Association-endorsed IRAs under ERISA Title I

P/OPINION 76-08


                                                         3(2) ✓
                                                        3(5)
                       January 26, 1976

Dear          :

This is in reply to your letter dated June 4, 1975,
requesting a ruling on the applicability of Title I,
Parts 1 and 4, of the Employee Retirement Income Security
Act of 1974 {ERISA) to the Individual Retirement Accounts
offered by the          Corporation to the
Association {Association) for the executives and employees
of its employer members. The Association will review
          Corporation's proposals and, if their reaction
is favorable, recommend them to their members for their
employees. The Association will receive a service fee
in connection with its introduction activity and be indemnified
against any loss arising from the presentation. The Association
plans no continuing involvement after the introduction.
The individual employers, if agreeable, will permit a
representative [a wholly owned subsidiary of the corporation]
to make a presentation to their employees and make payroll
deductions to be forwarded to           . The employers
will have no other involvement and may terminate the convenience
of payroll deduction at any time after 30 days' notice.

Section 3(5) of Title I defines an employer as "any person
acting directly as an employer, or indirectly in the
interest of an employer, in relation to an employee benefit
plan; and includes a group or association of employers
acting for an employer in such capacity". The Association,
therefore, acting for the employers, is an employer within
the meaning of section 3(5).
Section 2510.3-2 (d) of regulations issued August 15, 1975
(copy enclosed), states that the terms "employee pension
benefit plan" and "pension plan" shall not include an
individual retirement account provided that (1) no contri-
butions are made by the employer; (2) participation is
completely voluntary for employees; (3) the sole involvement
of the employer is without endorsement to permit the sponsor
to publicize the program to employees, to collect contributions
through payroll deductions and to remit them to the sponsor;
and (4) the employer receives no consideration in the form
of cash or otherwise, other than for services actually rendered
in connection with payroll deductions. Since the Association
P/OPINION 76-08

plans to review [the subsidiary's] proposals and recommend
them to employer members and since the Association will
receive payment other than for services actually rendered
in connection with payroll deductions, the individual
retirement accounts do not fall within the exclusion
provided by this section. Therefore, the program
constitutes employer-sponsored individual retirement
accounts and will be subject to the requirements under
Title I, Parts 1 and 4, of the ERISA.

Sincerely,