PBGC Coverage

[Dougsbpc]

We will probably get a coverage determination from the PBGC, but has anyone had experience with something like this?

Architect with 5 EE's has had a DB plan for 5 years. Plan has not been covered because of professional service employer exemption. Now acquires 80% of a storage facility business and has a controlled group. They have no problem covering all 15 employees from the storage business so the storage business becomes a participating employer in the plan. Now most income is derived from the storage business.

ERISA 4021©(2) says a professional service employer is any entity owned or controlled by professional individuals where BOTH THE ENTITY AND THE PROFESSIONAL INDIVIDUAL OWNING AND CONTROLLING IT ARE ENGAGED IN THE SAME PROFESSIONAL SERVICE.

Here we have a professional controlling a business that happens to be a participating employer in the plan, but he and the storage business are not engaged in the same professional service.

We are thinking the plan must now be covered. Any agreement/disagreement?

Thanks much.

[John Feldt ERPA CPC QPA]

I would agree. There is no requirement that an advanced degree must be obtained to run a typical storage facility and the nature of running a storage facility is not likely intellectual in nature.