Governmental status of county public school benefit plans

P/OPINION 76-19



                                                3(32) ✓
                                                4(b)(l)




                    March 10, 1976
Dear          :

This is in response to your letter, dated December 2, 1975,
requesting a determination as to whether the above-described
plan is covered under the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). We regret the delay
in answering; however, the demands on staff time because of
the large volume of inquiries generated by the ERISA and the
development and issuance of necessary regulations and
interpretive bulletins have precluded an earlier response.

According to the information furnished by you in your letter
as well as during a telephone conversation on January 7, 1976,
with         of my staff, the subject plans were established
by the           County Public Schools. Benefits are provided
under insurance contracts, and both the employer and the
participants contribute to the cost of benefits. Both
plans are administered by the school system.

Section 4(b) of Title I of the ERISA exempts governmental
plans from coverage thereunder. Section 3(32) 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.

It is concluded that the plans are established and maintained
for its employees by the         County Public Schools, an
agency or instrumentality of a political subdivision of the
State of        . Accordingly, they are "governmental plans"
as defined in section 3(32) of the ERISA, and they are
exempt from coverage under Title I pursuant to the provisions
of section 4(b)(l).
P/OPINION 76-19

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 governmental 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 rule of section
40l(a)(4), and the vesting provisions of section 40l(a)(7),
as in effect prior to the enactment of ERISA. In addition,
qualified governmental plans must satisfy the requirements
of section 415 of the Code relating to contributions or
benefits.

Sincerely,