Bond for Medical Expense Reimbursement Plan?

[Guest erisa15]

Has anyone heard of a requirement that self administered medical reimbursement plans have a bond? ERISA Section 412 requires a bond of "every fiduciary of an employee benefit plan and every person who handles funds or other property of such a plan" EXCEPT "where such plan is one under which the only assets from which benefits are paid are the general assets of ... an employer," All the plans I see are paid out of general assets and I don't know any that have a bond. ALso, I have never seen the DOL comment on this. Have I missed something? Thought,comments, as always, greatly appreciated.

[Harwood]

If, by chance, contributions are made to the plan by employees, then the unfunded plan exemption would not apply. Need to meet all the requirements of 2580.412-2 to be "completely unfunded."

[Guest erisa15]

If the only employee contributions are those made with pre-tax dollars wouldn't we still meet the unfunded exemption?

[Harwood]

Check out:

2580

A

2580.412-2 at the following site:

http://benefitsattorney.com/cgi-bin/framed...?ID=295&id==295

[g8r]

Pursuant to the cited reg, as long as benefits are paid from the general assets of the employer, no bonding is required. Thus, the answer to your question depends on how the plan is structured. Note that unlike the code, under ERISA, employee contributions are still employee contributions and must generally be put into a trust. However, if the employee contributions are pre-tax through a cafe plan, then no trust is required (tech release 92-01).

The key is to determine whether or not the plan is funded (or deemed funded) for purposes of ERISA.