Nonprofit school pension plan under ERISA

P/OPINION 75-44

                                                                   4(b)

                             July 21, 1975

Dear              :

This is in reply to your letter of January 14, 1975,
requesting information as to how the Employee Retirement
Income Security Act of 1974 (ERISA) affects the pension
plan of a not-for-profit school. Participants and
employer both contribute 5% of the employee's earnings.
Benefits are payable on termination of employment and are not
restricted to retirement. I will answer your questions
sequentially.

          1.   Congressional power under the Commerce
               Clause has been found to cover educational
               and scientific activity carried on by
               non-profit institutions. For example,
               although the National Labor Relations
               Board declined to adjudicate on policy
               grounds in Trustees of Columbia University,
               97 NLRB 424 (1951), it found that " . . . the
               activities of Columbia University affect
               commerce sufficiently to satisfy the
               requirements of the (LMRA) . . ." 97 NLRB at 425.

          2.   Section 4(b) of the ERISA, which lists employee
               benefit plans to which Title I does not apply,
               makes no provision for schools that are wholly
               tax exempt.

          3.   Any questions relating to coverage of a plan
               under Title IV of ERISA, Plan Termination
               Insurance, should be addressed to the
               Pension Benefit Guaranty Corporation.

          4.   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,
                      to the plan, the method of
                      calculating the benefits under the
2

P/OPINION 75-44

                  plan or the method of distributing
                  benefits from the plan". While the
                  pension plan you refer to does not
                  provide retirement income as specified
                  in (A), it does provide deferred
                  income distributed in a lump sum upon
                  termination of employment as specified
                  in (B). Therefore, the plan would not be
                  exempt from the disclosure and reporting
                  provisions.

          5.   At the present time simplified reporting is
               under consideration but no final determinations
               have been made.

          6.   I am enclosing a copy of the Plan Description
               Form EBS-1. The first two pages only plus
               the signature page, without supporting schedules,
               must be filed with the Department by August 31,
               1975. It has been proposed that the complete
               EBS-1 and the summary plan description be filed
               with the Department and the summary plan description
               furnished to plan participants and beneficiaries
               by May 30, 1976.

          7.   The first Annual Report is not due until 210 days
               after the end of the plan year beginning after
               December 30, 1974. The Welfare and Pension Plans
               Disclosure Act (WPPDA) Form D-2 remains in effect
               for plans subject to the WPPDA for plan years
               ending through and including December 30, 1975.

Sincerely,