Employer-paid IRA fees and ERISA plan status

                    U.S DEPARTMENT OF LABOR
                   Pension and Welfare Benefit Programs
                         Washington, D.C. 20216




                                                     OPINION 77-29 A

       MAR 16 1977                                   3(2)



Mr. Edwin P. Morrow
President, Financial Planning
  Consultants, Inc.
[Recipient address omitted]

Dear Mr. Morrow:

This is in reply to your letter concerning the Employee Retire-
ment Income Security Act of 1974 (ERISA). We regret that the
volume of correspondence has resulted in a delay in responding.
You state that your firm will be marketing a group Individual
Retirement Annuity (IRA) designed especially for the technical
services industry. Many of the members of the National Techni-
cal Service Association, a trade association of corporate
employers, wish to assist their employees participating in the
IRA plan by defraying the monthly administrative charge of $1.00
per employee. This charge is not a part of the IRA plan assets
nor is it part of the “deductible and qualified” employee contri-
bution. You request a determination that employers can contri-
bute a nominal administrative fee on behalf of employees who
wish to obtain an IRA and still remain exempt from the provisions
of Title I of ERISA.

The Department of Labor has adopted an advisory opinion proce-
dure (ERISA Procedure 76-1, copy enclosed) which describes the
general procedures for issuing information letters and advisory
opinions under ERISA. Pursuant to ERISA Procedure 76-1, this
letter is to have the effect of an advisory opinion.

Section 2510.3-2(d) of regulations issued by the Department on
August 15, 1975 (copy enclosed), to which you refer, indicates
that for purposes of Title I of ERISA, the term “pension plan”
shall not include IRA’s meeting the conditions specified therein.
One of these conditions is that the employer’s involvement in
the program must be limited to permitting the sponsor to publicize
the program and to remitting employee contributions. The employer
is not permitted to endorse the program.

Mr. Edwin P. Morrow
                                             OPINION 77-29 A



It has been determined that the payment of an administrative fee
by an employer on behalf of its employees would constitute the
endorsement of an IRA program. Therefore, a program which called
for such an employer payment would not qualify under section
2510.3-2(d) and would be deemed a pension plan within the meaning
of ERISA.

Section 4(a) of ERISA indicates that pension plans are subject
to the provisions of Title I. It should be noted, however, that
sections 201(6) and 301(a)(7) exempt IRA programs from coverage
under Parts 2 and 3 of Title I which contain the participation,
vesting and funding provisions. Therefore, such programs are
subject only to Parts 1, 4, and 5 of Title I of ERISA which con-
tain the reporting and disclosure, fiduciary responsibility, and
enforcement provisions respectively.

Sincerely,



Fred W. Stuckwisch
Director
Office of Regulatory Standards
  and Exceptions


Enclosures