Pension Benefit Guaranty Corporation 

97-2 

December 29, 1997 

REFERENCE: 

 [*1] 4021(b)(13) Plans Covered. Professional Service Employer Plans 

OPINION: 

I write in response to your request for a reconsideration of the Pension Benefit Guaranty Corporation's ("PBGC")

initial determination with respect to the * * * Retirement Plan (the "Plan"). On June 19, 1997, your client requested a

determination that the Plan was excluded from coverage as a plan established and maintained by a professional service

employer under Title IV of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). On August

5, 1997, PBGC issued its initial determination that the Plan is covered by the termination insurance provisions of ERISA

and not excluded from * * * coverage under ERISA § 4021 (b)(13) as a professional service employer. By letter dated

* * * September 4, 1997, on behalf of * * * , you requested * * * reconsideration of PBGC's initial determination.

After review of the facts and circumstances, for the reasons discussed below, the PBGC has determined that the Plan

is exempt from coverage under Title IV of ERISA. Thus, the request for reconsideration is granted.

Request for Reconsideration

In your request for reconsideration, you have represented that * * [*2] * is a Virginia professional corporation

pursuant to the Code of Virginia of 1950, as amended Title 13.1, § 543, and that the three individuals responsible for

controlling the operations of * * * all possess bachelors degrees and all have taken advanced courses in their respective

fields. Additionally, all three individuals hold class A or B surveying licenses certified by the Commonwealth of Virginia

Board for Architects, Professional Engineers, Land Surveyors and Landscape Architects, and all pay professional license

fees.

You further represent that the great majority of * * * 's revenues are derived from surveying and engineering design

consulting services. * * * 's principals affix their professional seal and signature to every plat, survey and design they

prepare and all of the professional opinions they issue are memorialized in a report. Ad ditionally, you state that all

principals remain personally liable to their respective clients, and all three principals maintain professional malpractice

acts and omissions insurance, as required by Virginia law. It is undisputed that at no time has the Plan had more than 25

active participants.

Discussion

Section 4021 (b)(13) of ERISA [*3] excludes from coverage any plan "established and maintained by a professional

service employer that does not at any time after the date of enactment of this Act have more than 25 active participants

in the plan."

Under § 4021 (c)(2) of ERISA, a professional service employer is any entity owned or controlled by professional

individuals where both the entity and the professional individuals owning and controlling it are engaged in the

performance of the same professional service. See PBGC Opinion Letter 76-106.

As stated in PBGC Opinion Letter 76-106, a professional individual generally is one who provides services that

require knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of

specialized intellectual instruction and study, as distinguished from a general academic education and from an

apprenticeship or from training in the performance of routine mental, manual or physical process. The rendering of

professional services generally requires the consistent exercise of discretion and judgment in its performance and would

be predominantly intellectual in character.

Based on our review of the relevant factors, we believe that [*4] the Plan is excluded from Title IV coverage as a
plan established and maintained by professional service employer. We agree that the surveying consulting services that

* * * provides require knowledge of an advanced type that is customarily acquired through a prolonged course of special

intellectual instruction. Surveyors seeking licensure by the Commonwealth of Virginia are generally required to graduate

from a surveying or surveying technology curriculum of four years or more prior to being admitted to sit for the sixteenhour state licensing examination. If an applicant has not graduated from such a program, the applicant must have a

specific record of ten years of approved surveying experience before being admitted to sit for the sixteen-hour licensing

examination.

Next, it appears that * * * renders professional services that require the consistent exercise of discretion and

judgment which are predominantly intellectual in nature. You state in your request for reconsideration that the services

from which * * * derives the majority of its revenue are far different from those of the surveyors "one sees locating

surveying points and planting surveying stakes as one drives along [*5] the roadside" (Request for Reconsideration at

4). Rather, * * * 's principals, relying upon knowledge gained through academic study and experience and exercising their

professional judgment and discretion, evaluate conflicting data and advise their clients based upon an analysis of this

data. Finally, we note that the principals, pursuant to Virginia law, remain personally liable for acts of negligence relating

to the rendering of their professional services and maintain professional malpractice insurance.

Conclusion

For the reasons discussed above, and on the basis of information provided to us, we conclude that the Plan is

excluded from coverage under Title IV as a plan established and maintained by a professional service employer pursuant

to section 4021(b)(13) of ERISA. This letter constitutes a final decision by the PBGC regarding the Plan.

Charles Korb

Manager, Processing and Technical Assistance Branch

Standard Termination Compliance Division

Insurance and Operations Department