ERISA

[MARYMM]

Are all Section 125 plans subject to ERISA?

We have a letter from the TPA regarding stale reimbursement checks and the way the returned funds are to be handled depends on whether or not ERISA applies to the plan.

[Guest b2kates]

Generally governmental plans are exempt from ERISA

[MARYMM]

Generally governmental plans are exempt from ERISA

Thanks. We are a not govt. plan.

This is a sticky situation where I have to question something OK'd by HR, Controller and CFO.

[MARYMM]

Generally governmental plans are exempt from ERISA

The letter from the TPA indicates that " in accordance with the plan document reimbursement checks are forfeited (or become stale) if they are not cashed."

The TPA has sent us a check for the amount of the stale checks. Since ERISA applies to the Plan , the letter states we can use the money to defray administrative expenses or "to pay benefits under the Plan"

AP has issued checks to the employees for these amounts even though that is not an option listed in the letter.

The letter also advises us to check with our counsel re application of state unclaimed property or escheat laws re these checks. Do those laws supercede the plan document ?

Thanks for any guidance you can offer to someone who now wishes she had never seen the AP checks

[GBurns]

As far as I know, in general you cannnot do something that is illegal or unlawful regardless of what your PD might say. That is like trying to use a contract to overide a law. I cannot deliberately set fire to your house even if you give me permission in writing.

I suggest that you get legal counsel.

I find it amusing that this TPA says that the funds are forfeited yet still says that state unclaimed property laws might apply. Forfeited to who? If forfeited to the Plan what is there left that would be unclaimed property?

What happens if the reason for the unclaimed checks is that the wrong address was used by the TPA?

What has now happened with the AP checks?

[Guest BenefitsLawyer]

Not to pick a nit, but Sec. 125 plans are not subject to ERISA--the benefit plans that are financed through the Sec. 125 plan might be subject to ERISA, depending on what kind of benefits. E.g., health FSA would be subject to ERISA (unless subject to another exception, such as governmental), DCAP would not.