If they meet certain criteria, multiemployer benefit plans can share certain expenses, facilities, and administrative staff without violating prohibited transaction rules under ERISA. Below, courtesy of Jules Levine, Esq. is a sample agreement plans can use to formally document their agreement.
Continuing Series: Exploring the IRS Examination Guide for Multiemployer Benefit Plans
Expect these questions to be among those your next IRS auditor asks. Following the questions are comments and suggestions.
"Has the plan engaged in office leases or sales, or sharing of administrative services, with the sponsoring union?"
When a fund shares office space, personnel, equipment, and other expenses with other funds and/or a labor union, it is common for certain expenses to be allocated among the funds and union. ERISA §408(b)(2) and PT Exemptions 76-1 and 77-10 allow these transactions to avoid prohibited transaction penalties if certain criteria are met, including:
a. the costs of securing shared office space, services, and goods are assessed and paid on a pro rata basis with respect to each party's use of the space, services and goods, and
b. the plan maintains appropriate records.
The '96 Tax Act clarified the status of the Service Awards program, determining that these were not deferred comp programs under section 457.
This was an important determination, because under 457, amounts paid into a plan can become taxable to the participant when the "risk of forfeiture" is gone. For most volunteer awards programs, this is long before retirement, so a volunteer might have been taxed on money he would not receive for 20 or 30 years. Under the '96 Act, amounts received from an awards program are taxable only when received. Also, the amounts received are not considered wages, for social security purposes.
Guest article by James Steinburg, ERISA attorney
"the application of the subrogation principle is different if the benefits provider is an insurance carrier and the Welfare Benefit Plan proceeds fail to differentiate which amounts are for medical expenses, pain and suffering, and loss of past and future earning"
James M. Steinberg, ERISA attorney, reviews IRS levy powers, and how and when they can apply to an ERISA plan.
If you are a plan administrator, read this and consult with your plan's attorney when you receive a notice of levy.
by Herbert R. Ricklin (reprinted w/permission)
Is it fair and responsible to place a pension or health fund controlling tens or even hundreds of millions of dollars under anything other than the full attention and direction of qualified trustees?
The Taft-Hartley Act and the Employee Retirement Income Security Act (ERISA) both require that the decisions made and actions taken by trustees be solely in the interest of the fund's participants and beneficiaries. The law's intent is clear, and yet, in many cases, the follow-through is impractical.
LAWYER's BRIEF by Alvin D. Lurie
The current buzz numbers in the pension universe are 98-22, which designate the new Revenue Procedure issued by the Internal Revenue Service to consolidate the so-called compliance resolution procedures into a single unified document. If you are a pension cognoscenti -- and who would admit to being anything less -- you know that several years ago the service initiated a process whereby it could drive noncompliant pension and profit sharing plans into compliance without pronouncing the dread sentence of "disqualification", by offering some lesser sanctions in return for actions taken by the plan sponsor to rectify the disqualifying deficiencies (i.e., actions or inactions that cause the plan to fail to meet the standards for a fully qualified plan).
By James M. Steinberg, Esq
A practical aspect of employee benefits and matrimonial law involves the attorneys representing an ERISA Qualified Defined Contribution Plan, the plan’s participant and an alternate payee in the preparation and submission of domestic relations order ("DRO") to the plan’s administrator for the purpose of distributing a portion of the participant’s account to the alternate payee. This article attempts to clarify several of the issues presented to attorneys who prepare and present DROs to ERISA plan administrators.
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