Successor trustee compensation and transition relief

P/OPINION 75-145

                                                       408✓
                                                       414

                        October 14, 1975

Dear           :

Your letter of February 6, 1975, addressed to Mr.
          of the          Regional Office, has been referred
to this office for reply. In your letter you requested an
interpretation under ERISA IB 75-1 (December 31, 1974) as
to whether successor trustees of a plan who are so designated
after July 1, 1974, may receive compensation for service
rendered as trustees to the plan.

Section 408(c)(2) of the Employee Retirement Income Security
Act of 1974 (the Act) provides, as here relevant, that
fiduciaries with respect to employee benefit plans are not
prohibited from receiving reasonable compensation for
services rendered to a plan, provided that they are not
already receiving full-time pay from an employer, or
association of employers, whose employees are participants
in the plan, or from an employee organization whose members
are participants in the plan. This provision expressly
does not preclude reimbursement for expenses properly and
actually incurred by any plan fiduciary.

As indicated in ERISA IB 75-1, a person serving as a
fiduciary for a plan who already receives such full-time
compensation as is referred to above, may continue to
receive reasonable compensation until June 30, 1977, for
services rendered to the plan, notwithstanding the limi-
tations of section 408(c)(2), provided that the conditions
of section 414(c)(4) of the Act are met and further provided
that such person was a fiduciary prior to July 1, 1974. The
provisions of section 414(c)(4) are, therefore, clearly
limited in the situation described in your letter to successor
trustees who were so designated prior to July 1, 1974. Conse-
quently, a successor trustee so designated after June 30, 1974
is prohibited from receiving compensation as a trustee if he
or she is already receiving full-time pay from an employer,
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P/OPINION 75-145

or an association of employers, whose employees are
participants in the plan, or from an employee organization
whose members are participants in the plan. Such a trustee
may, of course, receive reimbursement for expenses properly
and actually incurred.

Since the question you have raised also related to provisions
of section 4975 of the Internal Revenue Code of 1954 (the Code)
and section 2003(c)(2)(D) of the Act which are similar to
those provisions of the Act referred to above, and to IRS
TIR-1329 which is similar to ERISA IB 75-1, we have conferred
with representatives of the Internal Revenue Service regarding
this matter and they concur in the views set forth herein.

In addition, on April 28, 1975, notice was published in
the Federal Register (40 FR 18471) that the Labor Department
and the Internal Revenue Service have adopted a procedure
(ERISA Proc 75-1; Proc 75-26) for the submission of
applications under section 408(a) of the Act and section
4975(c)(2) of the Code for exemptions from the prohibited
transactions provisions of section 406 of the Act and section
4975(a), (b) and (c)(1) advising your clients with respect
to this matter.

Sincerely,