Schedule C and a "party-in-interest"

[Lori Friedman]

I'm having an interesting discussion with an ERISA attorney, and anyone's thoughts or input would be appreciated.

The attorney believes that Schedule C, Line 2, Box (b) can never be answered "None". She argues that the ERISA definition of a "party-in-interest" includes a "person providing services to the plan". If an individual or company is being listed as a Schedule C service provider, the entity is, by definition, a "person known to be a party in interest".

This is the first time that I've ever encountered this interpretation. I've worked with countless Schedule C filers that, on advice of and review by legal counsel, answered "None" if the service provider isn't a plan fiduciary.

What's your take on this?

[Belgarath]

Lori - I'm a little confused as to the reference. What Schedule C are you talking about? I was assuming the 5500 Schedule C, but Line 2 part (b) is simply asking for an employer ID number. Can you clarify? Thanks.

[Lori Friedman]

My careless typo. Sorry about that.

I meant to say: Form 5500, Schedule C, Line 2(d) -- "Relationship to employer, employee organization, or person known to be a party-in-interest".

[WDIK]

I interpret 2(d) as wanting to know what relationship the entity/individual in 2(a) has with the employer or the employer organization or a party-in-interest, not whether or not the entity/individual in 2(a) is a party-in-interest.

Is the attorney suggesting that "self" be entered in item 2(d)?

[Lori Friedman]

I've been researching this one for about an hour, and I believe that WDIK's correct.

Schedule C, Line 2(d) isn't asking whether the named service provider is a party-in-interest. Instead, the line discloses any relationship between the service provider and the (1) plan sponsor or (2) another party-in-interest.