Impartial chair bonding in multiemployer plans

P/OPINION 75-119


                                                                412

                          May 21, 1975

Dear           :

This is in response to your inquiry of January 17, 1975,
regarding bonding of fiduciaries under section 412 of the
Employee Retirement Income Security Act of 1974 (ERISA).

Your question involves the necessity of bonding an Impartial
Chairman because of a typical provision in collectively
bargained welfare and pension plans of the transit industry
in                 . The provision is as follows:

        In the event the Trustee cannot interpret
        or construe this instrument or decide any
        matter, or resolve any dispute within their
        jurisdiction because of a tie vote, then, on
        the written request of any two (2) Trustees, the
        matter or dispute shall be submitted for decision
        to a special meeting of the Trustees to be held
        at a time and place fixed, upon five days' notice,
        by the Impartial Chairman of the Local Transit
        Industry in             . Such Impartial Chairman
        shall preside at such special meeting and shall, for
        the purpose of deciding the matter or dispute, be
        vested with the full voting powers of a Trustee.

A temporary bonding regulation was published in the Federal
Register of January 10, 1975, which incorporated by reference
most of the bonding regulations issued under the Welfare and
Pension Plans Disclosure Act and makes them applicable to
plan officials under the ERISA. The effect of this temporary
regulation is to allow for the continuation of existing
bonding practices, while permanent bonding regulations are
being considered. For the purpose of the temporary bonding
regulations only those fiduciaries who handle funds or other
property of a plan must be bonded.

While we do not have the terms of a particular trust to cite,
it is reasonable to assume that the trustees are "handling"
funds or other property of a plan in the performance of their
duties as trustees. Based on this assumption, an Impartial
Chairman being vested with the full voting powers of a trustee,
would likewise be "handling" funds or other property of a plan
when acting as Impartial Chairman and is required to be bonded
to the same extent as the regular trustees.
2


P/OPINION 75-119


It is noted that you state some of the employers are
Public Authorities. You may want to consider the
applicability of section 4(b)(1) of the ERISA which is
as follows:

    The provisions of this title shall not apply to any
    employee benefit plan if such plan is a governmental
    plan (as defined in section 3(32).

Sincerely,