Trustee Compensation

[mal]

Given the state of our defined benefit plans, a lack of work in the region and skyrocketing health care costs, several groups are having difficulty finding management representatives willing to sit on a jointly trusteed board. One solution that has been proposed is to offer trustees a small stipend (>$500 per month) for their service to the trust. This would not be payable to anyone already receiving full-time pay from the union, an employer or an employer association. A trust amendment would be adopted by the settlors.

For example, we have a contractor representative who recently retired and wanted to resign. Can the Board offer him a small monthly stipend to remain involved?

How about a union trustee who is unemployed or retired?

What about an attorney or accountant who would be willing to serve for the union or association in exchange for the small stipend and paid conference expenses?

The relatively small cost of retaining or attracting qualified trustees would be well worth the money, but I cannot seem to find any guidance on the issue. The regs seem to speak only to "lost wage" reimbursement.

[Peter Gulia]

mal, as your post suggests, one of the simplest ways to get a trustee who isn't constrained because he or she "is already receiving full-time pay from" the relevant employers or unions [29 C.F.R. 2550.408c-2(b)(2)] is to select a person who has no relationship to any of the relevant employers or unions. Unless a governing document imposes more conditions than the statute requires, nothing in 29 U.S.C. 186©(5) precludes the employers from using their power to elect or appoint a "representative" to fill such a slot with a person who has no relationship to the employers or the unions.

Keep in mind that the economic circumstances you describe make a trustee's job a demanding one that requires real work, time, attention, and personal responsibility. A real trustee would want real compensation for that service.

Providing compensation to "outside" trustees usually is within a pension plan's proper purposes, which include using plan assets to pay reasonable expenses of administering the plan.