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2004-06A
ERISA Sec. 3(1)
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Ms. Lisa Belenky
Lewis & Feinberg, P.C.
436 14th Street, Suite 1505
Oakland, California 94612-2703
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Dear Ms. Belenky:
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This is in reply to your request on behalf of the
Service Employees International Union Local 616 (SEIU Local 616) regarding
the applicability of Title I of the Employee Retirement Income Security
Act of 1974, as amended (ERISA). Specifically, you ask whether a program
established by SEIU Local 616 to provide a small monetary payment to
beneficiaries of deceased members is a “remembrance fund” within the
meaning of 29 C.F.R. § 2510.3-1(g), and, therefore, exempt from coverage
under Title I of ERISA.
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The correspondence and materials you forwarded contain the following facts
and representations. SEIU Local 616 is a collective bargaining
representative for certain categories of employees of Alameda County,
California. SEIU Local 616 established the Employees’ Benefit Association
(EBA), a California nonprofit corporation, for the purpose of maintaining a
fund to provide a death benefit to beneficiaries of SEIU Local 616 members.
The officers and members of the SEIU Local 616 Executive Board serve as the
Board of Directors of the EBA. The SEIU Local 616 bylaws provide that a
maximum of twenty cents of each member’s monthly dues may be used to fund
the EBA. You further represent that although the EBA bylaws allow its Board
of Directors to provide members with other “group benefit programs,”
neither SEIU Local 616 nor the EBA Board of Directors intends to authorize
the EBA to provide other benefits to EBA members that constitute welfare or
pension benefits within the meaning of section 3(1) of ERISA.
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Upon the death of a SEIU Local 616 member, the EBA pays a death benefit to
his/her designated beneficiary, or if there is no named beneficiary, to the
party who paid the funeral expenses, or to the estate of the member, in
accordance with the following schedule: (i) a maximum of one hundred fifty
dollars if the decedent has been a member continuously for more than six
months and less than five years; (ii) a maximum of two hundred dollars if
the decedent has been a member continuously for five years and less than ten
years; or (iii) a maximum of two hundred fifty dollars if the decedent has
been a member continuously for ten years or more.
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Section 3(1) of Title I of ERISA provides, in relevant
part, that the term “employee welfare benefit plan” means “ . . .
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 benefits in the event
of sickness, accident, disability, death or unemployment . . . .”
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The Department’s regulation at 29 C.F.R. § 2510.3-1(g) excludes from the
definition of “employee welfare benefit plan” certain remembrance funds.
A “remembrance fund” is any program “under which contributions are
made to provide remembrances such as flowers, an obituary notice in a
newspaper or a small gift on occasions such as the sickness,
hospitalization, death or termination of employment of employees, or members
of an employee organization, or members of their families.”
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The Department has previously concluded that cash payments can constitute
remembrances within the meaning of 29 C.F.R. § 2510.3-1(g) so long as the
program provides for no more than “relatively small amount(s) to be paid
to recipients.” Compare Advisory Opinion 92-01A (Jan. 17, 1992) (death
benefit program that provided amount less than $100 was a remembrance fund),
with Advisory Opinion 82-25A (Jun. 8, 1982) (death benefit program with
maximum benefit of $1,000 was an employee welfare benefit plan within the
meaning of section 3(1) of ERISA). The cash payments available under the EBA
program are capped at a maximum of $250 per member. Accordingly, based on
the information you provided, it is the opinion of the Department that the
EBA program would be a “remembrance fund” within the meaning of 29 C.F.R.
§2510.3-1(g) excluded from coverage under Title I of ERISA.
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This letter constitutes an advisory opinion under ERISA
Procedure 76-1 and, accordingly, is issued subject to the provisions of that
procedure, including section 10 thereof concerning the effect of advisory
opinions. The opinion expressed in this letter applies only to the EBA
program described above, and does not extend to any other benefit
arrangement of the EBA or SEIU Local 616. We note in particular that the
absence of any explicit limitation in EBA’s bylaws that would prevent EBA
from providing welfare or pension benefits to participants or beneficiaries
precludes us from assuring you that the EBA program will not be an employee
benefit plan if, as is apparently permitted under the above noted grant of
authority in its bylaws, EBA is operated so as to provide a benefit within
the meaning of Title I of ERISA. This letter relates solely to the
application of the provisions of Title I of ERISA and is not determinative
of any particular tax treatment under the Internal Revenue Code.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
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