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You work for a school district and, even though benefit plans of school districts are generally not subject to Title I of ERISA, you have been asked to find out if the following language in the plan documentation would afford participants rights under ERISA. The documentation language states: "Choice of Law. This plan is designed to comply with the applicable provisions of ERISA, the Internal Revenue Code, and state law. Subject to the applicable laws of ERISA which provide to the contrary, this plan will be administered, construed and enforced according to the laws of the state and courts situated in that state."
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Answer: |
Generally, public school districts are governed by state law, not ERISA, as are other governmental entities. More specifically, governmental plans are exempt from ERISA's participation, minimum coverage, vesting and funding standards. The provision cited above, however, clearly states that the plan will comply with ERISA unless state law overrides ERISA. If the plan does not intend to comply with ERISA's rules, the language should not be included.
In this situation, the plan committed itself in its own written document to complying with ERISA rules and providing ERISA rights to employees in a situation where, normally, that would not be necessary. If the plan failed to comply with ERISA rules, there would be no remedy under ERISA, but there would be a contract breach and associated relief under applicable state law.
Remember, participants in school district plans are governmental employees. The Employee Benefits Security Administration (EBSA) has stated that, whether or not a plan is “established and maintained” by a governmental entity depends upon the extent to which a governmental entity funds and administers the plan.
Source: EBSA Advisory Opinion Letter No. 2004-01A.
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