Plan Eligible on USERRA-protected Active Duty

[J Simmons]

If a plan has any eligible employees away on USERRA-protected active duty, can the plan be terminated?

If so, how does the employer honor the obligation to make USERRA-required contributions upon the employee returning from that active duty after the plan's been terminated?

[Peter Gulia]

While of course this isn’t advice to anyone, here’s one idea.

After a plan sponsor has made its settlor decisions to amend and end a plan, the plan’s administrator might (even if not so required by statute) act in its discretion to preserve an employer’s obligation (if any), and a reemployed person’s opportunity, for USERRA make-up contributions.

An administrator might do this by getting an annuity contract with an insurance company. The contract would include the insurer’s promises to:

• accept contributions that are required or permitted under USERRA,

• provide a broad range of investment options,

• not pay a death distribution other than to a surviving spouse except under a qualified election,

• pay a distribution no later than the applicable IRC § 401(a)(9) required beginning date.

Perhaps such a plan administrator could suggest to an insurance company the public-relations value of this availability, and persuade the insurer to bind the contract for an initial premium of $1.00.

The plan administrator would distribute the annuity contract to the individual in military service.

If reemployed, he or she may use his or her rights under USERRA and the annuity contract.

[J Simmons]

Thanks, Peter. I appreciate the thought and creativity that went into this suggestion. From an initial read-through, it is certainly something to analyze and work at developing further. Again, thank you.