State school retirement plan reporting exemption

P/OPINION   76-131

                                                     3(32)

                     December 20, 1976



 Dear           :

 Thank you for your letter dated August 29, 1975,
 requesting a determination that the (named) Board of
 Education is not required to complete the Employee Welfare
 and Pension Benefit Plan Annual Report Form D-2 or the
 Plan Description Form EBS-1. I am sorry we could not
 reply sooner. You request this on the basis that any plan
 of the (named) Schools is a government plan.

 According to your letter and your conversation with a
 member of my staff, the (named) schools are agencies of
 (State). The Schools and their employees contribute to
 the State Retirement System, which is administered by a
 Board of Trustees under the complete control of the
 Legislature.

 Section 4(b)(1) of the Welfare and Pension Plans
 Disclosure Act (WPPDA) excludes from coverage under that
 Act any plan administered by the government of a State or
 by an Agency or instrumentality of a State. Section
 4(b)(1) of the Employee Retirement Income Security Act of
 1974 (ERISA) excludes governmental plans from coverage
 under title I of the ERISA. Section 3(32) of the ERISA
 defines the term "governmental plan", in part, to mean a
 plan established or maintained for its employees by the
 Government of the United States, by the government of any
 State or political subdivision thereof, or by any agency
 or instrumentality of any of the foregoing.

 Based on the foregoing, it is concluded that the plan is
 established, maintained and administered for its employees
 by agencies or incrementalities of (State). Accordingly,
 it is concluded that the plan is a governmental plan and
                           - 2 -


P/OPINION 76-131

exempt from coverage under the WPPDA and title I of the
ERISA pursuant to the provisions of section 4(b)(l) of
each Act. Neither the D-2 nor the EBS-1 need be filed
with the Department of Labor.

However, even though a governmental plan is exempt from
coverage under title I, many of the tax provisions of
title II (which are administered by the Internal Revenue
Service) may apply. For example, governmental plans may
qualify under section 40l(a) of the Internal Revenue Code
in order to attain special tax treatment for employees who
participate under such types of plans. Although a govern-
mental plan does not have to meet the alternative minimum
participation, vesting, and funding requirements added to
the Code by title II, in order to attain qualified status,
it must satisfy the coverage requirements of section
40l(a)(3) of the Code, the nondiscrimination rules of
section 40l(a)(4), and the vesting provisions of section
40l(a)(7), as in effect prior to the enactment of the
ERISA. In addition, qualified governmental plans must
satisfy the requirements of section 415 of the Code
relating to contributions or benefits.

Sincerely,