Kirk Maldonado

The DOL regulations provide a laundry list of the items that are required to be provided in the SPD.

Gburns: Pertaining to the employer's payment of the trustee's fees and plan administration fees on behalf of one participant, you said: Are you saying that if the employer paid those expenses on behalf of all of the participants in the plan the payment would not be deductible? I just want some clarification as to your position.

Tom Poje: I thought that IRS determination letter applications were exempt from disclosure under the FOIA, but I will admit to never having researched that issue. If they are exempt from disclosure, why would you find them by means of a Google search? I'm pretty sure that there was a court case holding that the favorable determination letters were exempt from disclosure, so I would guess that the applications are also exempt.

Have you checked with the American Benefits Council? They might be a good candidate.

mal: Have you reviewed the provisions of Title IV setting forth the special withdrawal liability rules for the construction industry?

Here it is: PBGC Opinion Letter 81-19, 07/01/1981 Reference(s): ERISA §4001 ERISA §4001(b) ERISA §4203 ERISA §4204 ERISA §4225 Dear Mr This is in response to your letter requesting general guidance concerning the potential withdrawal liability under the Multi-employer Pension Plan Amendments Act of 1980 (“MPPAA”) of a construction contractor who sells a trade or business in the construction industry. Your first two questions appear to relate to the applicability of the “sale of assets exception” in Section 4204 to the construction industry complete withdrawal provisions of Section 4203(b) and to the limitations on withdrawal liability in Section 4225. You pose the case of a construction contractor contributing to a construction industry plan who makes an arms-length sale of all the assets of the business. We assume that the seller is not under common control with any other trades or businesses under Section 4001(b) of ERISA . In the case of a construction industry plan, a complete withdrawal occurs, per ERISA Section 4203(b)(2) , if: (A) an employer ceases to have an obligation to contribute under the plan, and (B) the employer — (i) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required, or (ii) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does not renew the obligation at the time of the resumption. In the case that you have presented, it appears that after the sale of the assets of the business the seller would not continue to perform work in the jurisdiction of the collective bargaining agreement, so that there would not be a complete withdrawal under Section 4203. Since there is no withdrawal under Section 4203, there is no need to consider the application of Section 4204 or Section 4225. Your final inquiry is whether our answer would be different if the seller owned two companies in a controlled group relationship and sold one of them. We assume that one company would be in the construction industry, but you have not supplied us with facts concerning the business of the other company or its relation to the construction industry plan. Accordingly, we do not have sufficient information to respond. I hope we have been of assistance. Sincerely, Henry Rose General Counsel

A more apt website would be one that debunks urban myths, particularly those promulgated by devious investment professionals (I'm using that term very loosely).

I'm pretty sure that non-electing church plans are completely exempt from the provisions of section 411, so that they could use any cashout limit.

I guess I analyze the situation differently than Janet M. The parties to a sale of assets transaction have an incentive (in some circumstances) to comply with the requirements of Section 4204 because, if they don't, then the sale of assets triggers withdrawal liability. Thus, if there is substantial withdrawal liability the parties typically enter into a Section 4204 agreement. Admittedly, the buyer agreeing to contribute to the plan changes the facts somewhat, but I doubt that would mean that the buyer also agrees to assume all of the contribution history of the seller for purposes of determining the amount of its withdrawal liability. Thus, I think that you need to hire counsel to get actively involved in this situation. The amount of withdrawal liability can be huge. I once worked on a case where the amount was over $50,000,000.

For what it's worth (now that he has retired), I had a discusion with Dick Wickersham on this exact point. His position, which I believe to the IRS position as well, is that once a participant is fully vested, he or she keeps that status. To put it into perspective, Dick was probably the most knowledgeable person at the IRS regarding ERISA. It isn't terribly well-known, but he also participated in a lot of the legislative drafting sessions of ERISA on behalf of the IRS, along with Bill Lieber (now deceased) and Ira Cohen (now retired).

jquazza: Thanks for the compliment but I don't feel that I deserve (at least all of) it. I had a number of clients back then that were very aggressive in classifying workers as independent contractors. Because the IRS was very vigiliant (and successful) in challenging those arrangements, I thought that the logical next step was for the IRS to try to disqualify the employer's retirement plan for excluding those workers. Thus, the first generation of that language in my plan documents said that those workers were excluded from the plan even if the IRS later reclassified them as employees. I later thought about employees suing under ERISA to enforce the terms of the retirement plan that would have required their inclusion, so the second generation of that exclusionary language said that the exclusion applied even if it was a court that reclassified the workers as employees. I've learned that you can learn a lot of valuable insights from having aggressive clients. They can also generate huge legal fees when their aggressive schemes come under scrutiny from the administrative agencies.

Lori Friedman: As was stated above, a VEBA isn't a plan, it is a funding vehicle. It is no more of a plan than a trust agreement is a plan.

jquazza: Some of us had language like that in our plans many years before the Microsoft case.

mbozek: Is it a fair extrapolation of your comment to say that you think a court would reject a request for a QDRO even if both parties admitted that they had overlooked the issue of the retirement benefits? (I'm inclined to agree with you. I could see a court saying that the person's only recourse would be a malpractice suit against the domestic relations attorney. But I've not researched this issue or even spent any time thinking it through.)

George Chimento: I urge you to submit your analysis of the issue regarding the "acceleration" of the death benefit to the IRS for inclusion in their subsequent guidance. There is a website where you could submit your comments, apparently in e-mail format.

My recollection is that Microsoft also had to pay roughly $27 million in attorneys' fees to the plaintiffs.

I misinterpreted your prior posting. The fact that you were referring to a bifurcated approach was more clear in your last post, although in retrospect, I should have realized that if I had read your earlier posts more carefully. I agree that, if the coverage of the EAP is properly restricted along the lines of what you suggested, then it would not be subject to ERISA.

The bonding requirements for plans are contained in ERISA Section 412 and the regulations under that provision.

GBurns: If the plan is providing health benefits, which is included in the language you quoted, then why isn't it subject to ERISA? Please explain.

Isn't there an issue as to whether the employee could elect to use special tax treatment on the distribution (e.g.roll it over into an IRA)? Because it isn't a payment from a qualified plan, that favorable tax treatment may not be available.

legort69: You brought up a good point. I had assumed that everybody knew about the search feature and how to use them. That was clearly a mistake on my behalf and I am sorry if my heavy-handed remark offended you. I am not very tolerant of people that waste everybody's time rather than spend one minute searching for the answer. I consider that to be lazy and selfish. However, that assumes that they knew about the search function, which, as you quite correctly pointed out, may not be known by all of the users of the message boards. I need to mention to Dave Baker that he should undertake steps so as to make the search function more visible, and to possibly give the reader a cue to use the search function before opening a new thread.

GBurns: You didn't answer my question. I think that you need to read the wording of the statute before you take positions as to what the words mean.

Alf: That was the position taken in the first teleconference. They changed their tune in the second teleconference and said that some definitely work but they hadn't decided the test for determining which other types of plan design features were acceptable or objectionable.

FundeK: You shouldn't feel bad about posting your reply. I think that it was entirely appropriate. I think that the first post that everybody makes should be to check to see if the person searched the message boards before posting the question. My belief is that extremely few do. The second post should be to ask that person's analysis of the issue, if they didn't include it in their initial post. I don't believe that these Message Boards should be used by lazy people to try to get others to do their work for them. They should be used where there aren't any answers, the answers seem inconsistent, the analysis underlying the answers seems incorrect, etc.

Compared to the cost of actually litigating a case, the cost of providing those benefits for that period of time is negligible.