PBGC Coverage

[Effen]

A self employed doctor owns a C-corp. that sells software. The doctor practices as a self-employed physician, but also takes some compensation from the software business.

The doctor maintains a db plan that covers his income from self employment and his income from the c-corp. All employees of both entities are covered. There are 4 other employees, all working for the C-corp. The C-corp. by itself is not a professional services employer.

Do you think they are exempt from PBGC coverage because the physician owns the C-corp? What if most of the income came from the physician practice?

"A professional service employer is any entity owned or controlled by professional individuals where both the entity and the professionals controlling it are engaged in the performance of the same professional service" Since the C-corp doesn't perform the same service, I think I'm sunk, but I wondered if anyone else had another opinion.

[David MacLennan]

I agree the plan is covered. Not because of the multiple-employer aspect, but because as you concluded a software related business is not a professional service under PBGC rules (maybe it can be, but generally I would think no). I think you can have 2 professional service employers sponsoring the same plan and it would be exempt if particpants numbered under 25 at all times. ERISA 4021©(3) mentions this possibility.

It it was a single business where the work was somehow related, then the aspect of how much was attributable to physician care would probably come into play.

[AndyH]

I have still not gotten over the one and only time (last year) I called PBGC about a coverage question-25 person rule for an architectural firm. The official (who's name is seared in my mind but I will omit) went on and on talking about himself in the third person, how these people call him and he tells them he could claim to be a professional this and that after a 2 hour Saturday seminar, just going on and on about how vast his experiences in this matter are. He must have used his name in the third person 6 or 7 times.

Then I got to my real question (I took it for granted that an architectural firm was exempt-he did not). I asked how the 25 person exemption limit was determined, i.e. , employees or participants, and as of when, and his response was that they use whatever is on the form (PBGC Form 1). "I'm not an actuary you know. I don't complete those forms so I'm not sure what goes on he form. I'm not an actuary".

Ah, feed the kitty with those premium increases.

[david rigby]

"Ah, feed the kitty with those premium increases."

Don't get me started.

http://benefitslink.com/boards/index.php?s...ndpost&p=104851