Coverage of independent directors as a MEWA

[Guest bwell]

A client maintains a self-funded plan that covers independent directors. As I read the definition at 3(40) of ERISA, this makes them a MEWA. I realize that the DOL does not require a Form M-1 in this instance. However, nothing I have found so far takes them out of the definition of a MEWA.

My impression is that many companies cover their independent directors without considering their plan to be a MEWA - and just do not worry about this issue. Does anyone have any thoughts/comments? Am I missing something?

[Ron Snyder]

MEWA refers to multiple employers. Employees and directors of 1 employer would not make a single-employer plan a MEWA.

[QDROphile]

vebaguru:

For inquiring minds, could explain in greater detail why you would have a single employer arrangement when the benefits are provided to persons other than employees of the employer? For various purposes under ERISA plans, benefits under an employer plan can be provided only to employees and their beneficiaries, so it would be nice to understand how to distinguish.

[Kirk Maldonado]

Maybe I'm mistaken, but I thought that a plan that only covers independent contractors isn't subject to ERISA.

Before anybody posts a protest to my post, please think about the fact that the term "self-employed individual" is not synonymous with "independent contractor." Also, please focus upon the fact that I am only talking about plans that only cover independent contractors, not plans that cover both employees and independent contractors.

[GBurns]

That raises the question of What is the relationship between a non-employee Director and the company whose Board he/she sits on? Is the non-employee Director being self employed or being an IC to the company?

[Kirk Maldonado]

Both.

It gets confusing. For example, a partner is self-employed with respect to his or her income from the partnership, but is not an independent contractor with respect to the partnership.

[mbozek]

Outside directors are taxed as self employed persons subject to SECA tax, PLR 8819012, and receive 1099 income for tax purposes.