80-12

June 9, 1980

REFERENCE:

4021(b)(13) Plans Covered. Professional Service Employer Plans

4021(c)(2)(A) Plans Covered. Definition of Professional Service Employer

4021(c)(2)(B) Plans Covered. Definition of Professional Individuals

OPINION:

This is in response to your inquiry whether the above-referenced pension plan (the "Plan") is exempt from the termination

insurance provisions of the Employee Retirement Income Security Act of 1974 (the "Act") under § 4021(b)(13) as a

professional service employer. For the reasons stated herein, this Office concludes that the Plan is not excluded from

Title IV coverage by § 4021(b)(13).

Section 4021(b)(13) of the Act excludes from coverage any plan:

established and maintained by a professional service employer which does not at any time after the date of enactment of

this Act have more than 25 active participants in the plan. (emphasis added).

A professional service employer is any entity owned or controlled by professional individuals, as defined in §

4021(c)(2)(B) of the Act, where both the entity and the professional individuals owning and controlling it are engaged in the

performance of the same professional service. We understand that * * * Company is wholly owned by and conducts a

real estate brokerage business.

Section 4021(c)(2)(B) lists some but not all of those individuals who are considered to be "professional individuals." Those

performing real estate services, however, are not included in the list. Consequently, our determination of whether such

individuals, and others not listed, are "professional individuals" depends on an analysis of the services performed and the

expertise required to perform them.

As stated in PBGC Opinion Manual letter 76-106, a professional individual generally is one who provides services which

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 processes. The rendering of

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

would be predominantly intellectual in character.

A person engaged in real estate brokerage and similar real estate services would not appear to fit within the foregoing

description of "professional individual." Such people buy and sell real estate, or assist others in buying and selling real

estate. These activities do not require a prolonged course of specialized intellectual instruction, and are not prodominantly

intellectual in character. Because real estate brokers are not "professional individuals" within Act § 4021(c)(2)(B), * * *

Company cannot be a "professional service employer" within Act § 4021(c)(2)(A). Therefore, your firm's plan would not

be excluded from coverage under the plan termination insurance provisions of the Act.

This letter constitutes an initial determination of the PBGC which is subject to reconsideration under 29 CFR Part 2618. A

copy of that regulation is enclosed for your information.

If you have any questions please contact * * * of this Office at the above address or at (202) 254-3010.

Henry Rose

General Counsel