A Primer for Multiemployer Plan Trustees NECA Labor Relations
Conference San Antonio, Texas October 12-14, 2009 Presented by:
Robert A. West Partner, Haynes Benefits PC Slide 2 Types of Plans
Pension Plans Defined benefit plans Defined contribution plans
Health Plans Indemnity HMO/PPO HRS HSA/HDHP Joint Apprenticeship
and Training Committee Plans (JATC) Slide 3 Plan Formation Legal
Entity The Trust is the legal entity (compare a corporation or LLC)
The Trust may sue and be sued Governing Body Board of Trustees
Liability Board of Trustees Slide 4 Plan Formation Governing
Documents Trust Document Compare to a corporations bylaws or an
LLCs operating agreement Who appointed, how appointed (and by whom)
and how removed Meetings, quorums and decisions Binding arbitration
provisions Slide 5 Plan Formation Governing Documents Plan document
Describes the benefits offered by the Plan (and paid from the Trust
Fund) Describes how the amount of the benefits are determined
Defines the form in which the benefits are paid Provides when
benefits are paid Also defines eligibility and vesting provisions
Slide 6 Plan Formation Governing Documents Collective bargaining
agreement Compare to articles of incorporation the enabling
document Specifies rate of contributions Slide 7 Plan Formation
Governing Documents Participating Agreement Binds each employer to
the terms and conditions of the Plan and Trust Only the trustees
may change these termsconditions, changes or exceptions promised by
either the local union or NECA chapter are unenforceable Slide 8
Plan Formation NECA and IBEWs role Implement collective bargaining
agreements creation of the Plan & Trust Act as settlors
(creators) of the Trust agreement Negotiate contributions to the
Plan Appoint and remove trustees But no authority to bind the
trustees or to enter into unilateral agreements with contractors
Slide 9 Plan Formation CBA-NECA-IBEW-Trustees-Trust-Plan document
CBA authorizes creation of Plan and Trust NECA/IBEW create the
Trust fund and appoint trustees Trustees have sole responsibility
for, and authority over, the trust fund and the benefits offered
under the Plan Slide 10 Plan Formation
CBA-NECA-IBEW-Trustees-Trust-Plan document Trust document provides
mechanism for trustees to operate the trust fund and authorizes
trustees to create the plan Trust fund holds plan assets
(contributions and investments) Plan document specifies benefits
eligibility, vesting and distributions Slide 11 Applicable Laws and
Enforcement Agencies ERISA U.S. Department of Labor (DOL) and
Pension Benefit Guaranty Corporation (PBGC) Internal Revenue Code
Internal Revenue Service Taft-Hartley Ancillary Laws Slide 12
Applicable Laws and Enforcement Agencies Ancillary Laws Health
Insurance Portability and Accountability Act (HIPAA) U.S.
Department of Health & Human Services Family Medical Leave Act
(FMLA) DOL Americans with Disabilities Act (ADA) Equal Employment
Opportunity Commission (EEOC) Title VII EEOC Slide 13 Applicable
Laws and Enforcement Agencies Ancillary Laws Uniformed Services
Employment and Reemployment Rights Act of 1994 (USERRA) DOL Pension
Protection Act of 2006 (PPA) Heroes Earnings Assistance and Relief
Act of 2008 (HEART Act) Slide 14 Taft Hartley Mandates that any
payments made by an employer for employee benefits under a
multi-employer plan must meeting the following rules: Contributions
must be made into a trust for the sole benefit of employees The
trust must be jointly trusteed by an equal number of management and
labor representatives The trust agreement must provide a binding
arbitration mechanism Slide 15 Taft Hartley What Taft Hartley does
and does not provide: It enables labor organizations and management
representatives to create employee benefit plans for the benefit of
organized labor (and provides the general framework in which those
benefits must be provided i.e., a trust, jointly trusteed, and
mandatory arbitration) Slide 16 Taft Hartley What Taft Hartley does
and does not provide: Taft Hartley does not specify fiduciary
requirements or coverage, vesting, nondiscrimination or funding
requirements these provisions are dictated by ERISA and the
Internal Revenue Code Slide 17 ERISA (Employee Retirement Income
Security Act of 1974) ERISA provisions applicable to all Taft
Hartley pension and welfare benefit plans Covered by federal law
Federal law preempts any state law provisions Right to sue and be
sued Fiduciary duties Prohibited transactions* *Internal Revenue
Code has similar provisions Slide 18 ERISA (Employee Retirement
Income Security Act of 1974) ERISA provisions applicable to all
Taft Hartley pension and welfare benefit plans Participant
communications (Summary Plan Description and other required
participant notices) Claims procedures Governmental reporting
obligations (Form 5500)* *Internal Revenue Code has similar
provisions Slide 19 ERISA (Employee Retirement Income Security Act
of 1974) ERISA provisions applicable to all Taft Hartley pension
and welfare benefit plans Obligation to collect employer
contributions Trust fund/plan assets Bonding obligations Slide 20
ERISA (Employee Retirement Income Security Act of 1974) ERISA
provisions applicable to pension plans only Eligibility* Vesting*
Pension Benefit Guaranty Corporation provisions Funding
obligations* Withdrawal liability QDROs* *Internal Revenue Code has
similar provisions Slide 21 ERISA (Employee Retirement Income
Security Act of 1974) ERISA provisions applicable to health plans
only COBRA (continuation of health care benefits)* Qualified
Medical Child Support Orders Health Insurance Portability and
Accountability Act (special enrollment rules and eligibility and
benefit nondiscrimination rules) *Internal Revenue Code has similar
provisions Slide 22 Internal Revenue Code (I.R.C.) IRC Provisions
applicable to all Taft Hartley pension and health and welfare plans
Non-taxability of trust earnings (VEBA) Deductibility of employer
contributions Eligibility requirements Non-discrimination
requirements (highly compensated versus non-highly compensated
employees) Prohibited transactions Governmental reporting
obligations ERISA has similar provisions Slide 23 Internal Revenue
Code (I.R.C.) IRC Provisions applicable to all pension plans
Vesting Funding Pre-tax employee elective contributions (401(k)
only) Benefit limitations ERISA has similar provisions Slide 24
Internal Revenue Code (I.R.C.) IRC Provisions applicable to all
pension plans Qualified Joint and Survivor Annuity requirements
Required Minimum Distributions and distribution restrictions
Rollover rules Slide 25 Internal Revenue Code (I.R.C.) IRC
Provisions applicable to health and welfare plans COBRA
Non-taxation of benefits received Non-taxation of value of premium
paid by employer Cafeteria plan rules (Section 125) for pre- tax
treatment of employee contributions ERISA has similar provisions
Slide 26 Other Applicable Laws Pension Plans ADEA (age
discrimination) USERRA (military service) HEART Act (military
service) Slide 27 Other Applicable Laws Health Plans HIPAA
Portability (special enrollment) HIPAA Non-discrimination
(benefits) HIPAA Privacy (non-disclosure of personal health
information) HIPAA Security (electronic security procedures)
Americans with Disabilities Act (disability discrimination) Slide
28 Other Applicable Laws Health Plans Title VII (maternity/gender
discrimination) Family Medical Leave Act (medical leave) USERRA
(military service leave) Mental Health Parity Medicare Womens
Health and Cancer Rights Act Newborn and Mothers Health Protection
Act Wellstone Act Slide 29 Critical Documents All Plans Trust
Agreement Plan document Participation agreement Collection policy
Investment policy Reciprocal agreements Summary Plan Description
Slide 30 Critical Documents All Plans Service provider agreements
(such as third party administrator, investment managers and other
providers) Fidelity bond Fiduciary liability Insurance (including a
non-recourse policy purchased by the individual trustee or by the
Chapter) Slide 31 Critical Documents Pension Plans QDRO procedures
Loan procedures (401(k)) Slide 32 Critical Documents Health and
Welfare Plans COBRA procedures and notices FMLA procedures
Qualified Medical Child Support Order procedure Reinsurance (or
stop loss) policy HIPAA Privacy policy and procedures HIPAA
Security policy and procedures Slide 33 The Players and their Roles
Trustees The Plan fiduciaries Sole authority and responsibility for
defining benefits, calculating required contributions, collecting
contributions, investing Plan assets (or selecting an investment
manager), selecting other professional advisors, managing the Plan
and making benefit determinations Slide 34 The Players and their
Roles Trustees If any responsibility has been delegated, duty to
monitor the performance of the professional to whom the delegation
has been given Slide 35 The Players and their Roles NECA-IBEW Agree
in the CBA to establish a plan of benefits and trust Create the
original trust agreement (settlors of the trust) May reserve
authority to amend the trust agreement Appoint trustees and their
successors Slide 36 The Players and their Roles NECA-IBEW Neither
organization may agree to (i) special conditions for individual
employers (e.g., agreeing to special contribution exclusions
outside the labor agreement); or (ii) specified benefits for
employees. Only the trustees have this authority Slide 37 The
Players and their Roles NECA-IBEW If either organization asserts
authority (or neglects trustee appointment or removal authority),
the organization may become a fiduciary Slide 38 The Players and
their Roles Third party administrator Handles the day to day
administration of the Plan Includes collecting contributions,
processing QDROs, making benefit payments, etc. No independent
authority Slide 39 The Players and their Roles Actuary/consultant
Assists trustees in defining benefits Determines the funding costs
and funding requirements for those benefits May provide Plan
documents No independent authority Slide 40 The Players and their
Roles Investment Manager Invests Plan assets and selects investment
choices (pursuant to an investment policy) Has independent
authority and fiduciary responsibility for this responsibility (but
trustees remain liable for due diligence in selection, performance,
retention of the investment manager) Slide 41 The Players and their
Roles Investment Monitor Assists trustees in oversight of
Investment Manager (and monitors investment managers performance
against financial industry benchmarks). No independent authority
Slide 42 The Players and their Roles Attorney Advises the trustees
as to legal requirements under ERISA, the Code and general
fiduciary responsibilities Drafts and reviews Plan documents and
procedures Drafts/reviews provider agreements, insurance policies,
etc. Advises trustees concerning collection actions and brings such
actions Slide 43 The Players and their Roles CPA Performs the
annual audit Slide 44 A Trustees Eleven Commandments Do not deal
with the assets of the Plan in ones own interest (e.g., arranging
interim financing for a favorite general contractor). Read and
follow the terms of the trust agreement Read and follow the terms
of the Plan Insure the Plan is properly funded Slide 45 A Trustees
Eleven Commandments Do not take instructions from the business
manager (or the Chapter manager) Invest prudently and utilize due
diligence in selecting investment managers Engage an investment
monitor Exercise due diligence in selecting/retaining Plan
consultants, administrators and legal counsel Slide 46 A Trustees
Eleven Commandments Accept guidance from the professional advisors
you have selected (or replace them or obtain second opinions)
Collect unpaid contributions Make certain that fiduciary liability
policy premiums are paid Slide 47 Q & A
