Trustees' consideration of nonfinancial factors in tender of ESOP shares violates exclusive benefit rule

Article Abstract:

The IRS Chief Counsel has held that the IRC's qualified plan exclusive benefit rule narrows the factors an ESOP trustee can take into consideration when putting employer securities owned by the plan on the market, stating that plan fiduciaries endanger the qualified status of a plan if they consider matters other than those necessary to ensure a large enough asset pool to fund liabilities to participants. The Service felt that an ESOP provision allowing the trustees to weigh 'nonfinancial factors' contravened the prudent man standard.

Employee stock ownership plans

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Sick leave payments found payroll practice exempted from ERISA despite trust established to administer benefits

Article Abstract:

The US Court of Appeals for the 9th Circuit ruled in Alaska Airlines v. Oregon Bureau of Labor that the airline's sick leave payment system was exempt from ERISA because it was properly characterized as a payroll practice. The airline's intermediary trust, funded by its general assets, was being used to pay for sick leave benefits. The employer had erroneously denied two employees sick leave benefits by arguing the benefits fell under ERISA's welfare plan and were therefore preempted.

Accounting and auditing, Wages, Wages and salaries, Sick leave

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Sixth Circuit holds that limited-term trust intended to fund shutdown benefit program did not create an ERISA plan

Article Abstract:

The US 6th Circuit Court of Appeals in Williams v. WCI Steel Co. held that an ERISA plan did not exist when a temporary trust was created for the purpose of funding an employee benefit plan during a shutdown period pending the employer-business's ownership transfer. The litigation arose when actual shutdown did not occur and the funds were used to create a new plan which covered new employees.

United States, Employee Benefits & Services, Human resource management, Employee benefits

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