Although ERISA Section 4021(c)(2) defines the professional service employer, and ERISA Section 4021(c)(2)(B) provides a non-exclusive list of professionals, PBGC coverage status for a defined benefit plan or cash balance plan might still be unclear.
PBGC Opinion Letter 97-2 provides a good example of how the PBGC determines whether a particular employer is a professional service employer. In Opinion Letter 97-2, the PBGC determined that a surveyor would not be eligible for the PBGC professional service employer coverage exemption, but a surveying consultant would be eligible for the PBGC professional service employer coverage exemption. In making this determination, the PBGC made the following points about the particular surveying consultant who applied for the coverage exemption:
• The surveying consultant was licensed by the state of Virginia. In order to receive this license, an individual must pass a sixteen hour exam and either have a specialized four year degree or ten years of experience.
• The surveying consultant had significant revenue from professional services requiring professional judgment. This was compared to a surveyor whose primary revenue source was based upon measurements made in the field.
• The surveying consultant affixed his professional seal to each of their plats, designs and reports.
• As required by Virginia law, the surveying consultant was personally liable for malpractice and was required to have errors and omissions insurance.
While the PBGC drew a distinction between a surveyor and a surveying consultant in the Opinion Letter, it did not appear that the professional’s title itself was significant in making the coverage determination. Instead, the PBGC appears to have reviewed the qualifications and responsibilities of the applicant in making the determination of whether or not the defined benefit plan was PBGC covered.
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