Split dollar life insurance and stock purchase plans

P/OPINION   77-23

                                              3(1)
                                              3(2)
                                              4(a)
                                              105(a)

                    February 14, 1977


Dear          :
This is in reply to your letter to        of our
Area Office. You raise three problems: l. coverage of
your Split Dollar Plan under the Employee Retirement
Income Security Act of 1974 (ERISA), 2. providing a
statement of accrued benefits to participants, if
requested, and 3. coverage of your Stock Purchase Plan.
I am sorry we could not reply sooner.

l. Coverage of the Split Dollar Plan --
This Plan provides life insurance protection to
participants with the employer and the participant
splitting the cost of premiums. The employer is the owner
of the policy and is eventually reimbursed for his share
of the premiums. Section 3(l) of the ERISA defines an
employee welfare 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 such plan,
fund, or program was established or is maintained for the
purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or
otherwise, (A) medical, surgical, or hospital care or
benefits, or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care
centers, scholarship funds, or prepaid legal services, or
(B) any benefit described in section 320(c) of the Labor
Management Relations Act, 1947 (other than pensions on
retirement or death, and insurance to provide such
pensions).”

                           - 2 -


P/OPINION 77-23

The Split Dollar Plan was established and is maintained by
the employer for the purpose of providing death benefits
to participants and their beneficiaries through the
purchase of insurance. The Plan is an employee welfare
benefit plan within the meaning of section 3(1) and is
covered under section 4(a). Since it is a welfare plan,
it is subject to the reporting, disclosure and fiduciary
requirements of Title I.

2.   Statement of accrued benefits to participants --

You are concerned that since your plan is a Social
Security offset plan, you cannot provide participants with
a true evaluation of their accrued benefits. This, of
course, would be true of all pension plans that provide
for a Social Security offset. A statement of the accrued
benefits with a clear statement that such accrued
benefits will be reduced by the amount of Social Security
benefits received upon retirement or in effect upon
separation from service prior to retirement, whichever is
lower (but will not be reduced further if Social Security
benefits are increased following retirement), will satisfy
the requirements of section 105(a) of the ERISA.

3.   Coverage of your Stock Purchase Plan --

Employees may authorize payroll deductions up to 5% of
salary for the purchase of           stock. At the end of
the plan year there is a matching 10% employer contribu-
tion and all stock is distributed. Section 3(2) 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 termina-
tion 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. "

                          - 3 -

P/OPINION    77-23

Since the plan does not provide retirement income to
employees nor result in a deferral of income for periods
extending to the termination of employment or beyond, it
is not an employee pension benefit plan within the meaning
of section 3(2). It is not an employee welfare benefit
plan since it does not provide any of the benefits
enumerated in section 3(1). The plan, therefore, is not
covered under Title I of the ERISA since it is neither an
employee welfare benefit plan nor an employee pension
benefit plan.

Sincerely,