Profit sharing plan coverage and top-hat exception

P/OPINION 76-118


                                                     3(2)
                                                     4(a)
                                                     201(2)
                                                     30l(a)(8)
                                                     40l(a)(1)
                                                     403(a)


                      November 15, 1976


Dear            :

Thank you for your letter dated May 27, 1976, requesting
reconsideration of coverage of the (named) Profit Sharing
Plan (Plan) under the Employee Retirement Income Security
Act of 1974 (ERISA). The Plan was adopted by 14 (named)
corporations. You were advised that the Plan is covered
under the ERISA.

According to Article 3 of the Amendments to the Plan,
dated April 25, 1972, supervisory personnel, executive
staff personnel, department heads, and employees with
three years' service to the corporation or a sister
corporation are eligible to be participants in the Plan.
Also, in Article 4 of the Amendments, there is listed a
percentage of gross profit to be allocated to
nonsupervisory qualifying employees and office staff.
Article 7 of the Plan (effective April 1, 1968) provides
for the distribution of a participant's account upon
retirement, death or disability.

Section 3(2) of the ERISA defines an employee pension
benefit 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, regardless of the method
             of calculating the contributions made to the
             plan, the method of calculating the benefits
             under the plan or the method of distributing
             benefits from the plan".
P/OPINION 76-118



Based on the above, it is concluded that the Plan is an
employee pension benefit plan within the meaning of
section 3(2) of the ERISA and is covered under Title I
pursuant to section 4(a). The Plan does not qualify for
the exemptions provided in section 201(2), 30l(a)(3) or
40l(a)(l) as an unfunded plan maintained by an employer
primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees because the Plan is open to all
employees with three years of service to the corporation
or a sister corporation. The Plan is subject to the
Reporting and Disclosure, Participation, Vesting, and
Fiduciary requirements of Title I but not to the Minimum
Funding Standard requirements. Section 30l(a)(8) exempts
an individual account plan from the Minimum Funding
Standard requirements. However, it will be required that
a trust be established pursuant to the provisions of
section 403(a) to hold the plan assets.

Sincerely,