Collectively bargained vacation trust is an ERISA welfare plan

P/OPINION 75-01




                                                              3(1)


                        January 22, 1975



Dear           :

This is in response to your letter of January 8, 1975.
concerning a letter received from one of your constituents,
         , in regard to the Employee Retirement Income
Security Act of 1974 (ERISA).

I have reviewed the documents            submitted relating
to a collectively bargained vacation fund covering members
of his union         Local Union         . These documents
indicate that a joint employer-union trust fund has been
established to which employers pay nine percent of the
gross pay of employees working under the collective bargaining
agreement. The money transferred to the trust fund is
subject to all taxes and payroll deductions on the same
basis as take-home pay. The [employer] Association has
informed the Union that the vacation fund "as now operated"
would not comply with the terms of ERISA. The Association
indicated its intention to include vacation fund payments
in employees' weekly paychecks after December 31, 1974,
rather than sending them to the trust fund.

The vacation fund is an employee welfare benefit plan, as
defined in section 3(1) of ERISA. Under section 4(a),
the fund is covered by the provisions of Title I of ERISA.
This means that if the fund continues in operation, it must
comply with certain rules and requirements designed to protect
the interests of participants and beneficiaries. Reporting
and disclosure of basic facts about the plan and its operation
would have to be made, as provided in Part 1 of Title I. In
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P/OPINION 75-01


general, the fiduciary duties of Part 4 of Title I would
also apply to the plan, requiring those with control
of assets to act prudently and for the exclusive benefit
of participants and beneficiaries, and prohibiting certain
types of transactions which the Congress found were subject
to abuse.

From the facts submitted, I find no reason to believe that
the Vacation Fund could not be brought into compliance
with ERISA. There would doubtless be some costs involved
in doing so. The final decision on whether to continue,
drop or modify the fund is therefore not a legal one, but
a practical matter for the parties to the collective bargaining
agreement.

A copy of ERISA is enclosed. If I may be of any further
assistance, please do not hesitate to write or call my
office.

Sincerely,