Lawyer Monthly Magazine - July 2019 Edition

statutes also must be taken into account in establishing or maintaining such plans, and the Code is a significant one of those other statutes, especially with respect to most employee pension benefit plans. Thus, for Code purposes, the employer is any employer (under common law principles) of employees covered by the plan and may be any form of entity, including a corporation, S corporation, partnership, sole proprietorship, limited liability company or partnership, tax-exempt organization or governmental entity. Here, sole proprietors and partners are treated as “employees”. Generally, if another entity is related to the employer in what is known as an affiliated service group or controlled group of businesses, the group is considered one “employer” for purposes of the plan. For ERISA purposes, however, the “employer” is any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan, and sole proprietors and partners are not treated as employees. What is an employee pension benefit plan under ERISA? Under ERISA, a plan provides pension benefits if it provides retirement income or results in a deferral of income by employees for periods extending to termination of covered employment and beyond. This would include all types of “qualified plans” under the Code, e.g., profit sharing plans (including 401(k) plans), money purchase plans, defined benefit plans, stock bonus plans, ESOPs. It also includes nonqualified plans that meet this definition, such as SERPs and other executive compensation arrangements and Code section 403(b) plans (as long as there is enough employer involvement to be considered “established or maintained” by the employer). EMPLOYMENT LAW Since ERISA’s passage, this category of plans has been the main focus of employers and practitioners alike, because the rules applying to them under ERISA and the Code have been more extensive, both in terms of substance (affecting eligibility, vesting, distributions, fiduciary compliance, etc.) and disclosure and reporting (plan documentation, Form 5500 filings, summary plan descriptions, etc.). What is an employee welfare benefit plan under ERISA? Under ERISA, an employee benefit plan provides “welfare” benefits to employees, which encompasses a finite list of benefits. It includes medical, surgical, or hospital care benefits. It also includes benefits in the event of sickness, accident, disability, death or unemployment, vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, and prepaid legal services. In the past, ERISA itself required primarily only reporting and disclosure rules for this category of plans, rather than substantive rules, but other statutes have more recently added more and more substantive rules here as well. What plans are covered by ERISA? The Employee Retirement Income Security Act of 1974, as amended (ERISA), technically covers any “employee benefit plan”, so long as it is established or maintained by an “employer” or by an employee organization, or by both, and covers at least one “employee”. An employee benefit plan, in turn, includes two categories of plans: “employee pension benefit plan” and “employee welfare benefit plan”. What employers are subject to ERISA? We need to be careful about distinguishing the term “employer” for ERISA purposes and for qualified plan purposes (under section 401(a) of the Internal Revenue Code of 1986, as amendment (Code)), because the definitions differ slightly. As is true for many plans covered by ERISA, other federal Belowwe speak to John Skapars who tells us all you need to know about the Employee Retirement Income Security Act (ERISA). With his law firm specializing in ERISA, this article is a must read! 66 Professional Excellence www. lawyer-monthly .com JUL 2019