administration committee charter needed.

[Guest grafals]

I have been asked to draft a charter for an administrative committee for a Section 125 Plan. Does anyone have a sample of such a charter they would be willing to share, that I could use as a starting point?

Thanks in advance!

[GBurns]

What would this Committee do and why would it be needed?

I assume that you are either a large non-profit or public entity so why not just copy the charter of you other committees and change the functions descriptions. The only difference between this and your other committees will be in the functions which will be a very minor portion of the charter, all other sections should read essentially the same.

[Guest grafals]

The committee would serve as the administrator for our Plan. Sarbanes-Oxley has everyone looking to spread the risk around where possible. So we are exploring the adoption of administration by committee for all of our plans.

Unfortunately, this is our first use of a committee for administration of an ERISA Plan. Previously, our plans have all been administered by our head of HR.

I'm just looking for a starting point for the establishment. I've been researching the subject but can't find anything comprehensive on the subject of best practices for establishment of such a committee. I can draft one cold, but without such starting guidance, I'm concerned about leaving out valuable protections we might be able to advantage of.

[Lisa Hand]

One way for you to minimize the employer's exposure is to out-source the adminstration of the plan. While it does not eliminate the sponsoring employer's legal responsibilites, it does provide the resources of an organization which specializes in these benefits to insure proper day-to-day operations, claims adjudication, compliance and provides protection for the employer which self-administering does not , such as the legal exposure of the employer seeing health reimbursement claims and thus being open to legal action by former employees claiming they were dismissed because of a health condition, instead of performance.

If the committee is going to administer the plan, not simply oversee the selection of an appropriate service provider, then you will need to have the proper resources, which are updated regularly to insure compliance. Start with Section 125 of the IRC, the governing regulations for 125 plans (Treas. Reg. 1-125-4, Prop. Treas. Reg 1-125-3, ect) and then subscribe to a good legal guide on Section 125 Plans.

[mbozek]

I am curious as to what application Sarbaines -Oxley would have to a 125 plan. Secondly why would you want to run a 125 plan by a committee? A 125 plan needs a plan admin and a TPA to process the data, administer the plan and follow the participants elections. I dont see the need for a separate committee to act as a PA. Most clients either rely on a PA to make decisions or operate the 125 plan under an overall benefits committee. Having a separate committee to administer a 125 plan is just another layer of unnessary oversight and will slow down the operation of tahe plan since it will require the collective decision making of several people. Secondly wouldn't this committee duplicate the work of the TPA? Most operational decisons in a 125 plan do not require such a cumbersome process. I also am wondering what is the legal application of of a "charter" under ERISA. The reason you cant find any information on a charter is that 125 plans are not operated by a committee.