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surrenders and withdrawals on an employee-by-employee basis
within each employer group, further segregated by each of the
eight insurance companies participating in the STEP plan. STEP
maintained its books and records first by insurance company,
second by employer group, and finally by each individual
employee. Forms 5500-C/R, Return/Report of Employee Benefit
Plan, filed by the STEP plan were generally broken down by
insurance company, employer group, and employee. Forms W-2, Wage
and Tax Statement, were issued to participants with separate
employer identification numbers for each life insurance company.
Each insurance policy was essentially a separate account for
the covered employee on whose life the policy was written. The
account included all of the employer’s contributions for that
employee, was increased by all of the income earned as a result
of those contributions, was reduced by all insurance company
charges to provide the life insurance benefits for only that
employee, and was used as the base from which to calculate the
purported severance benefits of that employee. A severance
benefit that was paid out to an employee was typically not equal
to what had been paid in by way of employer contributions. The
employer contribution was invested by STEP, and the assets grew.
VRD/RTD’s contributions were invested in the individual
insurance policies of the participating doctors and Ms. Quinn.
The contributions for each policy were accounted for separately.
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Last modified: March 27, 2008