Pension Benefit Guaranty Corporation 96-1 June 27, 1996 RE FE RE NC E: [*1] § 4021(b) (13) OP INI ON : Th is is a fi nal decision by t he Pension Benefit Guaranty Corporation (the "P BG C" ) rega rdin g the * * * Def ined Be nefit Pension Plan (the "Pl an"). On Jul y 21, 1995, t he PBGC iss ued an initial de termin ation tha t the Pla n is covered under Title IV of the E mplo yee R etirem ent Inc ome Secu rity Act o f 197 4 (" ER ISA "), 29 U.S .C. § § 1301-1461. By lett er dated Augu st 18, 1 995 , you req uested reco nside ration o f PB GC 's initial determ ination o n beh alf of * * * Based on o ur review, and for t he reasons set f orth bel ow, the PBG C has deter mined tha t th e Plan is exempt fr om cov erage unde r Title I V o f ER ISA . Con sequ ently, the re que st for rec onsid eratio n is gran ted. Request f or Determi nation

By let ter date d Augus t 5, 1994, the Company as ked whether the Plan was exe mpt f rom c over age unde r ERIS A § 4021(b )(13), 29 U .S.C. § 1321(b)(13), as a plan mai ntai ned by a prof essi onal ser vice empl oyer wi th f ewer th an 25 active part ici pants . The Company repre sent ed th at i t qua li fi ed for tha t ex empti on as "a n economi c cons ult ing fi rm." Ini tial Determi nation

In it s l ett er of Jul y 21, 1995, t he PBGC indic ated, in pa rt, [*2] that based on its review of the servi ces perf ormed b y the Company a nd th e exper ti se r equir ed to pe rfor m the m, and "sin ce t here are n o st ate li cens ing requ ireme nts fo r economi sts , we deter mine that [th e] s ecti on 4021(b) excl usi on does n ot appl y t o the Plan. "

Request f or Reconsi derati on

The Comp any requested reconsideration i n August 1995. In that request, the Company stressed that t hr ee of th e owners have Doct or of Philo sop hy De grees in eco nom ics, and the four th is a certified pub lic accountant. In additi on, the Comp any expa nde d the d escrip tion of its b usiness to clarify that its exp ertise invo lved in ternatio nal eco nom ic s and accounting iss ues with respect t o transfer pri cing, tax i ssues, and int ernational t rade and sector analysis and that its clients includ ed m ultination al cor por ations, tra de as socia tions an d the In ternal R even ue Se rvice. Sub sequ ently, the Company pr ov ided add itional info rmatio n that ind icated that all of the Co mpa ny's work is eco nom ic analysis, wh ich in volves applying "the e ntire range of analytical tools from m icroeco nomic an alysis, mathemati cal economics and econ ome trics to the ir solutio n." W hile the Company' s cl ient s pot enti all y can appear in [ *3] an administrat ive hearing or t ria l ove r is sues on whi ch t he Company provi des i ts serv ices , onl y about 5% of their matt ers go to hearin g or trial, a nd, in tho se ma tters less tha n 2% of the C omp any's billab le wor k is actua l testimon y. Discus sion

Section 4021(b)(13 ) of ERISA excludes from coverage any plan establ ished an d maintai ned by a prof ess ion al ser vi ce em ploy er w hi ch doe s no t a t a ny ti me after t he date of enactment of this Act have more than 25 participants in t he plan.

A "profess ional servi ce employer" i s an ent ity whose pri ncipal busines s is the perf ormance of prof essi onal services, and is owne d or contro lled b y pro fessiona l individ uals or their exe cutor s or ad ministrato rs. ER ISA § 40 21( c)(2 )(A). A repre sentati ve, but non-exc lusive, list of professional individuals is listed in ERISA § 402 1(c)(2)(B ). The list includ es soc ial scientists a nd p ublic a cco untants, b ut do es no t specify e con omists. W her e an oc cup ation is no t listed, the P BG C will an alyze the service s perfo rmed and th e exp ertise req uired to perform them. P BG C O pinio n Letter s 80-1 4, 80 -13, 8 0-12 , 79-1 2. In su ch cases, a professi onal generally is one who provides service s which requ ire kno wled ge of [*4] a n adv ance d type in a field o f science or lear ning cu stoma rily acquired by a pr olong ed cour se of speci ali zed i ntel lect ual ins tru cti on and s tudy , as dis ti ngui shed f rom a gene ral aca dem ic educat ion and from an a pprenti ceship or from tr aini ng in t he perfor mance of rout ine men tal, manual or phy sical proce sses. The rende rin g of professional servi ces generally requires the consi stent exercise of discr etion and judgment in its perfo rman ce an d wo uld b e pre dom inantly intellec tual in cha racter . PB GC Op inion L etter 79 -12. In thi s cas e, t he Company 's owner s meet the PBGC's cr it eri a for prof essi onals . They have a dvance d de grees in economics and accounting, have extensive work and teaching experi ence in those fi elds, and have p ublishe d article s in thos e fi elds . They curr entl y do an aly ses in t he ar eas of macroec onomics , mat hemat ical economi cs, econom etri cs an d acco unti ng. They provide intellectual services which r equire knowledge of an advanced type and which require the consistent exer cis e of discretion and judgment in i ts performance. They present thei r professional opini ons in the form of rep orts to cli ent s. S in ce su ch se rv ic es co mp ri se es se nt ia lly al l o f th e C om pa ny 's b us in es s, t he [*5 ] C om pa ny 's "princi pal business . . . i s the perf orman ce of prof ess ion al ser vi ces " wi th in th e mea ni ng of ERISA § 4021(c)(2)(A)(ii). Conclusi on

The Plan i s exe mpt f rom cove rage u nde r Title I V o f ER ISA , pursu ant to E RIS A § 4 021 (b) (1 3), 29 U.S .C. § 132 1(b )(13 ). In accord ance with 29 C.F.R. § 2 606 .36, this constitutes a final decision and exhausts any f urther administ rative reme dies. Anna L. Gilreath Mana ger Standard Term ination Compliance Division Insura nce O pera tions D epa rtmen t