Reciprocity

[Miner88]

I'm new to the Taft-Hartley plan world, so any help would be appreciated!

Can a welfare fund accept employer contributions for both welfare and profit sharing benefits for "away" employees and then reciprocate the money back to the "home" locals for allocation between that local's welfare and profit sharing funds? For example, assume under the "away" contract that an employer must contribute $2 for profit sharing and $1 for welfare benefits. Can the welfare fund alone hold the $3 and then cut a check to the home local for $3 and have them allocate the money to their welfare and profit sharing plans?

[Ron Snyder]

Can't they come up with a more direct method? For example, have a payroll company do separate remittances?

What is the nature of the payment from the WBP to the PSP? And on who's behalf is the WBP trustee acting?

Does the WBP document permit an escrowing service?

There are no "rollovers" from a WBP to a PSP. And the WBP contains language barring distributions that are not for welfare benefits. This is not a direct transfer to another WBP.

This sounds like another group looking to get themselves into unnecessary trouble.

[Miner88]

Thanks for your reply Vebaguru. Apparently, I've been told, unions use welfare funds as "conduit trusts" all the time when they have union members from other locals working in the jurisdiction of the welfare fund. The trustees have no problem with the welfare fund holding the employer contributions for both the welfare and profit-sharing plans in their fund for later transfer to the union member's "Home" local welfare fund and profit sharing fund. Normally, the welfare fund would cut separate checks to the home local's welfare fund and profit sharing funds. The question that has come us is whether the welfare fund can just cut one check (including both welfare and profit sharing contributions) to send to the home local and have the home local split the one check into its welfare and profit sharing funds.

I was having trouble with the fact that the welfare fund was holding profit sharing contributions. But, if you assume that is OK (which is what I'm being told is done all the time), I guess it doesn't matter whether the welfare fund cuts separate checks to the home local funds or just one check into a "home" local conduit trust and have that trust distribute the funds to the "home" local separate funds.

[Ron Snyder]

The concept of "conduit trust" is not alarming. But I suspect that no "conduit" language is included in the trust that is being used as a conduit. You suggest that the welfare fund trustees are comfortable commingling trust funds. I wonder if their ERISA attorneys are equally comfortable without enabling language in the trust documents.