.com/pi_type10/?RECORD_ID=27029

My experience has been that you get one or two "inquiry" letters. This should ultimately be followed with a rejection if you don't respond, but I think the timing on the actual rejection could take several months or more in some circumstances. Once you get a formal rejection you still have 45 days: 2560.502c-2(b)(3) that states that: An annual report which is rejected under section 104(a)(4) for a failure to provide material information shall be treated as a failure to file an annual report when a revised report satisfactory to the Department is not filed within 45 days of the date of the Department's notice of rejection. A penalty shall not be assessed under section 502©(2) for any day earlier than the day after the date of an administrator's failure or refusal to file the annual report if a revised filing satisfactory to the Department is not submitted within 45 days of the date of the notice of rejection by the Department.

Now I am confused. I thought that the only exception to the 5 years was if you got your request in by the end of the GUST RAP. I think the GUST RAP is up for everyone.

http://pbgc.gov/services/descriptions/guarantee_table.htm Provides a chart for the reduction in receiving benefits prior to age 65.

Bird, My understanding is that no discretion is allowed. This is from the regs: (v) Involuntary distributions. A plan may be amended to provide for the involuntary distribution of an employee's benefit to the extent such involuntary distribution is permitted under sections 411(a)(11) and 417(e). Thus, for example, an involuntary distribution provision may be amended to require that an employee who terminates from employment with the employer receive a single sum distribution in the event that the present value of the employee's benefit is not more than $3,500, by substituting the cash-out limit in effect under Sec. 1.411(a)- 11©(3)(ii) for $3,500, without violating section 411(d)(6). In addition, for example, the employer may amend the plan to reduce the involuntary distribution threshold from the cash-out limit in effect under Sec. 1.411(a)-11©(3)(ii) to any lower amount and to eliminate the involuntary single sum option for employees with benefits between the cash-out limit in effect under Sec. 1.411(a)-11©(3)(ii) and such lower amount without violating section 411(d)(6). This rule does not permit a plan provision permitting employer discretion with respect to optional forms of benefit for employees the present value of whose benefit is less than the cash-out limit in effect under Sec. 1.411(a)- 11©(3)(ii). And This Q-4: May a plan provide that the employer may, through the exercise of discretion, deny a participant a section 411(d)(6) protected benefit for which the participant is otherwise eligible? A-4: (a) In general. Except as provided in paragraph (d) of Q&A-2 of this section with respect to certain employee stock ownership plans, a plan that permits the employer, either directly or indirectly, through the exercise of discretion, to deny a participant a section 411(d)(6) protected benefit provided under the plan for which the participant is otherwise eligible (but for the employer's exercise of discretion) violates the requirements of section 411(d)(6). A plan provision that makes a section 411(d)(6) protected benefit available only to those employees as the employer may designate is within the scope of this prohibition. Thus, for example, a plan provision under which only employees who are designated by the employer are eligible to receive a subsidized early retirement benefit constitutes an impermissible provision under section 411(d)(6). In addition, a pension plan that permits employer discretion to deny the availability of a section 411(d)(6) protected benefit violates the definitely determinable requirement of section 401(a), including section 401(a)(25). See Sec. 1.401-1(b)(1)(i). This is the result even if the plan specifically limits the employer's discretion to choosing among section 411(d)(6) protected benefits, including optional forms of benefit, that are actuarially equivalent. In addition, the provisions of sections 411(a)(11) and 417(e) that allow a plan to make involuntary distributions of certain amounts are not excepted from this limitation on employer discretion. Thus, for example, a plan may not permit employer discretion with respect to whether benefits will be distributed involuntarily in the event that the present value of the employee's benefit is not more than the cash-out limit in effect under Sec. 1.411(a)-11©(3)(ii) within the meaning of sections 411(a)(11) and 417(e). (An exception is provided for such provisions with respect to the nondiscrimination requirements of section 401(a)(4). See Sec. 1.401(a)(4)-4(b)(2)(ii)©.)

You are right, I spaced out there for a minute...

You can't rollover the after-tax contributions. From the regs: :Q-3: What is an eligible rollover distribution? A-3: (a) General rule. Unless specifically excluded, an eligible rollover distribution means any distribution to an employee (or to a spousal distributee described in Q&A-12(a) of this section) of all or any portion of the balance to the credit of the employee in a qualified plan. Thus, except as specifically provided in Q&A-4(b) of this section, any amount distributed to an employee (or such a spousal distributee) from a qualified plan is an eligible rollover distribution, regardless of whether it is a distribution of a benefit that is protected under section 411(d)(6). (b) Exceptions. An eligible rollover distribution does not include the following: (1) Any distribution that is one of a series of substantially equal periodic payments made (not less frequently than annually) over any one of the following periods-- (i) The life of the employee (or the joint lives of the employee and the employee's designated beneficiary); (ii) The life expectancy of the employee (or the joint life and last survivor expectancy of the employee and the employee's designated beneficiary); or (iii) A specified period of ten years or more; (2) Any distribution to the extent the distribution is a required minimum distribution under section 401(a)(9); or (3) The portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation described in section 402(e)(4)). Thus, for example, an eligible rollover distribution does not include the portion of any distribution that is excludible from gross income under section 72 as a return of the employee's investment in the contract (e.g., a return of the employee's after-tax contributions), but does include net unrealized appreciation.

Have the employer "declare" a contribuiton in the amount of the forfeiture and then offset it by the forfeiture.

http://benefitslink.com/modperl/qa.cgi?db=..._employer&id=11

I agree with your analysis and that it would depend on the langauge of the Trust. I frankly was surprised when I heard that many (most?) multis took the step of amending their trust documents to make what would otherwise be settlor functions into fiduciary functions. I understand the expenses question. However, there are a number of plan design issues that are in the interest of both management and the union--especially with regard to non-union employment-- where the trustees would be immune from fiduciary attack if they did not "opt in" to fiduciary coverage. I guess on the expenses there would be 302 issues to negotiate a contribution "oustide" the trust to pay for these expenses, but I haven't given that a good deal of thought. Of course I am sure that the fact that the service providers wanted to make sure that they could get paid by the people who orignially retained them from a very solvent entity (the trust) did not factor into any analysis one way or another.

I agree that this is a situation that you hear "everyone does it". However, you just have to walk through the analysis and ask them how can it possibly not be an ASG. There may be things you can do with intervening C Corps between the doctors and their investment in the hospital (there are different attribution rules of of C. Corps) so that the doctors will not be deemed to own a piece of the hospital, but it all takes careful planning and probably a 5300 filing for an ASG determination. Below is a "blurb" from an ALIABA outline on personal service corporations. 4. For example, Dr.Ais a 20 percent shareholder of his medical practice, Clinic, P.A. and a one percent limited partner in Imaging, Ltd. Imaging, Ltd. does diagnostic imaging for patients of practices in the region, including Clinic, P.A. Imaging, Ltd. has 15 nonexempt employees and Clinic, P.A. has eight. Dr. A’s fellow shareholders are not even aware of Dr. A’s ownership in Imaging, Ltd. and adopt a defined benefit pension plan. This plan is disqualified under section 401(a)(26). This is because Clinic, P.A.’s plan only covers approximately 35 percent of the total employees of Clinic, P.A. and Imaging, Ltd. (i.e., 8 divided by the sum of 8 + 15) which fails the 40 percent test). It can be found here: http://www.lhdl.com/whats_new/article_pdfs...orporations.pdf

Would it help if I said PLEASE PLEASE PLEASE

Would your answer be the same if an employer who sponsored a well funded single employer plan acquired another employer who sponosred a plan that was poorly funded and decided to merge the two? I think the first question is whether the merger is a fiduciary function. DOL in the 1989 opinion letter stated that it was but then stated that: "This analysis of fiduciary duties under sections 403 and 404 of ERISA is limited strictly to instances of multiemployer pension plan mergers" I think this reference acknowledged that for single employer plans, merger would not be a fiduciary function. I believe that in 1989 DOL was acting upon the notion that multiemployer plan trustees, when acting as trustees, are always performing fiduciary functions even if the function would be a "settlor" function in the single employer world. I am not sure that DOL's opinion would be the same today in light of FAB 2002-2.

My understanding is that the IRS has said that it will not follow Express Oil outside the 11th Circuit. The EBIA manaul also notes that even in the 11th the IRS might aruge that Express Oil only applies to FICA, FUTA and withholding but does not apply to what amounts are includible in an employee's income.

You might want to look here: > http://benefitslink.com/modperl/qa.cgi?db=qa_125&id=68 Q&A: Section 125 Plans Answers are provided by Robyn Morris of R. C. Morris, Incorporated -------------------------------------------------------------------------------- Opting out of health insurance - no Section 125 Plan in place (Posted February 20, 1998) Question 68: What if an employer gives its employees the option to opt out of medical care because the spouse has coverage. What are the tax consequences if there is no Section 125 Plan in place? Answer: Sorry, not enough detail...so I will make up some details to answer what I hope is your question. Scenario I - The employer gives employees who DO NOT take the health insurance an additional $1,000 per year in pay. If no Section 125 Plan is in place, this is problematic. It constitutes a choice between cash and benefits. Without a Section 125 Plan in place, all employees who had the choice (even those who took the benefits) should be taxed on the additional $1,000. Scenario II - The employer pays for the entire cost of health insurance for employees. An employee who opts out of the health insurance program does not receive additional compensation - just the gratitude of his/her employer. No requirement for a Section 125 Plan. Scenario III - The employer requires employees who take health insurance to pay on an after-tax basis. An employee who opts out of coverage is avoiding payment of the premium expense on an after-tax basis. No requirement for a Section 125 Plan. Scenario IV - A company offers pre-tax payment of health insurance premium. An employee opts not to be covered, and therefore takes full compensation - he does not pay toward the cost of premium. (Pre-tax is the key here...) Without a Section 125 Plan in place, this arrangement would require that all individuals who had a choice have incurred taxable income. In general, employers find Scenarios I and IV SO UNAPPEALING that they either implement a Section 125 plan or do not offer the choice of cash or benefits without a Section 125 Plan in place. I hope that one of these four scenarios answers your question. -------------------------------------------------------------------------------- Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted. -------------------------------------------------------------------------------- Copyright 1997-1999 R. C. Morris, Incorporated --------------------------------------------------------------------------------

https://institutional5.vanguard.com/VGApp/i...efaultFund.jsp#

As an addendum to my last statement, back in the late 1980's before the development of the settlor/fiduciary distinction in a trio of Supreme Court cases (and before the FAB referenced above), the DOL did take the position that fiduicary duties were implicated in a merger but the analysis should looked to the funded status of the merged plan. However, look at f.n. 8 where DOL says this is a multi-only rule. It took a long time for DOL to accept the settlor/fiduciary distinction in a multi context and they were not buying into it in 1989. I think the FAB analysis "trumps" this 1989 Advisory Opinion at least the 404 analysis below. Department of Labor. Pension & Welfare Benefit Programs. OPINION 89-29 A September 25, 1989 Re: Textile Workers Pension Fund, Identification No.: F-3813A REQUESTBY: Ronald E. Richman, Esq. Chadbourne & Parke 1230 Avenue of the Americas 1st Floor New York, NY 10112 OPINION: This is in response to your letters requesting an advisory opinion regarding the application of sections 403, 404 and 406 of the Employee Retirement Income Security Act of 1974 (ERISA) to the proposed merger of three multiemployer pension plans. You represent that the Textile Workers Pension Fund (the Fund) is the sponsor and administrator of four multiemployer pension plans; the National, New England, Mid Atlantic, and Philadelphia Pension Plans. n1 The National, New England and Mid Atlantic Plans (the Plans) are each independent legal entities. Each plan has its own tax identification number, plan benefits, summary plan description, actuarial valuation, and files its own Form 5500. The assets of each plan are used only to pay the benefits and expenses of such plan. n2 n1 The Philadelphia Plan will not participate in the merger. n2 By letter dated May 17, 1989, you notified the Department that the contributing employers to the New England Plan have ceased contributing to the New England Plan and are now contributing to the National Plan. You further represent that the Fund provides all administrative services for the Plans. Most of the Plans' assets are invested in a commingled trust and assets attributable to each plan are allocated to the plan in accordance with strict accounting principles. The Trustees of the Fund are trustees and fiduciaries of each of the multiemployer plans participating in the proposed merger. Some of the Fund's Trustees are stockholders and/or employees of contributing employers to the New England and Mid Atlantic Plans. The Fund's Trustees make all policy decisions for the Plans. The Fund Manager is responsible for the operation of the Plans on a day-to-day basis. In addition, the Amalgamated Clothing and Textile Workers Union (ACTWU) is the collective bargaining representative for all employees who participate in the Plans. Each of the Plans has a different level of funding. The National Plan has assets well in excess of vested benefits. The New England Plan has assets slightly in excess of vested benefits. The Mid Atlantic Plan has less assets than vested benefits. n3 n3 As of October 1, 1988, the Mid Atlantic Plan had unfunded vested benefits in the amount of $18,285,000. You state that the Trustees of the Fund propose to merge the New England and Mid Atlantic Plans into the National Plan. Under the terms of the proposed merger, participants in each of the Plans will maintain all benefits accrued to the date of the merger. Immediately subsequent to the merger, all participants in the merged National Plan will earn future benefits at the present National Plan formula. Individuals who participated in the National Plan prior to the merger will continue to earn past and future benefits in accordance with the formula used to calculate benefits in the National Plan which was in effect prior to the merger. The merger proposal contains four elements designed to reduce the Mid Atlantic Plan's pre-merger unfunded liabilities. First, contributing employers to the New England and Mid Atlantic Plans will enter the merged National Plan with a "withdrawal liability" account balance equal to the amount of unfunded vested benefits allocable to them by the plan to which they contributed prior to the merger. n4 Contributing employers to the National Plan will maintain their "withdrawal liability" account balances as calculated under the National Plan's modified direct attribution withdrawal liability method. Since the merged National Plan will maintain the National Plan's method of calculating withdrawal liability, the former contributing employers to the Mid Atlantic Plan (the only plan which has unfunded vested benefits) will have the ultimate responsibility for paying the unfunded vested benefits attributable to the Mid Atlantic Plan. This liability will be terminated if the merged National Plan has no unfunded vested benefits at the conclusion of five years after the merger. n4 You indicate that the merger proposal calls for an assessment of withdrawal liability pursuant to individual employer contracts. It was represented that such assessment is outside of the provisions of Title IV of ERISA because the merged National Plan will be fully funded. Second, effective September 1987, the contributing employers to the Mid Atlantic Plan increased their contributions from $57 per participant per month to $90 per participant per month. The merger proposal calls for continued contributions at this rate for at least five years. In each year, the first $1 million of contributions from former Mid Atlantic employers will be allocated to reduce the existing unfunded liability. Third, the balance of the contributions, after the first $1 million is allocated to the existing unfunded liability, will be used to provide future service benefits under the National Plan formula. Under the merged National Plan, former Mid Atlantic Plan employees will be provided past service benefits in accordance with amounts accrued under the former Mid Atlantic Plan. It is represented, therefore, that the balance of such contributions will exceed the amount required (on an actuarial basis) to provide future service-only benefits. This excess amount will also be used to offset the Mid Atlantic Plan's pre-merger unfunded vested benefits. Fourth, as a condition precedent to the merger, the ACTWU and contributing employers to the Mid Atlantic Plan will transfer a lump sum of $6 million to the Mid Atlantic Plan. The collective bargaining parties will obtain this money by terminating the Dyers Vacation and Welfare Fund (the Dyers Fund) and contributing $6 million of the Dyers Fund's assets in excess of the assets necessary to satisfy all of the Dyers Fund's liabilities to the Mid Atlantic Plan. n5 You have stated that the termination will comply with section 403(d)(2) of ERISA. n5 All of the Dyer's Fund participants are also participants in the Mid Atlantic Plan. You have represented that the total of the amounts transferred to the merged National Plan pursuant to the above provisions will be less than 100% of the Mid Atlantic Plan's unfunded vested benefits as of October 1, 1988. However, the Fund's actuary estimates that, if the merger occurs in accordance with the Trustees' proposal, the merged National Plan will have assets slightly in excess of vested benefits. Finally, you have represented that the proposed merger will satisfy all of the merger requirements for mergers of multiemployer plans set forth in section 4231 of ERISA and regulations promulgated thereunder by the Pension Benefit Guaranty Corporation (PBGC). As a condition precedent to the merger, the Fund will obtain a favorable compliance determination from the PBGC. You have requested an advisory opinion that: (1) The proposed merger would not violate sections 403©(1) and 404(a)(1) of ERISA; and (2) The proposed merger would not constitute a prohibited transaction under section 406 of ERISA. Section 403©(1) of ERISA provides, in part, that the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan. Section 404(a)(1) of ERISA similarly requires that fiduciaries of a plan discharge their duties solely in the interest of the participants and beneficiaries of the plan, and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable plan administration expenses. Section 406(a)(1)(D) of ERISA provides that a fiduciary with respect to a plan shall not cause the plan to engage in a transaction if he knows or should know that such transaction constitutes a direct or indirect transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan. Sections 406(B)(1) and 406(B)(2) of ERISA provide that a fiduciary with respect to a plan shall not deal with the assets of the plan in his own interest or for his own account or in his individual capacity or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party)whose interests are adverse to the interests of the plan or the interests of the participants or beneficiaries. Section 408(B)(11) of ERISA provides that the prohibitions of section 406 shall not apply to a merger of multiemployer plans, or the transfer of assets or liabilities between multiemployer plans, determined by the PBGC to meet the requirements of section 4231 of ERISA. Section 408(f) provides that section 406(B)(2) shall not apply to any merger described in subsection (B)(11). Finally, section 4231© of ERISA provides that the merger of multiemployer plans or the transfer of assets or liabilities between multiemployer plans shall be deemed not to constitute a violation of the provisions of section 406(a) or section 406(B)(2) if the PBGC determines that the merger or transfer otherwise satisfies the requirements of this section. n6 n6 Section 4231 is contained within Title IV of ERISA which is within the sole jurisdiction of the PBGC. In discussing section 4231 of ERISA, Congress noted in the legislative history accompanying the Multiemployer Pension Plan Amendments of 1980 Act that: The rules regarding mergers and transfers are designed to allow mergers in all cases where the resulting plan will not be expected to be in financial trouble. This facilitates the committee's purpose of encouraging mergers which expand a plan's contribution base to provide greater stability by looking at the prospects for the resulting plan instead of focusing on the narrow mechanical test provided under current law. The committee believes that a merger which complies with the conditions will generally be in the best interest of plan participants. House Comm. on Education and Labor, H.R. Rep. No. 869, 96th Cong., 2nd Sess. 87 reprinted in [1980] U.S. Code Cong. & Ad. News 2918, 2955. Issue 1 The provisions of Title I of ERISA do not expressly prohibit or limit mergers of multiemployer pension plans. In the Department's view, whether a proposed merger of multiemployer pension plans complies with the provisions of sections 403©(1) and 404(a)(1) of ERISA can only be determined by the appropriate plan fiduciaries based on all relevant facts and circumstances. Based on the statutory framework and the Congressional intent described above, it is the opinion of the Department that, in determining the propriety of a merger of multiemployer pension plans, the fiduciaries of each multiemployer plan must make their determinations under sections 403© and 404(a)(1) by reference to the multiemployer plan resulting from the proposed merger. In making such determinations, the fiduciaries must consider the funded status of the resulting merged plan, as well as the long-term financial viability of such plan. n7 In this regard, it is contemplated that the fiduciaries would, among other things, take into account the economic outlook of the industry, demographics of the resultant participant population, current and anticipated contribution rates and administrative expenses. The fiduciaries should be aware that compliance with the requirements of section 4231, as determined by the PBGC, will not, in and of itself, satisfy the fiduciaries' obligations under sections 403© and 404(a)(1) of ERISA. n8 Accordingly, the Department expects that the fiduciaries will make independent determinations taking into account all relevant information pertaining to the proposed merger. n7 In the instant case, we note that the trustees may wish to consider, among other things, actuarial projections made of assets and accrued and vested liabilities for the merged plan under a variety of alternate scenarios. n8 This analysis of fiduciary duties under sections 403 and 404 of ERISA is limited strictly to instances of multiemployer pension plan mergers. Issue 2 You represent that, as a condition precedent to the merger, the Fund will obtain a favorable compliance determination under section 4231 of ERISA from the PBGC. Therefore, it is unnecessary for the Department to address the issues raised under section 406(a) and 406(B)(2) by the proposed merger. Whether the proposed merger is prohibited by the provisions of section 406(B)(1) of ERISA involves questions of a factual nature which can only be answered by the Trustees based on all of the relevant facts and circumstances. This letter is an advisory opinion under ERISA Procedure 76-1. Section 10 of the procedure describes the effect of an advisory opinion. Robert J. Doyle Director of Regulations and Interpretations

I'm not sure that is completely correct. From a fiduciary standpoint that would typically be a "settlor" function. DOL was always a little bit "sideways" on the settlor/fiduciary distinction in the multi world, but in 2002 they came out with a Field Assitance Bulletin whose conclusion was: In our view, where relevant documents (e.g., collective bargaining agreements, trust documents, and plan documents) contemplate that the board of trustees of a multi-employer plan will act as fiduciaries in carrying out activities which would otherwise be settlor in nature, such activities would be governed by the fiduciary provisions of ERISA. In our view, such designation by the plan would result in the board of trustees exercising discretion as fiduciaries in the management or administration of a plan or its assets when undertaking the activities. However, where, as here, the relevant plan documents are silent, then the activities of the board of trustees which are settlor in nature generally will be viewed as carried out by the board of trustees in a settlor capacity, and such activities would not be fiduciary activities subject to Title I of ERISA. You can find the entire FAB here: http://www.dol.gov/ebsa/regs/fab_2002-2.html

I think Tom and Katherine addressed the point. You may want to look at the definition of excess amount rather than looking for the definitiion of corrective distribution. You generally make conrrective distributions of excess amounts. 2003-44 defines excess amount as: 3) Excess Amount. The term "Excess Amount" means (a) an Overpayment, (b) an elective deferral or employee after-tax contribution returned to satisfy § 415, © an elective deferral in excess of the limitation of § 402(g) that is distributed, (d) an excess contribution or excess aggregate contribution that is distributed to satisfy § 401(k) or § 401(m), (e) an elective deferral that is distributed to satisfy the limitation of § 401(a)(17), or (f) any similar amount that is required to be distributed in order to maintain plan qualification If you had to make an argument I think you would say that a terminated plan generally has to distribute assets within a year to save the tax qualified status. If you don't distribute does the account balance become a "similar amount that is required to be distributed in order to maintain plan qualification?" I think that this may be a stretch. Even if you could use this definition of excess amount woudl you have to wait until the year is up so that you actually had a qualification problem?

Agreed. The Supreme Court in Inter-modal said exactly that. . In the Third Circuit it would not be, but the argument woudl be that it is for the same reason that you cannot discharge an employee for purposes of preventing him or her from attaining a benefit right. An employer could eliminate retiree health benefits as a settlor decision but an employer coud not discharge an employee solely for the purposes of preventing that employee from obtaining the years of service neccessary to obtain that retiree benefit. As the Supreme Court said in Inter-Modal if you want this settlor "out" you have to formally amend the plan and they were not going to accept an argument that an employer was really informally amending the plan one participant at a time. I never indicated that this was the standard. I said: However, firing someone to prevent them from accuring benefits or becoming vested under the plan is the heart of a 510 action and participants surely could "maintain" such an action if they alleged that that is the reason they were fired.

At least in a rehire, the argument is that the failure to rehire does not fall within the prohibited conduct of "discharge, fine, suspend, expel, discipline, or discriminate against a participant " for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." Whether other Circuits that don't require a current employment nexus for "discrimination" would adopt the Third Circuit's reasoning, will, I guess, be decided sometime in the future. However, firing someone to prevent them from accuring benefits or becoming vested under the plan is the heart of a 510 action and participants surely could "maintain" such an action if they alleged that that is the reason they were fired. Whether the employee could make a prima facie case that this was the reason for the discharge and whether the employer could rebut this prima facie case with a non-disciriminatory reason would go to the merits. I agree that under the employment at will doctrine you are not required to rehire anyone, but that doesn't mean that you can refuse to rehire someone for a discriminatory reason (age, sex, race etc.) Of course at least in the Third Circuit it is not considered "discriminatory" to refuse to rehire someone because of potential implications on the employer's ERISA plan.

I have always thought that the 510 discrimination issue was interesting on this issue. The Third Circuit in Mack Trucks determined it was not a 510 violation to refuse to rehire somone based on the additional pension liability that would create as opposed to a new hire. I don't recall if other Circuits have signed on to this reasoning If anyone is interested the Mack Trucks decision is here: http://laws.lp.findlaw.com/3rd/004414.html