Voluntary stock purchase plan outside ERISA

P/OPINION 75-10


                                                          3(1)
                                                          3(2)✓


                          June 27, 1975


Dear              :

This is in reply to your letter and that of
requesting a determination as to whether a specimen non-
qualified employee stock purchase plan is either an “employee
pension benefit plan” or “pension plan” as defined in section
3(2) of the Employee Retirement Income Security Act of 1974
(ERISA) or an “employee welfare benefit plan” or a “welfare
plan” as defined in section 3(1) of that Act. You also raise
a number of questions in relation to Part 4 of Title I –
Fiduciary Responsibility.

The purpose of the Plan is to give employees wishing to do
so a means of purchasing stock in the Company through
payroll deductions, and to allow employers to contribute
to purchase of company stock for participants in the plan.
A participant may withdraw from the plan upon written notice
to the Company and the Agent (         Bank). Upon withdrawal,
the participant may receive the net proceeds from the sale
of the stock held in the participant’s stock account or
may receive certificates for such shares in his own name.
After withdrawal, a participant is ineligible to rejoin the
Plan for at least six months from the withdrawal date.

Section 3(1) defines an “employee welfare benefit plan” and
“welfare plan” as any plan, fund, or program which. . . was
established or is maintained for the purpose of providing for
its participants or their beneficiaries, through the purchase
of insurance or otherwise, (A) medical, surgical, or hospital
care or benefits, or benefits in the event of sickness,
accident, disability death or unemployment, or vacation
benefits, apprenticeship or other training programs, or day
care centers, scholarship funds, or prepaid legal services,
or (B) any benefit described in section 302(c) of the Labor
Management Relations Act, 1974 (other than pensions on
retirement or death, and insurance to provide such pensions).”
2

P/OPINION 75-10


Section 3(2) defines an “employee pension benefit plan”
and “pension plan” as “any plan, fund, or program which
was heretofore or is hereafter established or maintained
by an employer or by an employee organization, or by both,
to the extent that by its express terms or as a result of
surrounding circumstances such plan, fund, or program –

     (A) Provides retirement income to employees, or
     (B) results in a deferral of income by employees for
         periods extending to the termination of covered
         employment or beyond,. . .”

The specimen stock purchase plan does not fall within any
of the categories of welfare plans set forth in section
3(1) of ERISA, and consequently is not a welfare plan under
the Act. The specimen plan does not provide retirement
income or result in deferral of income, because a participant
may withdraw the contents of his individual account at any
time and therefore realizes the income upon its deposit
in the account. The plan agent (the bank) renders monthly
statements to each participant stating the current balance
of his individual account. In these circumstances, the
specimen plan is not a pension plan under section 3(2)
of ERISA. Accordingly, the plan is not covered by Title I
of the Act and would not have to comply with the fiduciary
rules or other requirements of that Title.

As requested, the copy of your April 29, 1975 letter
is returned herewith.

Sincerely,