Union and welfare plans jointly purchasing forms

P/OPINION 77-31

                                                406

                    March 21, 1977



Dear          :

This is in response to your submission dated July 11,
1975, in which you requested clarification as to whether
the purchase of application and information cards on a
shared basis by three welfare plans and (named) Union
Local # (the Union) constitutes a transaction prohibited
under section 406 of the Employee Retirement Income
Security Act of 1974 (the Act) where the Union is a party
in interest, within the meaning of section 3(14) of the
Act, with respect to such plans. The three plans are the
Health and Welfare Fund, the Health and Welfare Fund A,
and the Health and Welfare Non-Food Fund (the Plans).

In your submission you stated that the cards are a
composite form including application for membership in the
Union and authorization of the Union as bargaining agent,
as well as employee information needed and used by the
Plans; that the new cards would cost the Plans approxi-
mately one cent less per card over the previous practice
of using separate forms for the Union and the Plans; and
that the use of joint cards will result in savings of cost
and time to the Plan in computerizing the information on
the cards. According to the submission, one-half of the
cost of the cards will be borne by the Union, while the
other half will be borne by the Plans on a prorated
basis.

On the basis of the representations set forth in your
submission, we have concluded that the joint purchasing of
the application and information cards by the Plans and the
Union, where one-half of the cost of the cards is borne by
the Union and the other half is borne by the Plans on a
prorated basis bearing a reasonable relationship to each
party's use, does not constitute a prohibited transaction
under section 406(a) of the Act.

                      - 2 -


P/OPINION    77-31

No opinion is expressed herein as to whether the joint
purchasing of the application and information cards by the
Plans and the Union on the above basis complies with any
provisions of Title I of the Act except section 406(a) or
with the provisions of any other law.

In your July 11, 1975 submission, you requested that in
the event that it should be concluded that the joint
purchasing of the application cards by the Plans and the
Union, where the cost of the cards is allocated one-half
to the Union and one-half to the Plans on a pro-rated
basis, constitutes a prohibited transaction under section
406 of the Act, an exemption under section 408(a) of the
Act be granted for such joint purchasing. In view of our
conclusion that such joint purchasing does not constitute
a prohibited transaction under section 406(a), however,
and the lack of any information in your letter relating to
any perceived prohibited transaction under section 406(b),
your application will be treated as closed and no further
action will be taken in connection with that application.

Sincerely,

Harold S. Simonoff, Esq.
Tomer, Parks, Seliger, Simonoff
  & Adourian
[Recipient address omitted]

   Re:   Exemption Application No. L-238

Dear Mr. Simonoff:

This is in response to your submission dated July 11, 1975, in
which you requested clarification as to whether the purchase
of application and information cards on a shared basis by
three welfare plans and Retail Store Employees Union Local
1262 (the Union) constitutes a transaction prohibited under
section 406 of the Employee Retirement Income Security Act
of 1974 (the Act) where the Union is a party in interest,
within the meaning of section 3(14) of the Act, with respect
to such plans. The three plans are the Retail Store Employees
Union Local 1262 and Subscribing Employers Health and Welfare
Fund, the Retail Store Employees Union Local 1262 and Sub-
scribing Supermarket Employers Health and Welfare Fund A, and
the Retail Store Employees Union Local 1262 and Subscribing
Employers Health and Welfare Non-Food Fund (the Plans).

In your submission you stated that the cards are a composite
form including application for membership in the Union and
authorization of the Union as bargaining agent, as well as
employee information needed and used by the Plans; that the
new cards would cost the Plans approximately one cent less per
card over the previous practice of suing separate forms for
the Union and the Plans; and that the use of joint cards will
result in savings of cost and time to the Plan in computeriz-
ing the information on the cards. According to the submission,
one-half of the cost of the cards will be borne by the Union,
while the other half will be borne by the Plans on a prorated
basis.

                           - 2 -

On the basis of the representations set forth in your submission,
we have concluded that the joint purchasing of the application
and information cards by the Plans and the Union, where one-half
of the cost of the cards is borne by the Union and the other
half is borne by the Plans on a prorated basis bearing a reason-
able relationship to each party's use does not constitute a
prohibited transaction under section 406(a) of the Act.

No opinion is expressed herein as to whether the joint purchas-
ing of the application and information cards by the Plans and
the Union on the above basis complies with any provisions of
Title I of the Act except section 406(a) or with the provisions
of any other law.

In your July 11, 1975 submission, you requested that in the
event that it should be concluded that the joint purchasing of
the application cards by the Plans and the Union, where the
cost of the cards is allocated one-half to the Union and one-
half to the Plans on a pro-rated basis, constitutes a prohibi-
ted transaction under section 406 of the Act, an exemption
under section 406(a) of the Act be granted for such joint
purchasing. In a letter to you from Mr. Ellis Scott of this
office, dated August 6, 1975, your application for an exemption
was assigned the number L-238. In view of our conclusion that
such joint purchasing does not constitute a prohibited transac-
tion under section 406(a), however, and the lack of any infor-
mation in your letter relating to any perceived prohibited
transaction under section 406(b), application No. L-238 will
be treated as closed and no further action will be taken in
connection with that application.

Sincerely,



Fred W. Stuckwisch
Direction
Office of Regulatory Standards
  and Exceptions