About
ERI DisclaimerEmployee Retirement Income Security Act (ERISA)
Employee Retirement Income Security Act of 1974 (ERISA)
(Pension Reform Act of 1974)
P.L. 93-406
88 United States Statutes at Large 829
Signed by the President
September 2, 1974
SHORT TITLE AND TABLE OF CONTENTS
Act Section 1. This Act may be cited as the "Employee Retirement Income Security Act of 1974".
TABLE OF CONTENTS
Section 1. Short Title and table of contents.
TITLE I PROTECTION OF EMPLOYEE BENEFIT RIGHTS
Subtitle A General Provisions.
Section 2. Findings and declaration of policy.
Section 3. Definitions.
Section 4. Coverage.
Subtitle B Regulatory Provisions.
Part 1 Reporting and Disclosure.
Section 101 Duty of disclosure and reporting.
Section 102 Plan description and summary plan description.
Section 103 Annual reports.
Section 104 Filing with Secretary and furnishing information to participants.
Section 105 Reporting of participant's benefit rights.
Section 106 Reports made public information.
Section 107 Retention of records.
Section 108 Reliance on administrative interpretations.
Section 109 Forms.
Section 110 Alternative methods of compliance.
Section 111 Repeal and effective date.
Part 2 Participation and Vesting.
Section 201 Coverage.
Section 202 Minimum participation standards.
Section 203 Minimum vesting standards.
Section 204 Benefit accrual requirements.
Section 205 Joint and survivor annuity requirement.
Section 206 Other provisions relating to form and payment of benefits.
Section 207 Temporary variances from certain vesting requirements.
Section 208 Mergers and consolidations of plans or transfers of plan assets.
Section 209 Record keeping and reporting requirements.
Section 210 Plans maintained by more than one employer, predecessor plans, and employer groups.
Section 211 Effective dates.
Part 3 Funding.
Section 301 Coverage.
Section 302 Minimum funding standards.
Section 303 Variance from minimum funding standard.
Section 304 Extension of amortization periods.
Section 305 Alternative minimum funding standard.
Section 306 Security for waivers of minimum funding standard and extensions of amortization period.
Section 307 Security required upon adoption of plan amendment resulting in significant under-funding.
Section 308 Effective dates.
Part 4 Fiduciary Responsibility
Section 401 Coverage.
Section 402 Establishment of plan.
Section 403 Establishment of trust.
Section 404 Fiduciary duties.
Section 405 Liability for breach by co-fiduciary.
Section 406 Prohibited transactions.
Section 407 10 percent limitation with respect to acquisition and holding of employer securities and employer real property by certain plans.
Section 408 Exemptions from prohibited transactions.
Section 409 Liability for breach of fiduciary duty.
Section 410 Exculpatory provisions; insurance.
Section 411 Prohibition against certain persons holding certain positions.
Section 412 Bonding.
Section 413 Limitation on actions.
Section 414 Effective date.
Part 5 Administration and Enforcement.
Section 501 Criminal penalties.
Section 502 Civil enforcement.
Section 503 Claims procedure.
Section 504 Investigative authority.
Section 505 Regulations.
Section 506 Other agencies and departments.
Section 507 Administration.
Section 508 Appropriations.
Section 509 Separability provisions.
Section 510 Interference with rights protected under Act.
Section 511 Coercive interference.
Section 512 Advisory Council.
Section 513 Research, studies, and annual report.
Section 514 Effect on other laws.
Section 515 Delinquent contributions.
Part 6 Group Health Plans.
Section 601 Plans must provide continuation coverage to certain individuals.
Section 602 Continuation coverage.
Section 603 Qualifying event.
Section 604 Applicable premium.
Section 605 Election.
Section 606 Notice requirements.
Section 607 Definitions and special rules.
Section 608 Regulations.
Section 609 Additional standards for group health plans.
TITLE II AMENDMENTS TO THE INTERNAL turnover CODE RELATING
TO RETIREMENT PLANS
Section 1001 Amendment of Internal turnover Code of 1954.
Subtitle A Participation, Vesting, Funding, Administration, Etc.
Part 1 Participation, Vesting, and Funding.
Section 1011 Minimum participation standards.
Section 1012 Minimum vesting standards.
Section 1013 Minimum funding standards.
Section 1014 Collectively bargained plans.
Section 1015 Definitions and special rules.
Section 1016 Conforming and clerical amendments.
Section 1017 Effective dates and transitional rules.
Part 2 Certain Other Provisions Relating to Qualified Retirement Plans.
Section 1021 Additional plan requirements.
Section 1022 Miscellaneous provisions.
Section 1023 Retroactive changes in plan.
Section 1024 Effective dates.
Part 3 Registration and Information.
Section 1031 Registration and information.
Section 1032 Duties of Secretary of Health, Education, and Welfare.
Section 1033 Reports by actuaries.
Section 1034 Effective dates.
Part 4 Declaratory Judgments Relating to Qualification of Certain Retirement Plans.
Section 1041 Tax Court procedure.
Part 5 Internal turnover Service
Section 1051 Establishment of Office.
Section 1052 Authorization of appropriations.
Subtitle B Other Amendments to the Internal turnover Code Relating to Retirement Plans.
Section 2001 Contributions on behalf of self-employed individuals and shareholder-employees.
Section 2002 Deduction for retirement savings.
Section 2003 Prohibited transactions.
Section 2004 Limitations on benefits and contributions.
Section 2005 Taxation of certain lump sum distributions.
Section 2006 Salary reduction regulations.
Section 2007 Rules for certain negotiated plans.
Section 2008 Certain armed forces survivor annuities.
TITLE III JURISDICTION, ADMINISTRATION, ENFORCEMENT; JOINT PENSION, PROFIT-SHARING, AND EMPLOYEE STOCK OWNERSHIP PLAN TASK FORCE, ETC.
Subtitle A Jurisdiction, Administration, and Enforcement
Section 3001 Procedures in connection with the issuance of certain determination letters by the Secretary of the Treasury.
Section 3002 Procedures with respect to continued compliance with requirements relating to participation, vesting, and funding standards.
Section 3003 Procedures in connection with prohibited transactions.
Section 3004 Coordination between the Department of the Treasury and the Department of Labor.
Subtitle B Joint Pension, Profit Sharing, and Employee Stock Ownership Plan Task Force; Studies
Part 1 Joint Pension, Profit Sharing, and Employee Stock Ownership Plan Task Force.
Section 3021 Establishment.
Section 3022 Duties.
Part 2 Other Studies.
Section 3031 Congressional study.
Section 3032 Protection for employees under Federal procurement, construction, and research contracts and grants.
Subtitle C Enrollment of Actuaries
Section 3041 Establishment of Joint Board for the enrollment of actuaries.
Section 3042 Enrollment by Joint Board.
Section 3043 Amendment of Internal turnover Code.
TITLE IV PLAN TERMINATION INSURANCE.
Subtitle A Pension Benefit Guaranty Corporation.
Section 4001 Definitions.
Section 4002 Pension Benefit Guaranty Corporation.
Section 4003 Investigatory authority; cooperation with other agencies; civil actions.
Section 4004 (Repealed).
Section 4005 Establishment of pension benefit guaranty funds.
Section 4006 Premium rates.
Section 4007 Payment of premiums.
Section 4008 Report by the corporation.
Section 4009 Portability assistance.
Subtitle B Coverage
Section 4021 Plans covered
Section 4022 Single-employer plan benefits guaranteed.
Section 4022A Multi-employer plan benefits guaranteed.
Section 4022B Aggregate limit on benefits guaranteed.
Section 4023 Plan fiduciaries.
Subtitle C Terminations
Section 4041 Termination of single-employer plans.
Section 4041A Termination of multi-employer plans.
Section 4042 Institution of termination proceedings by the corporation.
Section 4043 Reportable events.
Section 4044 Allocation of assets.
Section 4045 Recapture of certain payments.
Section 4046 Reports to trustee.
Section 4047 Restoration of plans.
Section 4048 Date of termination.
Section 4049 (Repealed).
Subtitle D Liability
Section 4061 Amounts payable by the corporation.
Section 4062 Liability for termination of single-employer plans under a distress termination.
Section 4063 Liability of substantial employer for withdrawal from single-employer plans under multiple controlled groups.
Section 4064 Liability on termination of single-employer plans under multiple controlled groups.
Section 4065 Annual report for plan administrator.
Section 4066 Annual notification of substantial employers.
Section 4067 Recovery of liability for plan terminations.
Section 4068 Lien for liability.
Section 4069 Treatment of transactions to evade liability; effect of corporate reorganization.
Section 4070 Enforcement authority relating to terminations of single-employer plans.
Subtitle E Special Provisions for Multi-employer Plans.
Part I Employer Withdrawals.
Section 4201 Withdrawal liability established.
Section 4202 Determination and collection of liability; notification of employer.
Section 4203 Complete withdrawal.
Section 4204 Sale of assets.
Section 4205 Partial withdrawals.
Section 4206 Adjustment for partial withdrawal.
Section 4207 Reduction or waiver of complete withdrawal liability.
Section 4208 Reduction or abatement of partial withdrawal liability.
Section 4209 De minimis rule.
Section 4210 No withdrawal liability for certain temporary contribution obligation periods.
Section 4211 Methods for computing withdrawal liability.
Section 4212 Obligation to contribute; special rules.
Section 4213 Actuarial assumptions, etc.
Section 4214 Application of plan amendments.
Section 4215 Plan notification to corporation of potentially significant withdrawals.
Section 4216 Special rules for Section 404(c) plans.
Section 4217. Application of part in case of certain pre-1980 withdrawals.
Section 4218 Withdrawal not to occur merely because of change in business form or suspension of contributions during labor dispute.
Section 4219 Notice, collection, etc., of withdrawal liability.
Section 4220 Approval of amendments.
Section 4221 Resolution of disputes.
Section 4222 Reimbursements for uncollectible withdrawal liability.
Section 4223 Withdrawal liability payment fund.
Section 4224 Alternative method of withdrawal liability payments.
Section 4225 Limitation on withdrawal liability.
Part 2 Merger or Transfer of Plan Assets or Liabilities.
Section 4231 Mergers and transfers between multi-employer plans.
Section 4232 Transfers between a multi-employer plan and a single-employer plan.
Section 4233 Partition.
Section 4234 Asset transfer rules.
Section 4235 Transfers pursuant to change in bargaining representative.
Part 3 Reorganization; Minimum Contribution Requirement for Multi-employer Plans.
Section 4241 Reorganization status.
Section 4242 Notice of reorganization and finding requirements.
Section 4243 Minimum contribution requirement.
Section 4244 Overburden credit against minimum contribution requirement.
Section 4244A Adjustments in accrued benefits.
Section 4245 Insolvent plans.
Part 4 Financial Assistance.
Section 4261 Financial assistance.
Part 5 Benefits After Termination.
Section 4281 Benefits under certain terminated plans.
Part 6 Enforcement.
Section 4301 Civil actions.
Section 4302 Penalty for failure to provide notice.
Section 4303 Election of plan status.
Subtitle F Transition Rules and Effective Dates.
Section 4401 Amendment to Internal turnover Code of 1954.
Section 4402 Transition rules and effective dates.
TITLE I. PROTECTION OF EMPLOYEE BENEFIT RIGHTS
Subtitle A General Provisions
FINDINGS AND DECLARATION OF POLICY
Act Section 2.
(a) The Congress finds that the growth in size, scope, and numbers of employee benefit plans in recent years has been rapid and substantial; that the operational scope and economic impact of such plans is increasingly interstate; that the continued well-being and security of millions of employees and their dependents are directly affected by these plans; that they are affected with a national public interest; that they have become an important factor affecting the stability of employment and the successful development of industrial relations; that they have become an important factor in commerce because of the interstate character of their activities, and of the activities of their participants, and the employers, employee organizations, and other entities by which they are established or maintained; that a large volume of the activities of such plans is carried on by means of the mails and instrumentalities of interstate commerce; that owing to the lack of employee information and adequate safeguards concerning their operation, it is desirable in the interests of employees and their beneficiaries, and to provide for the general welfare and the free flow of commerce, that disclosure be made and safeguards be provided with respect to the establishment, operation, and administration of such plans; that they substantially affect the turnovers of the United States because they are afforded preferential Federal tax treatment; that despite the enormous growth in such plans many employees with long years of employment are losing anticipated retirement benefits owing to the lack of vesting provisions in such plans; that owing to the inadequacy of current minimum standards, the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered; that owing to the termination of plans before requisite funds have been accumulated, employees and their beneficiaries have been deprived of anticipated benefits; and that it is therefore desirable in the interests of employees and their beneficiaries, for the protection of the turnover of the United States, and to provide for the free flow of commerce, that minimum standards be provided assuring the equitable character of such plans and their financial soundness.
(b) It is hereby declared to be in the policy of this Act to protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.
(c) It is hereby further declared to be the policy of this Act to protect interstate commerce, the Federal taxing power, and the interests of participants in private pension plans and their beneficiaries by improving the equitable character and the soundness of such plans by requiring them to vest the accrued benefits of employees with significant periods of service, to meet minimum standards of funding, and by requiring plan termination insurance.
.10 House Education and Labor Committee Report (P.L. 93406).
Purposes
(1) to establish minimum standards of fiduciary conduct for Trustees, Administrators and others dealing with retirement plans, to provide for their enforcement through civil and criminal sanctions, to require adequate public disclosure of the plans' administrative and financial affairs, and
(2) to improve the equitable character and soundness of private pension plans by requiring them to:
(a) vest the accrued benefits of employees with significant periods of service with an employer,
(b) meet minimum standards of funding and
(c) guarantee the adequacy of the plan's assets against the risk of plan termination prior to completion of the normal funding cycle by insuring the unfunded portion of the benefits promised.
DEFINITIONS
Act Section 3. For purposes of this Title:
(1) The terms "employee welfare benefit plan" and "welfare plan" mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in Section 302(c) of the Labor Management Relations Act, 1947 (other than pensions on retirement or death, and insurance to provide such pensions).
(2)
(A) Except as provided in subparagraph (B), the terms "employee pension benefit plan" and "pension plan" mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.
(B) The Secretary may by regulation prescribe rules consistent with the standards and purposes of this Act providing one or more exempt categories under which
(i) severance pay arrangements, and
(ii) supplemental retirement income payments, under which the pension benefits of retirees or their beneficiaries are supplemented to take into account some portion or all of the increases in the cost-of-living (as determined by the Secretary of Labor) since retirement, shall, for purposes of this Title, be treated as welfare plans rather than pension plans. In the case of any arrangement or payment a principal effect of which is the evasion of the standards or purposes of this Act applicable to pension plans, such arrangement or payment shall be treated as a pension plan.
(3) The term "employee benefit plan" or "plan" means an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan.
(4) The term "employee organization" means any labor union or any organization of any kind, or any agency or employee representation committee, association, group, or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan, or other matters incidental to employment relationships; or any employees' beneficiary association organized for the purpose in whole or in part, of establishing such a plan.
(5) The term "employer" means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.
(6) The term "employee" means any individual employed by an employer.
(7) The term "participant" means any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.
(8) The term "beneficiary" means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.
(9) The term "person" means an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association, or employee organization.
(10) The term "State" includes any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, and the Canal Zone. The term "United States" when used in the geographic sense means the States and the Outer Continental Shelf lands defined in the Outer Continental Shelf Lands Act (43 U.S.C. 1331-1343).
(11) The term "commerce" means trade, traffic, commerce, transportation, or communication between any State and any place outside thereof.
(12) The term "industry or activity affecting commerce" means any activity, business, or industry in commerce or in which a labor dispute would hinder or obstruct commerce or the free flow of commerce, and includes any activity or industry "affecting commerce" within the meaning of the Labor Management Relations Act, 1947, or the Railway Labor Act.
(13) The term "Secretary" means the Secretary of Labor.
(14) The term "party in interest" means, as to an employee benefit plan
(A) any fiduciary (including, but not limited to, any administrator, officer, trustee, or custodian), counsel, or employee of such employee benefit plan;
(B) a person providing services to such plan;
(C) an employer any of whose employees are covered by such plan;
(D) an employee organization any of whose members are covered by such plan;
(E) an owner, direct or indirect, of 50 percent or more of
(i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation,
(ii) the capital interest or the profits interest of a partnership, or
(iii) the beneficial interest of a trust or unincorporated enterprise, which is an employer or an employee organization described in subparagraph (C) or (D);
(F) a relative (as defined in paragraph (15)) of any individual described in subparagraph (A), (B), (C), or (E);
(G) a corporation, partnership, or trust or estate of which (or in which) 50 percent or more of
(i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation,
(ii) the capital interest or profits interest of such partnership, or
(iii) the beneficial interest of such trust or estate, is owned directly or indirectly, or held by persons described in subparagraph (A), (B), (C), (D), or (E);
(H) an employee, officer, director (or an individual having powers or responsibilities similar to those of officers or directors), or a 10 percent or more shareholder directly or indirectly, of a person described in subparagraph (B), (C), (D), (E), or (G), or of the employee benefit plan; or
(I) a 10 percent or more (directly or indirectly in capital or profits) partner or joint venturer of a person described in subparagraph (B), (C), (D), (E), or (G).
The Secretary, after consultation and coordination with the Secretary of the Treasury, may by regulation prescribe a percentage lower than 50 percent of subparagraphs (E) and (G) and lower than 10 percent for subparagraph (H) or (I). The Secretary may prescribe regulations for determining the ownership (direct or indirect) of profits and beneficial interests, and the manner in which indirect stockholdings are taken into account. Any person who is a party in interest with respect to a plan to which a trust described in Section 501(c)(22) of the Internal turnover Code of 1986 is permitted to make payments under Section 4223 shall be treated as a party in interest with respect to such trust.
(15) The term "relative" means a spouse, ancestor, lineal descendant, or spouse of a lineal descendant.
(16) (A) The term "administrator" means
(i) the person specifically so designated by the terms of the instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(iii) in the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.
(B) The term "plan sponsor" means
(i) the employer in the case of an employee benefit plan established or maintained by a single employer,
(ii) the employee organization in the case of a plan established or maintained by an employee organization, or
(iii) in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.
(17) The term "separate account" means an account established or maintained by an insurance company under which income, gains, and losses, whether or not realized, from assets allocated to such account, are, in accordance with the applicable contract, credited to or charged against such account without regard to other income, gains, or losses of the insurance company.
(18) The term "adequate consideration" when used in part 4 of subtitle B means (A) in the case of a security for which there is a generally recognized market, either
(i) the price of the security prevailing on a national securities exchange which is registered under Section 6 of the Securities Exchange Act of 1934, or
(ii) if the security is not traded on such a national securities exchange, a price not less favorable to the plan than the offering price for the security as established by the current bid and asked prices quoted by persons independent of the issuer and of any party in interest; and (B) in the case of an asset other than a security for which there is a generally recognized market, the fair market value of the asset as determined in good faith by the trustee or named fiduciary pursuant to the terms of the plan and in accordance with regulations promulgated by the Secretary.
(19) The term "nonforfeitable" when used with respect to a pension benefit or right means a claim obtained by a participant or his beneficiary to that part of an immediate or deferred benefit under a pension plan which arises from the participant's service, which is unconditional, and which is legally enforceable against the plan. For purposes of this paragraph, a right to an accrued benefit derived from employer contributions shall not be treated as forfeitable merely because the plan contains a provision described in Section 203(a)(3).
(20) The term "security" has the same meaning as such term has under Section 2(1) of the Securities Act of 1933 (15 U.S.C. 77b(1)).
(21) (A) Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to the extent
(i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets,
(ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or
(iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under Section 405(c)(1)(B).
(B) If any money or other property of an employee benefit plan is invested in securities issued by an investment company registered under the Investment Company Act of 1940, such investment shall not by itself cause such investment company or such investment company's investment adviser or principal underwriter to be deemed to be a fiduciary or a party in interest as those terms are defined in this Title, except insofar as such investment company or its investment adviser or principal underwriter acts in connection with an employee benefit plan covering employees of the investment company, the investment adviser, or its principal underwriter. Nothing contained in this subparagraph shall limit the duties imposed on such investment company, investment adviser, or principal underwriter by any other law.
(22) The term "normal retirement benefit" means the greater of the early retirement benefit under the plan, or the benefit under the plan commencing at normal retirement age. The normal retirement benefit shall be determined without regard to
(A) medical benefits, and
(B) disability benefits not in excess of the qualified disability benefit.
For purposes of this paragraph, a qualified disability benefit is a disability benefit provided by a plan which does not exceed the benefit which would be provided for the participant if he separated from the service at normal retirement age. For purposes of this paragraph, the early retirement benefit under a plan shall be determined without regard to any benefit under the plan which the Secretary of the Treasury finds to be a benefit described in Section 204(b)(1)(G).
(23) The term "accrued benefit" means
(A) in the case of a defined benefit plan, the individual's accrued benefit determined under the plan and, except as provided in Section 204(c)(3), expressed in the form of an annual benefit commencing at normal retirement age, or
(B) in the case of a plan which is an individual account plan, the balance of the individual's account.
The accrued benefit of an employee shall not be less than the amount determined under Section 204(c)(2)(B) with respect to the employee's accumulated contribution.
(24) The term "normal retirement age" means the earlier of
(A) the time a plan participant attains normal retirement age under the plan, or
(B) the later of
(i) the time a plan participant attains age 65, or
(ii) the 5th anniversary of the time a plan participant commenced participation in the plan.
(25) The term "vested liabilities" means the present value of the immediate or deferred benefits available at normal retirement age for participants and their beneficiaries which are nonforfeitable.
(26) The term "current value" means fair market value where available and otherwise the fair value as determined in good faith by a trustee or a named fiduciary (as defined in Section 402(a)(2)) pursuant to the terms of the plan and in accordance with regulations of the Secretary, assuming an orderly liquidation at the time of such determination.
(27) The term "present value", with respect to a liability, means the value adjusted to reflect anticipated events. Such adjustments shall conform to such regulations as the Secretary of the Treasury may prescribe.
(28) The term "normal service cost" or "normal cost" means the annual cost of future pension benefits and administrative expenses assigned, under an actuarial cost method, to years subsequent to a particular valuation date of a pension plan. The Secretary of the Treasury may prescribe regulations to carry out this paragraph.
(29) The term "accrued liability" means the excess of the present value, as of a particular valuation date of a pension plan, of the projected future benefit costs and administrative expenses for all plan participants and beneficiaries over the present value of future contributions for the normal cost of all applicable plan participants and beneficiaries. The Secretary of the Treasury may prescribe regulations to carry out this paragraph.
(30) The term "unfunded accrued liability" means the excess of the accrued liability, under an actuarial cost method which so provides, over the present value of the assets of a pension plan. The Secretary of the Treasury may prescribe regulations to carry out this paragraph.
(31) The term "advance funding actuarial cost method" or "actuarial cost method" means a recognized actuarial technique utilized for establishing the amount and incidence of the annual actuarial cost of pension plan benefits and expenses. Acceptable actuarial cost methods shall include the accrued benefit cost method (unit credit method), the entry age normal cost method, the individual level premium cost method, the aggregate cost method, the attained age normal cost method, and the frozen initial liability cost method. The terminal funding cost method and the current funding (pay-as-you-go) cost method are not acceptable actuarial cost methods. The Secretary of the Treasury shall issue regulations to further define acceptable actuarial cost methods.
(32) The term "governmental plan" means a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. The term "governmental plan" also includes any plan to which the Railroad Retirement Act of 1935 or 1937 applies, and which is financed by contributions required under that Act and any plan of an international organization which is exempt from taxation under the provisions of the International Organizations Immunities Act (59 Stat. 669).
(33) (A) The term "church plan" means a plan established and maintained (to the extent required in clause (ii) of subparagraph (B)) for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under Section 501 of the Internal turnover Code of 1986.
(B) The term "church plan" does not include a plan
(i) which is established and maintained primarily for the benefit of employees (or their beneficiaries) of such church or convention or association of churches who are employed in connection with one or more unrelated trades or businesses (within the meaning of Section 513 of the Internal turnover Code of 1986), or
(ii) if less than substantially all of the individuals included in the plan are individuals described in subparagraph (A) or in clause (ii) of subparagraph (C) (or their beneficiaries).
(C) For purposes of this paragraph
(i) A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches includes a plan maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.
(ii) The term employee of a church or a convention or association of churches includes
(I) a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry, regardless of the source of his compensation;
(II) an employee of an organization, whether a civil law corporation or otherwise, which is exempt from tax under Section 501 of the Internal turnover Code of 1986 and which is controlled by or associated with a church or a convention or association of churches; and
(III) an individual described in clause (v).
(iii) A church or a convention or association of churches which is exempt from tax under Section 501 of the Internal turnover Code of 1986 shall be deemed the employer of any individual included as an employee under clause (ii).
(iv) An organization, whether a civil law corporation or otherwise, is associated with a church or a convention or association of churches if it shares common religious bonds and convictions with that church or convention or association of churches.
(v) If an employee who is included in a church plan separates from the service of a church or a convention or association of churches or an organization, whether a civil law corporation or otherwise, which is exempt from tax under Section 501 of the Internal turnover Code of 1986 and which is controlled by or associated with a church or a convention or association of churches, the church plan shall not fail to meet the requirements of this paragraph merely because the plan
(I) retains the employee's accrued benefit or account for the payment of benefits to the employee or his beneficiaries pursuant to the terms of the plan; or
(II) receives contributions on the employee's behalf after the employee's separation from such service, but only for a period of 5 years after such separation, unless the employee is disabled (within the meaning of the disability provisions of the church plan or, if there are no such provisions in the church plan, within the meaning of Section 72(m)(7) of the Internal turnover Code of 1986) at the time of such separation from service.
(D) (i) If a plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under Section 501 of the Internal turnover Code of 1986 fails to meet one or more of the requirements of this paragraph and corrects its failure to meet such requirements within the correction period, the plan shall be deemed to meet the requirements of this paragraph for the year in which the correction was made and for all prior years.
(ii) If a correction is not made within the correction period, the plan shall be deemed not to meet the requirements of this paragraph beginning with the date on which the earliest failure to meet one or more of such requirements occurred.
(iii) For purposes of this subparagraph, the term "correction period" means
(I) the period ending 270 days after the date of mailing by the Secretary of the Treasury of a notice of default with respect to the plan's failure to meet one or more of the requirements of this paragraph; or
(II) any period set by a court of competent jurisdiction after a final determination that the plan fails to meet such requirements, or, if the court does not specify such period, any reasonable period determined by the Secretary of the Treasury on the basis of all the facts and circumstances, but in any event not less than 270 days after the determination has become final; or
(III) any additional period which the Secretary of the Treasury determines is reasonable or necessary for the correction of the default, whichever has the latest ending date.
(34) The term "individual account plan" or "defined contribution plan" means a pension plan which provides for an individual account for each participant and for benefits based solely upon the amount contributed to the participant's account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant's account.
(35) The term "defined benefit plan" means a pension plan other than an individual account plan; except that a pension plan which is not an individual account plan and which provides a benefit derived from employer contributions which is based partly on the balance of the separate account of a participant
(A) for the purposes of Section 202, shall be treated as an individual account plan, and
(B) for the purposes of paragraph (23) of this Section and Section 204 shall be treated as an individual account plan to the extent benefits are based upon the separate account of a participant and as a defined benefit plan with respect to the remaining portion of benefits under the plan.
(36) The term "excess benefit plan" means a plan maintained by an employer solely for the purpose of providing benefits for certain employees in excess of the limitations on contributions and benefits imposed by Section 415 of the Internal turnover Code of 1986 on plans to which that Section applies, without regard to whether the plan is funded. To the extent that a separable part of a plan (as determined by the Secretary of Labor) maintained by an employer is maintained for such purpose, that part shall be treated as a separate plan which is an excess benefit plan.
(37) (A) The term "multi-employer plan" means a plan
(i) to which more than one employer is required to contribute,
(ii) which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and
(iii) which satisfies such other requirements as the Secretary may prescribe by regulation.
(B) For purposes of this paragraph, all trades or businesses (whether or not incorporated) which are under common control within the meaning of Section 4001(b)(1) are considered a single employer.
(C) Notwithstanding subparagraph (A), a plan is a multi-employer plan on and after its termination date if the plan was a multi-employer plan under this paragraph for the plan year preceding its termination date.
(D) For purposes of this Title, notwithstanding the preceding provisions of this paragraph, for any plan year which began before the date of the enactment of the Multi-employer Pension Plan Amendments Act of 1980, the term "multi-employer plan" means a plan described in Section 3(37) of this Act as in effect immediately before such date.
(E) Within one year after the date of the enactment of the Multi-employer Pension Plan Amendments Act of 1980, a multi-employer plan may irrevocably elect, pursuant to procedures established by the corporation and subject to the provisions of sections 4403(b) and (c), that the plan shall not be treated as a multi-employer plan for all purposes under this Act or the Internal turnover Code of 1954 if for each of the last 3 plan years ending prior to the effective date of the Multi-employer Pension Plan Amendments Act of 1980
(i) the plan was not a multi-employer plan because the plan was not a plan described in Section 3(37)(A)(iii) of this Act and Section 414(f)(1)(C) of the Internal turnover Code of 1954 (as such provisions were in effect on the day before the date of the enactment of the Multi-employer Pension Plan Amendments Act of 1980); and
(ii) the plan had been identified as a plan that was not a multi-employer plan in substantially all its filings with the corporation, the Secretary of Labor and the Secretary of the Treasury.
(F) (i) For purposes of this Title a qualified football coaches plan
(I) shall be treated as a multi-employer plan to the extent not inconsistent with the purposes of this subparagraph; and
(II) notwithstanding Section 401(k)(4)(B) of the Internal turnover Code of 1986, may include a qualified cash and deferred arrangement.
(ii) For purposes of this subparagraph, the term "qualified football coaches plan" means any defined contribution plan which is established and maintained by an organization
(I) which is described in Section 501(c) of such Code;
(II) the membership of which consists entirely of individuals who primarily coach football as full-time employees of 4-year colleges or universities described in Section 170(b)(1)(A)(ii) of such Code; and
(III) which was in existence on September 18, 1986.
(38) The term "investment manager" means any fiduciary (other than a trustee or named fiduciary, as defined in Section 402(a)(2))
(A) who has the power to manage, acquire, or dispose of any asset of a plan;
(B) who is
(i) registered as an investment adviser under the Investment Advisers Act of 1940,
(ii) is a bank, as defined in that Act; or
(iii) is an insurance company qualified to perform services described in subparagraph (A) under the laws of more than one State; and
(C) has acknowledged in writing that he is a fiduciary with respect to the plan.
(39) The terms "plan year" and "fiscal year of the plan" mean, with respect to a plan, the calendar, policy, or fiscal year on which the records of the plan are kept.
(40) (A) The term "multiple employer welfare arrangement" means an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit described in paragraph (1) to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries, except that such term does not include any such plan or other arrangement which is established or maintained
(i) under or pursuant to one or more agreements which the Secretary finds to be collective bargaining agreements,
(ii) by a rural electric cooperative, or
(iii) by a rural telephone cooperative association.
(B) For purposes of this paragraph
(i) two or more trades or businesses, whether or not incorporated, shall be deemed a single employer if such trades or businesses are within the same control group,
(ii) the term "control group" means a group of trades or businesses under common control,
(iii) the determination of whether a trade or business is under "common control" with another trade or business shall be determined under regulations of the Secretary applying principles similar to the principles applied in determining whether employees of two or more trades or businesses are treated as employed by a single employer under Section 4001(b), except that, for purposes of this paragraph, common control shall not be based on an interest of less than 25 percent,
(iv) the term "rural electric cooperative" means
(I) any organization which is exempt from tax under Section 501(a) of the Internal turnover Code of 1986 and which is engaged primarily in providing electric service on a mutual or cooperative basis, and
(II) any organization described in paragraph (4) or (6) of Section 501(c) of the Internal turnover Code of 1986 which is exempt from tax under Section 501(a) of such Code and at least 80 percent of the members of which are organizations described in subclause (I), and
(v) the term "rural telephone cooperative association" means an organization described in paragraph (4) or (6) of Section 501(c) of the Internal turnover Code of 1986 which is exempt from tax under Section 501(a) of such Code and at least 80 percent of the members of which are organizations engaged primarily in providing telephone service to rural areas of the United States on a mutual, cooperative, or other basis.
(41) Single Employer Plan. The term "single-employer plan" means an employee benefit plan other than a multi-employer plan.
Amendments
P.L. 102-9, Section 2:
Amended ERISA Section 3(40) by striking "or" at the end of subparagraph (A)(i); by striking "cooperative." in subparagraph (A)(i) and adding "cooperative, or"; by adding a new subparagraph (iii) in paragraph (A) to read as above; by striking "and" at the end of subparagrpah (B)(iii); by striking "subclause (I)." in subparagraph (B) (iv)(II) and adding "subclause (I), and"; and by adding a new subclause-(v) at the end of subparagraph (B) to read as above, effective on the date of enactment.
P.L. 101-508, Section 12001(b)(2)(C):
Amended ERISA Section 3 by adding a new paragraph (41) to read as above effective for reversions occurring after September 30, 1990 except for the provisions of Act. Section 17A03(b).
SECTION 12003. EFFECTIVE DATE.
(b) EXCEPTION. The amendments made by this sum Title shall not apply to any reversion after September 30, 1990, if means a plan which is not a multi-employer plan.
(1) in the case of plans subject to Title IV of the Employee Retirement Income Security Act of 1974, a notice of intent to terminate under such Title was provided to participants (or if no participants, to the Pension Benefit Guaranty Corporation)before October 1, 1990,
(2) in the case of plans subject to Title I (and not to Title IV) of such Act, a notice of intent to reduce future accruals under Section 204(h) of such Act was provided to participants in connection with the termination before October 1, 1990,
(3) in the case of plans not subject to Title I or IV of such Act, a request for a determination letter with respect to the termination was filed with the Secretary of the Treasury or the Secretary's delegate before October 1,1990, or
(4) in the case of plans not subject to Title I or IV of such Act and having only I participant, a resolution terminating the plan was adopted by the employer before October 1, 1990.
P.L. 101-239, Section 7871(b)(2):
Amended ERISA Section 3(24)(B) to read as above, effective for plan years beginning on or after January 1, 1988 and for service performed on or after that date. Prior to amendment, Section 3(24)(8) read as follows:
(B) the latest of
(i) the time a plan participant attains age 65,
(ii) in the case of a plan participant who commences participation in the plan within 5 years before attaining normal retirement age under the plan, the 5th anniversary of the time the plan participant commences participation in the plan, or
(iii) in the case of a plan participant not described in clause (ii), the 10th anniversary of the time the plan participant commences participation in the plan.
P.L. 101-239, Section 7881(m)(2)(D):
Amended ERISA Section 3(23) by adding a new flush sentence to read as above effective December 22, 1987.
P.L. 101-239, Section 7893(a):
Amended ERISA Section 3(37)(B) by striking "Section 4001(c)(1)" and inserting "Section 4001(b)(1)" effective April 7, 1986.
P.L. 101-239, Section 7894(a)(1)(A):
Amended ERISA Section 3(33)(D)(iii) by inserting "of the Treasury" after "Secretary" each place it appears effective as if included in P.L. 96-364, Section 407.
P.L. 101-239, Section 7894(a)(2):
Amended ERISA Section 3(37)(F) in clause (i)(II) by striking "such Code" and inserting "the Internal turnover Code of 1986;" in clause (ii)(l) by inserting "of such Code" after "Section 501(c);" and in clause (ii)(II) by inserting "of such Code" after "Section 170(b)(1)(A)(ii)" effective as if included in P.L. 100-202, Section 136.
P.L. 101-239, Section 7894(a)(3):
Amended ERISA Section 3(39) by inserting a comma after "mean" and by inserting "the" before "calendar" effective September 2, 1986.
P.L. 101-239, Section 7894(a)(4):
Amended ERISA Section 3 by adding a new paragraph (41) to read as above effective September 2, 1986.
P.L. 101-239, Section 7891(a)(1):
Titles I, III, and IV of ERISA (other than sections 3(37)(E), 301(a)(7), and 308, the last sentence of Section 408(d), and sections 414(c), 4001(a)(3)(ii), and 4393) are each amended by striking "Internal turnover Code of 1954" each place it appears and inserting "Internal turnover Code of 1986" effective April 7, 1986.
P.L. 100-202, Section 136:
Amended ERISA Section 3(37) by adding subparagraph (F) to read as above.
P.L. 99-514, Section 1897(u)(3):
Repealed Section 11016 of P.L. 99-272, effective on April 7, 1986.
P.L. 99-509, Section 9203(b)(1):
Amended ERISA Section 3(24)(B) to read as above, effective with respect to plan years beginning on or after January 1, 1988 and only with respect to service performed on or after such date. See also Section 9204(c) at 1(14,440 (amendment notes). Prior to amendment, Section 3(24)(B) read as follows:
(24) The term "normal retirement age" means the earlier
(B) the later of
(i) the time a plan participant attains age 65, or
(ii) the 10th anniversary of the time a plan participant commenced participation in the plan.
P.L. 99-272:
Act Section 11016(c)(1) amended ERISA Section 3(37)(A) by inserting "pension" before "plan" effective on April 7, 1986.
P.L. 97-473:
Added paragraph (40), effective January 14, 1983.
P.L. 96-364; Sections 302(a), 305, 407(a), and 409:
Amended Section 3(2) by adding "(A) Except as provided in subparagraph (B), the", by renumbering subsections (A) and (B) as (i) and (ii) and by adding new subparagraph (B), effective September26, 1980.
Amended Section 3(14) by adding the last sentence to read as above, effective April 29,1980.
Amended Section 3(33) to read as above, effective January 1, 1974. Prior to amendment, the Section read:
"(33) (A) The term 'church plan' means (i) a plan established and maintained for its employees by a church or by a convention or association of churches which is exempt from tax under Section 501 of the Internal turnover Code of 1954, or (ii) a plan described in subparagraph (C).
(B) The term 'church plan' (notwithstanding the provisions of subparagraph (A)) does not include a plan
(i) which is established and maintained primarily for the benefit of employees (or their beneficiaries) of such church or convention or association of churches who are employed in connection with one or more unrelated trades or businesses (within the meaning of Section 513 of the Internal turnover Code of 1954), or
(ii) which is a plan maintained by more than one employer, if one or more of the employers in the plan is not a church (or a convention or association of churches) which is exempt from tax under Section 501 of the Internal turnover Code of 1954.
(C) Notwithstanding the provisions of subparagraph (B)(ii), a plan in existence on January 1, 1974, shall be treated as a 'church plan' if it is established and maintained by a church or convention or association of churches for its employees and employees of one or more agencies of such church (or convention or association) for the employees of such church (or convention or association) and the employees of one or more agencies of such church (or convention or association), and if such church (or convention or association) and each such agency is exempt from tax under Section 501 of the Internal turnover Code of 1954. The first sentence of this subparagraph shall not apply to any plan maintained for employees of an agency with respect to which the plan was not maintained on January 1, 1974. The first sentence of this subparagraph shall not apply with respect to any plan for any plan year beginning after December 31, 1982."
Amended Section 3(37) to read as above generally effective for plan years beginning on or after September 26, 1980. Prior to amendment, the Section read:
"(37) (A) The term 'multi-employer plan' means a plan
(i) to which more than one employer is required to contribute,
(ii) which is maintained pursuant to one or more collective-bargaining agreements between an employee organization and more than one employer,
(iii) under which the amount of contributions made under the plan for a plan year by each employer making such contributions is less than 50 percent of the aggregate amount of contributions made under the plan for that plan year by all employers making such contributions,
(iv) under which benefits are payable with respect to each participant without regard to the cessation of contributions by the employer who had employed that participant except to the extent that such benefits accrued as a result of service with the employer before such employer was required to contribute to such plan, and
(v) which satisfies such other requirements as the Secretary may by regulations prescribe.
(B) For purposes of this paragraph
(i) if a plan is a multi-employer plan within the meaning of subparagraph (A) for any plan year, clause (iii) of subparagraph (A) shall be applied by substituting '75 percent' for '50 percent' for each subsequent plan year until the first plan year following a plan year in which the plan had one employer who made contributions of 75 percent or more of the aggregate amount of contributions made under the plan for that plan year by all employers making such contributions, and
(ii) all corporations which are members of a controlled group of corporations (within the meaning of Section 1563(a) of the Internal turnover Code of 1954, determined without regard to Section 1563(e)(3)(C) of such Code) shall be deemed to be one employer. Effective September 26, 1986 except that the prior law definition will continue for plan years beginning before enactment."
.085 Committee Report on P.L. 102-89
This Section amends Section 3(40) of Title I of the Employee Retirement Income Security Act of 1974 to exclude rural telephone cooperative associations from the definition of a multiple employer welfare arrangement (MEWA). Under Section 514, ERISA's preemption provision, a MEWA may be subject to some or all provisions of state insurance law. Thus, the effect of this amendment is to treat rural telephone cooperative associations in the same manner as rural electric cooperative associations are currently treated under ERISA, i.e., both would be exempt from state insurance laws.
.09 Committee Reports on P.L. 100-202
Conference Committee Report. Amendment No. 79: Inserts Section as proposed by the Senate amending the Employee Retirement Income Security Act of 1974 for the purpose of defining "qualified football coaches plan" to mean a defined contribution plan established and maintained by a tax-exempt organization whose membership consists of full-time football coaches at four-year colleges and universities. The House resolution contained no similar provision.
.095 Senate Committee Reports (P.L. 96-364). Under present law, the standards provided by the labor law provisions of ERISA generally do not apply to the pension plan of a church for its employees. Church plans are also generally exempt from the tax qualification standards which correspond to the labor standards.
Under present law, a church plan may cover employees of a tax-exempt agency related to a church only if the plan was in existence on January 1, 1974. For taxable years beginning after December 31, 1982, a church plan no longer will be able to cover such employees.
Reason for change. The Committees believe that plans maintained by churches should be allowed to cover all employees of related tax-exempt agencies.
Explanation of the bill. The bill would permit a church plan to cover employees of a tax-exempt agency controlled by or affiliated with a church or a convention or association of churches. This would include ministers and other clerical employees as well as lay employees of the church agency. Thus, for plans in existence on January 1, 1974, present law would be continued after December 31, 1982, and for other plans present law would be modified. Also, the bill would provide a period of time during which a plan intended to qualify as a church plan but failing to do so could be amended to so qualify without penalty.
Effective date. The provisions of the bill would be effective as of January 1, 1974.
The bill would allow the Department of Labor to prescribe rules, consistent with the standards and purposes of Title I of ERISA, under which certain categories of (1) severance pay arrangements, and (2) supplemental retirement income payments, would be treated as welfare plans rather than pension plans.
For example, as supplemental income payments, an employer might provide for the payment of monthly supplemental amounts to retirees based on a formula amounting to 3 percent, multiplied by the retiree's monthly pension benefit, multiplied by the number of years that such retirees' pension benefit has been in pay status.
The Committees expect that in prescribing regulations applicable to such supplemental payments, the Secretary of Labor will take into account the overall percentage of retirees' total retirement benefits represented by such payments.
Also, in order to protect plan participants and beneficiaries against an erosion of ERISA's standards, supplemental retirement income payments or a severance pay arrangement, a principal effect of which is the evasion of the standards or purpose of Title I of ERISA is treated under the bill as a pension plan rather than a welfare plan. Thus, it is subject to the ERISA standards (e.g., vesting, funding) applicable to pension plans.
Effective date. The provisions would be effective upon the date of enactment.
.10 House Education and Labor Committee Report. (P.L. 93-406). Definitions.
The definition of "employee" is intended to encompass any person who has the status of an "employee" under a collective bargaining agreement.
The exclusion of assets of investment companies regulated under the Investment Company Act of
1940 from the definition of "fund" is not intended to exclude participating shares in an investment company held by the fund.
With respect to the term "profit-sharing retirement" plan, it is intended that stock bonus, thrift and savings or similar plans with retirement features be treated as the equivalent of profit-sharing retirement plans for purposes of this Act unless expressly indicated otherwise.
With respect to the term "non-forfeitable right" or "vested right", it is not contemplated that vesting be required in benefits such as death benefits, disability benefits, or other forms of ancillary benefits provided by the plan. The plan may, of course, at its option, provide for vesting in such benefits.
With respect to "adequate consideration," it is intended that this term be read to include the fair market value of the use of leased property.
.15 Conference Committee Joint Explanation. Definitions.
The substitute defines "fiduciary" as any person who exercises any discretionary authority or control respecting management of a plan, exercises any authority or control respecting the management or disposition of its assets or has any discretionary authority or responsibility in the administration of the plan. Under this definition, fiduciaries include officers and directors of a plan, members of a plan's investment committee and persons who select these individuals.
Consequently, the definition includes persons who have authority and responsibility with respect to the matter in question, regardless of their formal Title. The term "fiduciary" also includes any person who renders investment advice for a fee and includes persons to whom "discretionary" duties have been delegated by named fiduciaries.
While the ordinary functions of consultants and advisers to employee benefit plans (other than investment advisers) may not be considered as fiduciary functions, it must be recognized that there will be situations where such consultants and advisers may because of their special expertise, in effect, be exercising discretionary authority or control with respect to the management or administration of such plan or some authority or control regarding its assets. In such cases, they are to be regarded as having assumed fiduciary obligations within the meaning of the applicable definition.
The labor definition of a "party-in-interest" includes the following general categories.
(1) Plan administrators, officers, fiduciaries, trustees, custodians, counsel and employees.
(2) Persons providing services to a plan.
(3) The employer, its employees, officers, directors, or 10-percent shareholders.
(4) Controlling or controlled parties or parties under common control (and their employees, officers, directors, or 10-percent shareholders). (Under the substitute, "control" is generally defined as 50-percent ownership. However, the Secretary of Labor and Secretary of Treasury may, by regulation, reduce this percentage.)
(5) Employee organizations with members covered by the plan, its employees, its officers and directors and its affiliates.
(6) Certain relatives and partners of parties-in-interest are also treated as parties-in-interest.
Under the tax provisions, the same general categories of persons are disqualified persons, with some differences. Although fiduciaries are disqualified persons under the tax provisions, they are to be subject to the excise tax only if they act in a prohibited transaction in a capacity other than that of a fiduciary. Also, only highly-compensated employees are to be treated as disqualified persons, not all employees of an employer, etc.
Regulations
The following regulations were adopted by FR Doc. 75-21470 under "Title 29- Labor; Chapter XXV Office of Employee Benefits Security; Part 251~Definitions of Terms used in Subchapters C, D, E, F. and G of this Chapter." The regulations were published in the Federal Register of August 15, 1975, and are effective August 15, 1975.
Section 2510.3-1. Employee welfare benefit plan.
(a) General.
(1) The purpose of this Section is to clarify the definition of the terms "employee welfare benefit plan" and "welfare plan" for purposes of Title I of the Act and this chapter by identifying certain practices which do not constitute employee welfare benefit plans for those purposes. In addition, the practices listed in this Section do not constitute employee pension benefit plans within the meaning of Section 3(2) of the Act, and therefore, do not constitute employee benefit plans within the meaning of Section 3(3). Since under Section 4(a) of the Act, only employee benefit plans within the meaning of Section 3(3) are subject to Title I of the Act, the practices listed in this Section are not subject to Title I.
(2) The terms "employee welfare benefit plan" and "welfare plan" are defined in Section 3(1) of the Act to include plans providing "(i) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (ii) any benefit described in Section 302(c) of the Labor Management Relations Act, 1947 (other than pensions on retirement or death, and insurance to provide such pensions)." Under this definition only plans which provide benefits described in Section 3(1)(A) of the Act or in Section 302(c) of the Labor-Management Relations Act 1947 (hereinafter "the LMRA") (other than pensions on retirement or death) constitute welfare plans. For example, a system of payroll deductions by an employer for deposit in savings accounts owned by its employees is not an employee welfare benefit plan within the meaning of Section 3(1) of the Act because it does not provide benefits described in Section 3(1)(A) of the Act or Section 302(c) of the LMRA. (In addition, if each employee has the right to withdraw the balance in his or her account at any time, such a payroll savings plan does not meet the requirements for a pension plan set forth in Section 3(2) of the Act and, therefore, is not an employee benefit plan within the meaning of Section 3(3) of the Act).
(3) Section 302(c) of the LMRA lists exceptions to the restrictions contained in subsections (a) and (b) of that Section on payments and loans made by an employer to individuals and groups representing employees of the employer. Of these exceptions, only those contained in paragraphs (5), (6), (7) and (8) describe benefits provided through employee benefit plans. Moreover, only paragraph (6) describes benefits not described in Section 3(1)(A) of the Act. The benefits described in Section 302(c)(6) of the LMRA but not in Section 3(1)(A) of the Act are " ..... holiday, severance or similar benefits". Thus, the effect of Section 3(1)(B) of the Act is to include within the definition of "welfare plan" those plans which provide holiday and severance benefits, and benefits which are similar (for example, benefits which are in substance severance benefits, although not so characterized).
(4) Some of the practices listed in this Section as excluded from the definition of "welfare plan" or mentioned as examples of general categories of excluded practices are inserted in response to questions received by the Department of Labor and, in the Department's judgment, do not represent borderline cases under the definition in Section 3(1) of the Act. Therefore, this Section should not be read as implicitly indicating the Department's views on the possible scope of Section 3(1).
(b) Payroll practices. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include
(1) Payment by an employer of compensation on account of work performed by an employee, including compensation at a rate in excess of the normal rate of compensation on account of performance of duties under other than ordinary circumstances, such as
(i) Overtime pay,
(ii) Shift premiums,
(iii) Holiday premiums,
(iv) Weekend premiums;
(2) Payment of an employee's normal compensation, out of the employer's general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons (such as pregnancy, a physical examination or psychiatric treatment); and
(3) Payment of compensation, out of the employer's general assets, on account of periods of time during which the employee, although physically and mentally able to perform his or her duties and not absent for medical reasons (such as pregnancy, a physical examination or psychiatric treatment) performs no duties; for example
(i) Payment of compensation while an employee is on vacation or absent on a holiday, including payment of premiums to induce employees to take vacations at a time favorable to the employer for business reasons,
(ii) Payment of compensation to an employee who is absent while on active military duty,
(iii) Payment of compensation while an employee is absent for the purpose of serving as a juror or testifying in official proceedings,
(iv) Payment of compensation on account of periods of time during which an employee performs little or no productive work while engaged in training (whether or not subsidized in whole or in part by Federal, State or local government funds), and
(v) Payment of compensation to an employee who is relieved of duties while on sabbatical leave or while pursuing further education.
(c) On-premises facilities. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include
(1) The maintenance on the premises of an employer or of an employee organization of recreation, dining or other facilities (other than day care centers) for use by employees or members; and
(2) The maintenance on the premises of an employer of facilities for the treatment of minor injuries or illness or rendering first aid in case of accidents occurring during working hours.
(d) Holiday gifts. For purposes of Title I of the Act and this chapter the terms "employee welfare benefit plan" and "welfare plan" shall not include the distribution of gifts such as turkeys or hams by an employer to employees at Christmas and other holiday seasons.
(e) Sales to employees. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include the sale by an employer to employees of an employer, whether or not at prevailing market prices, of articles or commodities of the kind which the employer offers for sale in the regular course of business.
(f) Hiring halls. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include the maintenance by one or more employers, employee organizations, or both, of a hiring hall facility.
(g) Remembrance funds. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a program under which contributions are made to provide remembrances such as flowers, an obituary notice in a newspaper or a small gift on occasions such as the sickness, hospitalization, death or termination of employment of employees, or members of an employee organization.
(h) Strike funds. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a fund maintained by an employee organization to provide payments to its members during strikes and for related purposes.
(i) Industry advancement programs. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a program maintained by an employer or group or association of employers, which has no employee participants and does not provide benefits to employees or their dependents, regardless of whether the program serves as a conduit through which funds or other assets are channeled to employee benefit plans covered under Title I of the Act.
(j) Certain group or group-type insurance programs. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a group or group-type insurance program offered by an insurer to employees or members of an employee organization, under which
(1) no contributions are made by an employer or employee organization;
(2) participation in the program is completely voluntary for employees or members;
(3) the sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and
(4) the employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs.
(k) Unfunded scholarship programs. For purposes of Title I of the Act and this chapter, the terms "employee welfare benefit plan" and "welfare plan" shall not include a scholarship program, including a tuition and education expense refund program, under which payments are made solely from the general assets of an employer or employee organization.
Section 2510.3-2. Employee pension benefit plan.
(a) General. This Section clarifies the limits of the defined terms "employee pension benefit plan" and "pension plan" for purposes of Title I of the Act and this chapter by identifying certain specific plans, funds and programs which do not constitute employee pension benefit plans for those purposes. To the extent that these plans, funds and programs constitute employee welfare benefit plans within the meaning of Section 3(1) of the Act and Section 2510.3-1 of this part, they will be covered under Title I; however, they will not be subject to parts 2 and 3 of Title I of the Act.
(b) Severance pay plans.
(1) For purposes of Title I of the Act and this chapter, an arrangement shall not be deemed to constitute an employee pension benefit plan or pension plan solely by reason of the payment of severance benefits on account of the termination of an employee's service, provided that:
(i) Such payments are not contingent, directly or indirectly, upon the employee's retiring;
(ii) The total amount of such payments does not exceed the equivalent of twice the employee's annual compensation during the year immediately preceding the termination of his service; and
(iii) All such payments to any employee are completed,
(A) In the case of an employee whose service is terminated in connection with a limited program of terminations, within the later of 24 months after the termination of the employee's service, or 24 months after the employee reaches normal retirement age; and
(B) In the case of all other employees, within 24 months after the termination of the employee's service.
(2) For purposes of this paragraph (b),
(i) "Annual compensation" means the total of all compensation, including wages, salary, and any other benefit of monetary value, whether paid in the form of cash or otherwise, which was paid as consideration for the employee's service during the year, or which would have been so paid at the employee's usual rate of compensation if the employee had worked a full year.
(ii) "Limited program of terminations" means a program of terminations:
(A) Which, when begun, was scheduled to be completed upon a date certain or upon the occurrence of one or more specified events;
(B) Under which the number, percentage or class or classes of employees whose services are to be terminated is specified in advance; and
(C) Which is described in a written document which is available to the Secretary upon request, and which contains information sufficient to demonstrate that the conditions set forth in subclauses (A) and (B) of this clause (ii) have been met. (Amended February 23, 1979, by FR Doc. 79-5812.)
(c) Bonus program. For purposes of Title I of the Act and this chapter, the terms "employee pension benefit plan" and "pension plan" shall not include payments made by an employer to some or all of its employees as bonuses for work performed, unless such payments are systematically deferred to the termination of covered employment or beyond, or so as to provide retirement income to employees.
(d) Individual Retirement Accounts.
(1) For purposes of Title I of the Act and this chapter, the terms "employee pension benefit plan" and "pension plan" shall not include an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Internal turnover Code of 1954 (hereinafter "the Code") and an individual retirement bond described in Section 409 of the Code, provided that
(i) no contributions are made by the employer or employee association;
(ii) participation is completely voluntary 403(b)(7) of the Code) to publicize their products to employees, (ii) requesting information concerning proposed funding media, products or annuity contractors;
(iii) summarizing or otherwise compiling the information provided with respect to the proposed funding media or products which are made available, or the annuity contractors whose services are provided, in order to facilitate review and analysis by the employees;
(iv) collecting annuity or custodial account considerations as required by salary reduction agreements or by agreements to forego salary increases, remitting such considerations to annuity contractors and maintaining records of such considerations;
(v) holding in the employer's name one or more group annuity contracts covering its employees;
(vi) before February 7, 1978, to have limited the funding media or products available to employees, or the annuity contractors who could approach employees, to those which, in the judgment of the employer, afforded employees appropriate investment opportunities, or
(vii) after February 6, 1978, limiting the funding media or products available to employees, or the annuity contractors who may approach employees, to a number and selection which is designed to afford employees a reasonable choice in light of all relevant circumstances. Relevant circumstances may include, but would not necessarily be limited to, the following types of factors:
(A) the number of employees affected,
(B) the number of contractors who have for employees or members;
(I) the sole involvement of the employer or employee organization is without endorsement to permit the sponsor to publicize the program to employees or members, to collect contributions through payroll deductions or dues checkoffs and to remit them to the sponsor; and
(II) the employer or employee organization receives no consideration in the form of cash or otherwise, other than reasonable compensation for services actually rendered in connection with payroll deductions or dues checkoffs.
(e) Gratuitous payments to predict retirees. For purposes of Title I of the Act and this chapter the terms "employee pension benefit plan" and "pension plan" shall not include voluntary, gratuitous payments by an employer to former employees who separated from the service of the employer if:
(1) payments are made out of the general assets of the employer,
(2) former employees separated from the service of the employer prior to September 2, 1974,
(3) payments made to such employees commenced prior to September 2, 1974, and
(4) each former employee receiving such payments is notified annually that the payments are gratuitous and do not constitute a pension plan.
(f) Tax sheltered annuities. For the purpose of Title I of the Act and this chapter, a program for the purchase of an annuity contract or the establishment of a custodial account described in Section 403(b) of the Internal turnover Code of 1954 (the Code), pursuant to salary reduction agreements or agreements to forego an increase in salary, which meets the requirements of 26 CFR Section 1.403(b)-l(b)(3) shall not be "established or maintained by an employer" as that phrase is used in the definition of the terms "employee pension benefit plan" and "pension plan" if
(1) participation is completely voluntary for employees;
(2) all rights under the annuity contract or custodial account are enforceable solely by the employee, by a beneficiary of such employee, or by any authorized representative of such employee or beneficiary;
(3) the sole involvement of the employer, other than pursuant to paragraph (f)(2) above, is limited to any of the following:
(i) permitting annuity contractors (which term shall include any agent or broker who offers annuity contracts or who makes available custodial accounts within the meaning of Section meets, indicated interest in approaching employees,
(A) the variety of available products,
(B) the terms of the available arrangements,
(C) the administrative burdens and costs to the employer, and
(D) the possible interference with employee performance resulting from direct solicitation by contractors; and
(4) the employer receives no direct or indirect consideration or compensation in cash or otherwise other than reasonable compensation to cover expenses properly and actually incurred by such employer in the performance of the employer's duties pursuant to the salary reduction agreements or agreements to forego salary increases described in this paragraph (f) above.
(g) Supplemental payment plans.
(1) General rule. Generally, an arrangement by which a payment is made by an employer to supplement retirement income is a pension plan. Supplemental payments made on or after September 26, 1980, shall be treated as being made under a welfare plan rather than a pension plan for purposes of Title I of the Act if all of the following conditions are met:
(i) Payment is made for the purpose of supplementing the pension benefits of a participant or his or her beneficiary out of:
(A) the general assets of the employer, or
(B) a separate trust fund established and maintained solely for that purpose.
(ii) The amount payable under the supplemental payment plan to a participant or his or her beneficiary with respect to a month does not exceed the payee's supplemental payment factor ("SPF," as defined in paragraph (g)(3)(i) of this Section) for that month, provided however, that unpaid monthly amounts may be cumulated and paid in subsequent months to the participant or his or her beneficiary.
(iii) The payment is not made before the last day of the month with respect to which it is computed.
(2) Safe harbor for arrangements concerning pre-1977 retirees.
(i) Notwithstanding paragraph (g)(1) of this Section, effective January 1, 1975 an arrangement by which a payment is made by an employer to supplement the retirement income of a former employee who separated from the service of the employer prior to January 1, 1977 shall be deemed not to have been made under an employee benefit plan if all of the following conditions are met:
(A) The employer is not obligated to make the payment or similar payments for more than twelve months at a time.
(B) The payment is made out of the general assets of the employer.
(C) The former employee is notified in writing at least once each year in which a payment is made that the payments are not part of an employee benefit plan subject to the protections of the Act.
(D) The former employee is notified in writing at least once each year in which a payment is made of the extent of the employer's obligation, if any, to continue the payments.
(3) Definitions and special rules. For purposes of this paragraph (g)(3),
(i) The term "supplemental payment factor" (SPF) is, for any particular month, the product of: (A) The individual's pension benefit amount (as defined in paragraph (g)(3)(ii) of this Section), and (B) the cost-of-living increase (as defined in paragraph (g)(3)(v) of this Section) for that month.
(ii) (A) The term "pension benefit amount" (PBA) means, with regard to a retiree, the amount of pension benefits payable, in the form of the annuity chosen by the retiree, for the first full month that he or she is in pay status under a pension plan (as defined in paragraph (g)(3)(iii) of this Section) sponsored by his or her employer or under a multi-employer plan in which his or her employer participates. If the retiree has received a lump-sum distribution from the plan, the PBA for the retiree shall be determined as follows:
(1) If the plan provides an annuity option at the time of the distribution, the PBA shall be computed as if the distribution had been applied on that date to the purchase from the plan of a level straight annuity for the life of the participant if the participant was unmarried at the time of the distribution or a joint and survivor annuity if the participant was married at the time of distribution.
(2) If the plan does not provide an annuity option at the time of the distribution, the PBA shall be computed as if the distribution had been applied on that date to the purchase from an insurance company qualified to do business in a State of a commercially available level straight annuity for the life of the participant if the participant was then single, or a joint and survivor annuity if the participant was then married, based upon the assumption that the participant and beneficiary are standard mortality risks.
(B) If the retiree has received from the plan a series of distributions which do not constitute a lump-sum distribution or an annuity, the PBA for the retiree shall be determined with respect to each distribution according to paragraph (g)(3)(ii)(A) above, or in accordance with a reasonably equivalent method.
(C) The term PBA, with regard to the beneficiary of a plan participant, means: (1 ) The amount of pension benefits, payable in the form of a survivor annuity to the beneficiary, for the first full month that he or she begins to receive the survivor annuity, reduced by: (2) Any increases which have been incorporated as part of the survivor annuity under the plan since the participant entered pay status or, if the participant died before the commencement of pension benefits, since the participant's date of death.
(D) Where a plan participant has commenced to receive his or her pension benefits in the form of a straight-life annuity, or another form of an annuity that does not continue after the participant's death in the form of a survivor annuity, no beneficiary of the participant will have a PBA.
(iii) The term "pension plan" means, for purposes of this paragraph (g), a pension plan as defined in Section 3(2) of the Act, but not including a plan described in Section 4(b), 201(2), or 301(a)(3) of the Act. The term also does not include an arrangement meeting all the conditions of paragraph (g)(l) or (g)(2) of this Section or of an arrangement described in Section 2510.3-2(e). In the case of a controlled group of corporations within the meaning of Section 407(d)(5) of the Act, all pension plans sponsored by members of the group shall be considered to be one pension plan.
(iv) The term "employer" means, for purposes of paragraph (g)(3) of this Section, the former employer making the supplemental payment. In the case of a controlled group of corporations within the meaning of Section 407(d)(7) of the Act, all members of the controlled group shall be considered to be one employer for purposes of this paragraph (g).
(v) The term "cost-of-living increase" (CLI) means, as to any month, a percentage equal to the following fraction:
a - b
b
where a = the CPIU for the month for which a payment is being computed, and b = the CPIU for the first full month the retiree was in pay status. Where the CLI is calculated for the beneficiary of a plan participant, "b" continues to be equal to the CPIU for the first full month the retiree was in pay status. If, however, the participant dies before the commencement of pension benefits, "b" is equal to the CPIU for the first full month the survivor is in pay status.
(vi) The term "CPIU" means the U.S. City Average All Items Consumer Price Index for all Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics. Data concerning the CPIU for a particular period can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, Washington D.C. 20212.
(vii) Where an employer does not pay to a retiree the full amount of the supplemental payments which would be permitted under paragraph (g)(l) of this Section, any unpaid amounts may be cumulated and paid in subsequent months to either the retiree or the beneficiary of the retiree.
The beneficiary need not be the recipient of a survivor annuity in order to be paid these cumulated supplemental payments.
(4) Examples. The following examples illustrate how this paragraph (g) works. As referred to in these examples, the CPIU's for July through November of 1980 are as follows:
Example (I)(a). E is an employer. R received monthly benefits of $600 under a straight-life annuity under E's defined benefit pension plan after R retired from E and entered pay status on July 1,1980. The amount that E may pay to R as supplemental payments under a welfare rather than pension plan with respect to the months of July through September of 1980 is computed as follows:
SPF for July 1980
a - b
SPF = b X PBA
= 247.8 - 247.8 X $600 = $0.00
247.8
SPF for August 1980
SPF = 249.4 - 247.8
247.8 X $600 = $3.87
SPF for September 1980
SPF = 251.7 - 247.8 X $600 = $9.44
247.8
Total= $ 0.00
3.87
9.44
$13.31
No supplemental payment may be made to R as a welfare plan payment with respect to July 1980, the month of retirement. The $3.87 that may be paid with respect to August 1980 may be paid at any time after August 31, 1980. The $9.44 that may be paid with respect to September 1980 may be paid at any time after September 30, 1980.
Example (I)(b). S is the beneficiary of R. Because R received pension benefits under a straight-life annuity, S will receive no survivor annuity from E after R's death. S thus will have no PBA after R's death and will not be eligible to receive any supplemental payments from E based on S's PBA. To the extent, however, that R did not receive supplemental payments from E to the maximum limit allowable under paragraph (g)(1), any amounts not paid to R may be cumulated and paid to S after R's death.
Example (2)(a). E is an employer. Q received monthly benefits of $500 in the form of a joint and survivor annuity under E's defined benefit pension plan since retirement from E on July 1, 1980. The amount that E may pay to Q as welfare rather than pension plan payments with respect to the months of July through September of 1980 is computed as follows:
SPF for July 1980
SPF = 249.4 - 247.8 X $500 = $0.00
247.8
SPF for August 1980
SPF = 249.4 - 247.8 X $500 = $3.23
247.8
SPF for September 1980
SPF = 251.7 - 247.8 X $500 = $7.87
247.8
Total = $ 0.00
3.23
7.87
$11.10
No supplemental payment may be made as a welfare plan payment with respect to July 1980, the month of retirement. The $3.23 that may be paid with respect to August 1980 may be paid at any time after August 31, 1980. The $7.87 that may be paid with respect to September 1980 may be paid at any time after September 30, 1980.
Example (2)(b). Q dies on October 15, 1980 without having received any supplemental payments from E. T is the beneficiary of Q. E pays T a survivor's annuity of $300 beginning in November of 1980. The amount payable to T as a survivor annuity under the plan has not been increased since Q began to receive pension benefits. Thus, T's PBA is $300. The amount that E may pay to T as welfare rather than pension plan payments with respect to the months of July through November 1980 is computed as follows:
SPF for July 1980 = $0.00
SPF for August 1980 = $3.23
SPF for September 1980 = $7.87
SPF for October 1980
SPF = a - b X PBA
b
= 253.9 - 247.8
247.8 X $500
$12.31
(Note that T's "b" is equal to Q's "b".)
SPF for November 1980
SPF = 256.2 - 247.8
247.8 X $300 = $10.17
Total that may be paid to T:
The maximum E may pay T with respect to the months of July through November 1980 as welfare rather than pension plan payments is the sum of those months' SPFs, which is $33.58.
Example (3). Assume the same facts as in Example (I)(a), except that R elected to receive a lump-sum distribution rather than a straight-life annuity. If R is unmarried on July 1, 1980, R's PBA is $600 for the remainder of R's life. If R is married to S on July 1, 1980, the PBAs of R and S are based on the annuity that would have been paid under an election to receive a joint and survivor annuity. See paragraph (g)(3)(ii)(A)(I ) of this Section.
(Added November 4, 1982, by FR Doc. 82-30403 (47 FR 50237).)
Section 2510.3-3. Employee benefit plan. -
(a) General. This Section clarifies the definition in Section 3(3) of the term "employee benefit plan" for purposes of Title I of the Act and this chapter. It states a general principle which can be applied to a large class of plans to determine whether they constitute employee benefit plans within the meaning of Section 3(3) of the Act. Under Section 4(a) of the Act, only employee benefit plans within the meaning of Section 3(3) are subject to Title I.
(b) Plans without employees. For purposes of Title I of the Act and this chapter, the term "employee benefit plan" shall not include any plan, fund or program, other than an apprenticeship or other training program, under which no employees are participants covered under the plan, as defined in paragraph (d) of this Section. For example, a so-called "Keogh" or "H.R. 10" plan under which only partners or only a sole proprietor are participants covered under the plan will not be covered under Title I. However, a Keogh plan under which one or more common law employees in addition to the self-employed individuals are participants covered under the plan, will be covered under Title I. Similarly, partnership buyout agreements described in Section 736 of the Internal turnover Code of 1954 will not be subject to Title I.
(c) Employees. For purposes of this Section:
(1) An individual and his or her spouse shall not be deemed to be employees with respect to a trade or business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse, and
(2) A partner in a partnership and his or her spouse shall not be deemed to be employees with respect to the partnership.
(d) Participant covered under the plan.
(1) (i) An individual becomes a participant covered under an employee welfare benefit plan on the earlier of
(A) the date designated by the plan as the date on which the individual begins participation in the plan;
(B) the date on which the individual becomes eligible under the plan for a benefit subject only to occurrence of the contingency for which the benefit is provided; or
(C) the date on which the individual makes a contribution to the plan, whether voluntary or mandatory.
(ii) An individual becomes a participant covered under an employee pension plan
(A) in the case of a plan which provides for employee contributions or defines participation to include employees who have not yet retired, on the earlier of
(1) the date on which the individual makes a contribution, whether voluntary or mandatory, or
(2) the date designated by the plan as the date on which the individual has satisfied the plan's age and service requirements for participation, and
(B) in the case of a plan which does not provide for employee contributions and does not define participation to include employees who have not yet retired, the date on which the individual completes the first year of employment which may be taken into account in determining
(1) whether the individual is entitled to benefits under the plan, or
(2) the amount of benefits to which the individual is entitled, whichever results in earlier participation.
(2) (i) An individual is not a participant covered under an employee welfare plan on the earliest date on which the individual
(A) is ineligible to receive any benefit under the plan even if the contingency for which such benefit is provided should occur, and
(B) is not designated by the plan as a participant.
(ii) An individual is not a participant covered under an employee pension plan or a beneficiary receiving benefits under an employee pension plan if
(A) the entire benefit rights of the individual and are legally enforceable by the sole choice of the individual against the insurance company, insurance service or insurance organization; and a contract, policy or certificate describing the benefits to which the individual is entitled under the plan has been issued to the individual; or
(B) the individual has received from the plan a lump-sum distribution or a series of distributions of cash or other property which represents the balance of his or her credit under the plan.
(3) (i) In the case of an employee pension benefit plan, an individual who, under the terms of the plan, has incurred a one-year break in service after having become a participant covered under the plan, and who has acquired no vested right to a benefit before such break in service is not a participant covered under the plan until the individual has completed a year of service after returning to employment covered by the plan.
(ii) For purposes of paragraph (d)(3)(i) of this Section, in the case of an employee pension benefit plan which is subject to Section 203 of the Act the term "year of service" shall have the same meaning as in Section 203(b)(2)(A) of the Act and any regulations issued under the Act and the term "one-year break in service" shall have the same meaning as in Section 203(b)(3)(A) of the Act and any regulations issued under the Act.
Section 2510.3-21 Definition of "Fiduciary."
(a) (Reserved)
(b) (Reserved)
(c) Investment advice.
(1) A person shall be deemed to be rendering "investment advice" to an employee benefit plan, within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974 (the Act) and this paragraph, only if:
(i) Such person renders advice to the plan as to the value of securities or other property, or makes recommendations as to the advisability of investing in, purchasing, or selling securities or other property; and
(ii) Such person either directly or indirectly (e.g., through or together with any affiliate):
(A) has discretionary authority or control, whether or not pursuant to agreement, arrangement or understanding, with respect to purchasing or selling securities or other property for the plan; or
(B) renders any advice described in paragraph (c )(1)(i ) of this Section on a regular basis insurance company, insurance service or insurance to the plan pursuant to a mutual agreement, organization licensed to do business in a State, arrangement or understanding, written or otherwise, between such person and the plan or a fiduciary with respect to the plan, that such services will serve as a primary basis for investment decisions with respect to plan assets, and that such person will render individualized investment advice to the plan based on the particular needs of the plan regarding such matters as, among other things, investment policies or strategy, overall portfolio composition, or diversification of plan investments.
(2) A person who is a fiduciary with respect to a plan by reason of rendering investment advice (as defined in paragraph (c)(l) of this Section) for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or having any authority or responsibility to do so, shall not be deemed to be a fiduciary regarding any assets of the plan with respect to which such person does not have any discretionary authority, discretionary control or discretionary responsibility, does not exercise any authority or control, does not render investment advice (as defined in paragraph (c)(1) of this Section) for a fee or other compensation, and does not have any authority or responsibility to render such investment advice, provided that nothing in this paragraph shall be deemed to:
(i) Exempt such person from the provisions of Section 405(a) of the Act concerning liability for fiduciary breaches by other fiduciaries with respect to any assets of the plan; or
(ii) Exclude such person from the definition of the term "party in interest" (as set forth in Section 3(14)(B) of the Act) with respect to any assets of the plan.
(d) Execution of securities transactions.
(1) A person who is a broker or dealer registered under the Securities Exchange Act of 1934, a reporting dealer who makes primary markets in securities of the United States Government or of an agency of the United States Government and reports daily to the Federal Reserve Bank of New York its positions with respect to such securities and borrowings thereon, or a bank supervised by the United States or a State, shall not be deemed to be a fiduciary, within the meaning of Section 3(21)(A) of the Act, with respect to an employee benefit plan solely because such person executes transactions for the purchase or sale of securities on behalf of such plan in the ordinary course of its business as a broker, dealer, or bank, pursuant to instructions of a fiduciary with respect to such plan, if:
(i) Neither the fiduciary nor any affiliate of such fiduciary is such broker, dealer, or bank; and
(ii) The instructions specify (A) the security to be purchased or sold, (B) a price range within which such security is to be purchased or sold, or, if such security is issued by an open-end investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et seq.), a price which is determined in accordance with Rule 22c-1 under the Investment Company Act of 1940 (17 CFR 270.22c-1), (C) a time span during which such security may be purchased or sold (not to exceed five business days), and (D) the minimum or maximum quantity of such security which may be purchased or sold within such price range, or, in the case of a security issued by an open-end investment company registered under the Investment Company Act of 1940, the minimum or maximum quantity of such security which may be purchased or sold, or the value of such security in dollar amount which may be purchased or sold, at the price referred to in paragraph (d)(l)(ii)(B) of this Section.
(2) A person who is a broker-dealer, reporting dealer, or bank which is a fiduciary with respect to an employee benefit plan solely by reason of the possession or exercise of discretionary authority or discretionary control in the management of the plan or the management or disposition of plan assets in connection with the execution of a transaction or transactions for the purchase or sale of securities on behalf of such plan which fails to comply with the provisions of paragraph (d)(1) of this Section, shall not be deemed to be a fiduciary regarding any assets of the plan with respect to which such broker-dealer, reporting dealer or bank does not have any discretionary authority, discretionary control or discretionary responsibility, does not exercise any authority or control, does not render investment advice (as defined in paragraph (c)(1) of this Section) for a fee or other compensation, and does not have any authority or responsibility to render such investment advice, provided that nothing in this paragraph shall be deemed to:
(i) Exempt such broker-dealer, reporting dealer, or bank from the provisions of Section 405(a) of the Act concerning liability for fiduciary breaches by other fiduciaries with respect to any assets of the plan; or
(ii) Exclude such broker-dealer, reporting dealer, or bank from the definition of the term "party in interest" (as set forth in Section 3(14)(B) of the Act) with respect to any assets of the plan.
(e) Affiliate and control.
(1) For purposes of paragraphs (c) and (d) of this Section, an "affiliate" of a person shall include:
(i) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by. or under common control with such person:
(ii) Any officer, director, partner, employee or relative (as defined in Section 3(15) of the Act) of such person; and
(iii) Any corporation or partnership of which such person is an officer, director or partner.
(2) For purposes of this paragraph, the term "control" means the power to exercise a controlling influence over the management or policies of a person other than an individual. (Section 2510.3-21 was filed with the Federal Register on October 28, 1975.)
Temporary Regulations
The following temporary regulations were adopted by FR Doc. 75-30032 under "Title 29-Labor; Chapter XXV-Employee Benefits Security, Office of Department of Labor; Part 2510 Definitions of Terms used in Subchapters C, D, E, F and G of this Chapter." The regulations were published in the Federal Register of November 7, 1975, filed November 6, 1975, and effective immediately (40 FR 52008).
Purpose: The purpose of these amendments to chapter XXV of the Department of Labor regulations is to provide guidance to determine coverage under the Employee Retirement Income Security Act of 1974 (hereinafter "the Act").
On December 4, 1974, notice was published in the Federal Register (39 FR 42234) of proposed regulations concerning the definition of the term "multi-employer plan" under Section 3(37) of the Act.
On May 12, 1975, a final rule (40 FR 20629) and proposed rule (40 FR 20653) redesignating both final and proposed subchapters, parts and sections were published in the Federal Register. Under this redesignation system, the Section numbers of proposed and adopted regulations promulgated under Chapter XXV are based on the Section numbers of the Act to which each regulation relates. The December 4 proposed regulations have been re-designated in accordance with this system.
The regulations contained in this document are both temporary regulations effective immediately and proposed regulations for final adoption. The primary reason for making these regulations effective immediately on a temporary basis is that plans not in existence on January 1, 1974 must meet the requirements of the Act for plan years beginning after September 2, 1974. For many plans the first plan year beginning after September 2, 1974 will be a plan year beginning on September 1, 1975, as a result of procedures set forth by the Internal turnover Service in turnover Procedures 74-38, 74-39, and 74-40 issued September 10 and 11, 1974. These procedures classified plans as "pre-existing plan" adopted and put into effect by an employer on or before January 1, 1974), "new plan subject to prior law" (adopted and put into effect by an employer after January 1, 1974, whose first plan year begins on or before September 2, 1974, whether or not it is adopted and put into effect by an employer before September 2, 1974), and "new plan subject to new law" (adopted and put into effect by an employer after January 1, 1974, whose first plan year begins after September 2, 1974). The effect of these procedures was to permit plans adopted after January 1, 1974 to meet the requirements of prior law rather than the requirements of the Act by making the plan year begin on or before September 2, 1974. Many of these plans will now have plan years beginning September 1, 1975, during which they will be required to meet the standards of the Act. In addition, pre-existing plans must meet the requirements of the Act for plan years beginning after December 31, 1975. The regulations in Part 2530 will allow these plans to make the necessary adjustments. Any changes or modifications contained in "final" regulations will be prospective only.
For the foregoing reasons, the undersigned finds that good cause exists for making these regulations temporarily effective without advance publication as specified in the Administrative Procedure Act (5 U.S.C. 553(d)(3)).
These regulations are also proposed for final adoption as soon as possible. Interested persons are invited to submit written data, views, or arguments concerning any or all of the proposed regulations contained in this document on or before December 3, 1975. Such data, views and comments should be submitted to the Office of Employee Benefits Security DEVD-ME, Labor Management Services Administration, U.S. Department of Labor, Washington, D.C. 20216. All comments should be clearly referenced to the numbers of the sections to which the comments are directed.
The regulation provides that all multi-employer plans must meet the tests set forth in Section 3(37)(a)(i)-(iv), and in addition a plan not in existence prior to the effective date of the Act must meet the test that it was established for a substantial business purpose. With one exception, all changes in this regulation from the December 4 proposal are editorial in nature and made in the interest of clarity.
The exception, contained in Subsection (b), is a newly added set of rules for determining whether a plan was in existence prior to the effective date of the Act. These rules are consistent with those contained in Section 1.411(a)-2(c) of the proposed regulations of the Internal turnover Service concerning vesting (26 CFR 1.411(a)-2(c)). Comments are specifically solicited on these new provisions.
(Section 505, Pub.L. 93-406, 88 Stat. 894, 29 U.S.C. 1135; Secretary of Labor's Order No. 27-74, and Labor Management Services Administration Order No. 2-6.)
Accordingly, Chapter XXV of Title 29 of the Code of Federal Regulations is amended by adding a new Section 2510.3-37.
Section 2510.3-37 Multi-employer plan. -
(a) General. Section 3(37) of the Act contains in subparagraph (a)(i)-(iv) a number of criteria which an employee benefit plan must meet in order to be a multi-employer plan under the Act. Section 3(37) also provides that the Secretary may prescribe by regulation other requirements in addition to those contained in subparagraph (a)(i)-(iv). The purpose of this regulation is to establish such requirements.
(b) Plans in existence before the effective date.
(1) A plan in existence before September 2, 1974, will be considered a multi-employer plan if it satisfies the requirements of Section 3(37)(A)(i)-(iv) of the Act.
(2) For purposes of this Section, a plan is considered to be in existence if:
(i) (A) The plan was reduced to writing and adopted by the participating employers and the employee organization (including, in the case of a corporate employer, formal approval by an employer's board of directors or shareholders, if required), even though no amounts had been contributed under the plan, and
(B) The plan has not been terminated; or
(ii) (A) There was a legally enforceable agreement to establish such a plan signed by the employers and the employee organization, and
(B) The contributions to be made to the plan were set forth in the agreement.
(iii) If a plan was in existence within the meaning of paragraph (b)(i) or (ii) of this Section, any other plan with which such existing plan is merged or consolidated shall also be considered to be in existence.
(c) Plans not in existence before the effective date. In addition to the provisions of Section 3(37)(A)(i)-(iv) of the Act, a multi-employer plan established on or after September 2, 1974, must meet the requirement that it was established for a substantial business purpose. A substantial business purpose includes the interest of a labor organization in securing an employee benefit plan for its members. The following factors are relevant in determining whether a substantial business purpose existed for the establishment of a plan; any single factor may be sufficient to constitute a substantial business purpose:
(1) The extent to which the plan is maintained by a substantial number of unaffiliated contributing employers and covers a substantial portion of the trade, craft or industry in terms of employees or a substantial number of the employees in the trade, craft or industry in a locality or geographic area;
(2) The extent to which the plan provides benefits more closely related to years of service within the trade, craft or industry rather than with an employer, reflecting the fact that an employee's relationship with an employer maintaining the plan is generally short-term although service in the trade, craft or industry is generally long-term;
(3) The extent to which collective bargaining takes place on matters other than employee benefit plans between the employee organization and the employers maintaining the plan; and
(4) The extent to which the administrative burden and expense of providing benefits through single employer plans would be greater than through a multi-employer plan.
Issued in Washington, D.C. this 4th day of November 1975.
Section 2510.3-101 Definition of "plan assets" plan investments.
(a) In general
(1) This Section describes what constitutes assets of a plan with respect to a plan's investment in another entity for purposes of Subtitle A, and Parts I and 4 of Subtitle B. of Title I of the Act and Section 4975 of the Internal turnover Code. Paragraph (a)(2) of this Section contains a general rule relating to plan investments. Paragraphs (b) through (f) of this Section define certain terms that are used in the application of the general rule. Paragraph (g) of this Section describes how the rules in this Section are to be applied when a plan owns property jointly with others or where it acquires an equity interest whose value relates solely to identified assets of an issuer. Paragraph (h) of this Section contains special rules relating to particular kinds of plan investments. Paragraph (i) describes the assets that a plan acquires when it purchases certain guaranteed mortgage certificates. Paragraph (j) of this Section contains examples illustrating the operation of this Section. The effective date of this Section is set forth in paragraph (k) of this Section.
(2) Generally, when a plan invests in another entity, the plan's assets include its investment, but do not, solely by reason of such investment, include any of the underlying assets of the entity. However, in the case of a plan's investment in an equity interest of an entity that is neither a publicly-offered security nor a security issued by an investment company registered under the Investment Company Act of 1940 its assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that
(i) The entity is an operating company, or
(ii) Equity participation in the entity by benefit plan investors is not significant.
Therefore, any person who exercises authority or control respecting the management or disposition of such underlying assets, and any person who provides investment advice with respect to such assets for a fee (direct or indirect), is a fiduciary of the investing plan.
(b) "Equity interests" and "publicly-offered securities".
(1) The term "equity interest" means any interest in an entity other than an instrument that is treated as indebtedness under applicable local law and which has no substantial equity features. A profits interest in a partnership, an undivided ownership interest in property and a beneficial interest in a trust are equity interests.
(2) A "publicly-offered security" is a security that is freely transferable, part of a class of securities that is widely held and either
(i) Part of a class of securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, or
(ii) Sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act of 1933 and the class of securities of which such security is a part is registered under the Securities Exchange Act of 1934 within 120 days (or such later time as may be allowed by the Securities and Exchange Commission) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred.
(3) For purposes of paragraph (b)(2) of this Section, a class of securities is "widely-held" only if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another. A class of securities will not fail to be widely-held solely because subsequent to the initial offering the number of independent investors falls below 100 as a result of events beyond the control of the issuer.
(4) For purposes of paragraph (b)(2) of this Section, whether a security is "freely transferable" is a factual question to be determined on the basis of all relevant facts and circumstances. If a security is part of an offering in which the minimum investment is $10,000 or less, however, the following factors ordinarily will not, alone or in combination, affect a finding that such securities are freely transferable:
(i) Any requirement that not less than a minimum number of shares or units of such security be transferred or assigned by any investor, provided that such requirement does not prevent transfer of all of the then remaining shares or units held by an investor;
(ii) Any prohibition against transfer or assignment of such security or rights in respect thereof to an ineligible or unsuitable investor;
(iii) Any restriction on, or prohibition against, any transfer or assignment which would either result in a termination or reclassification of the entity for federal or state tax purposes or which would violate any state or federal statute, regulation, court order, judicial decree, or rule of law;
(iv) Any requirement that reasonable transfer or administrative fee be paid in connection with a transfer or assignment;
(v) Any requirement that advance notice of a transfer or assignment be given to the entity and any requirement regarding execution of documentation evidencing such transfer or assignment (including documentation setting forth representations from either or both of the transferor or transferee as to compliance with any restriction or requirement described in this paragraph (b)(4) of this Section or requiring compliance with the entity's governing instruments);
(vi) Any restriction on substitution of an assignee as a limited partner of a partnership, including a general partner consent requirement, provided that the economic benefits of ownership of the assignee may be transferred or assigned without regard to such restriction or consent (other than compliance with any other restriction described in this paragraph (b)(4)) of this Section;
(vii) Any administrative procedure which establishes an effective date, or an event, such as the completion of the offering, prior to which a transfer or assignment will not be effective; and
(viii) Any limitation or restriction on transfer or assignment which is not created or imposed by the issuer or any person acting for or on behalf of such issuer.
(c) "Operating company".
(1) An "operating company" is an entity that is primarily engaged, directly or through a majority owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital. The term "operating company" includes an entity which is not described in the preceding sentence, but which is a "venture capital operating company" described in paragraph (d) or a "real estate operating company" described in paragraph (e).
(d) "Venture capital operating company".
(1) An entity is a "venture capital operating company" for the perieginning on an initial valuation date described in paragraph (d)(S)(i) and ending on the last day of the first "annual valuation period" described in paragraph (d)(5)(ii) (in the case of an entity that is not a venture capital operating company immediately before the determination) or for the 12 month period following the expiration of an "annual valuation period" described in paragraph (d)(5)(ii) (in the case of an entity that is a venture capital operating company immediately before the determination) if
(i) On such initial valuation date, or at any time within such annual valuation period, at least 50 percent of its assets (other than short-term investments pending long-term commitment or distribution to investors), valued at cost, are invested in venture capital investments described in paragraph (d)(3)(i) or derivative investments described in paragraph (d)(4); and
(ii) During such 12 month period (or during the period beginning on the initial valuation date and ending on the last day of the first annual valuation period), the entity, in the ordinary course of its business, actually exercises management rights of the kind described in paragraph (d)(3)(ii) with respect to one or more of the operating companies in which it invests.
(2) (i) A venture capital operating company described in paragraph (d)(1) shall continue to be treated as a venture capital operating company during the "distribution period" described in paragraph (d)(2)(ii). An entity shall not be treated as a venture capital operating company at any time after the end of the distribution period.
(ii) The "distribution period" referred to in paragraph (d)(2)(i) begins on a date established by a venture capital operating company that occurs after the first date on which the venture capital operating company has distributed to investors the proceeds of at least 50 percent of the highest amount of investments (other than short term investments made pending long-term commitment or distribution to investors) outstanding at any time from the date it commenced business (determined on the basis of the cost of such investments) and ends on the earlier of:
(A) The date on which the company makes a "new portfolio investment", or
(B) The expiration of 10 years from the beginning of the distribution period.
(iii) For purposes of paragraph (d)(2)(ii)(A), a "new portfolio investment" is an investment other than
(A) An investment in an entity in which the venture capital operating company had an outstanding venture capital investment at the beginning of the distribution period which has continued to be outstanding at all times during the distribution period, or
(B) A short-term investment pending long-term commitment or distribution to investors.
(3) (i) For purposes of this paragraph (d) a "venture capital investment" is an investment in an operating company (other than a venture capital operating company) as to which the investor has or obtains management rights.
(ii) The term "management rights" means contractual rights directly between the investor and an operating company to substantially participate in, or substantially influence the conduct of, the management of the operating company.
(4) (i) An investment is a "derivative investment" for purposes of this paragraph (d) if it is
(A) A venture capital investment as to which the investor's management rights have ceased in connection with a public offering of securities of the operating company to which the investment relates, or
(B) An investment that is acquired by a venture capital operating company in the ordinary course of its business in exchange for an existing venture capital investment in connection with:
(l ) A public offering of securities of the operating company to which the existing venture capital investment relates, or
(2 ) A merger or reorganization of the operating company to which the existing venture capital investment relates, provided that such merger or reorganization is made for independent business reasons unrelated to extinguishing management rights.
(ii) An investment ceases to be a derivative investment on the later of:
(A) 10 years from the date of the acquisition of the original venture capital investment to which the derivative investment relates, or
(B) 30 months from the date on which the investment becomes a derivative investment.
(5) For purposes of this paragraph (d) and paragraph (e)
(i) An "initial valuation date" is the later of
(A) Any date designated by the company within the 12-month period ending with the effective date of this Section, or
(B) The first date on which an entity makes an investment that is not a short-term investment of funds pending long-term commitment.
(ii) An "annual valuation period" is a pre-established annual period, not exceeding 90 days in duration, which begins no later than the anniversary date of an entity's initial valuation date. An annual valuation period, once established, may not be changed except for good cause unrelated to a determination under this paragraph (d) or paragraph (e).
(e) "Real estate operating company". An entity is a "real estate operating company" for the period beginning on an initial valuation date described in paragraph (d)(5)(i) and ending on the last day of the first "annual valuation period" described in paragraph (d)(5)(ii) (in the case of an entity that is not a real estate operating company immediately before the determination) or for the 12-month period following the expiration of an annual valuation period described in paragraph (d)(5)(ii) (in the case of an entity that is a real estate operating company immediately before the determination) if:
(1) On such initial valuation date, or on any date within such annual valuation period, at least 50 percent of its assets, valued at cost (other than short-term investments pending long-term commitment or distribution to investors), are invested in real estate which is managed or developed and with respect to which such entity has the right to substantially participate directly in the management or development activities; and
(2) During such 12-month period (or during the period beginning on the initial valuation date and ending on the last day of the first annual valuation period) such entity in the ordinary course of its business is engaged directly in real estate management or development activities. (Corrected by 51 FR 47226 on December 31, 1986.)
(f) Participation by benefit plan investors.
(1) Equity participation in an entity by benefit plan investors is "significant" on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25 percent or more of the value of any class of equity interests in the entity is held by benefit plan investors (as defined in paragraph (f)(2)). For purposes of determinations pursuant to this paragraph (f), the value of any equity interests held by a person (other than a benefit plan investor) who has discretionary authority or control with respect to the assets of the entity or any person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a person, shall be disregarded.
(2) A "benefit plan investor" is any of the following
(i) Any employee benefit plan (as defined in Section 3(3) of the Act), whether or not it is subject to the provisions of Title I of the Act,
(ii) Any plan described in Section 4975(e)(1) of the Internal turnover Code,
(iii) Any entity whose underlying assets include plan assets by reason of a plan's investment in the entity.
(3) An "affiliate" of a person includes any person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the person. For purposes of this paragraph (f)(3), "control", with respect to a person other than an individual, means the power to exercise a controlling influence over the management or policies of such person.
(g) Joint ownership. For purposes of this Section, where a plan jointly owns property with others, or where the value of a plan's equity interest in an entity relates solely to identified property of the entity, such property shall be treated as the sole property of a separate entity.
(h) Specific rules relating to plan investments. Notwithstanding any other provision of this Section
(1) Except where the entity is an investment company registered under the Investment Company Act of 1940, when a plan acquires or holds an interest in any of the following entities its assets include its investment and an undivided interest in each of the underlying assets of the entity:
(i) A group trust which is exempt from taxation under Section 501(a) of the Internal turnover Code pursuant to the principles of Rev. Rul. 81-100,1981-1 C.B. 326,
(ii) A common or collective trust fund of a bank,
(iii) A separate account of an insurance company, other than a separate account that is maintained solely in connection with fixed contractual obligations of the insurance company under which the amounts payable, or credited, to the plan and to any participant or beneficiary of the plan (including an annuitant) are not affected in any manner by the investment performance of the separate account.
(2) When a plan acquires or holds an interest in any entity (other than an insurance company licensed to do business in a State) which is established or maintained for the purpose of offering or providing any benefit described in Section 3(1) of Section 3(2) of the Act to participants or beneficiaries of the investing plan, its assets will include its investment and an undivided interest in the underlying assets of that entity.
(3) When a plan or a related group of plans owns all of the outstanding equity interests (other than director's qualifying shares) in an entity, its assets include those equity interests and all of the underlying assets of the entity. This paragraph (h)(3) does not apply, however, where all of the outstanding equity interests in an entity are qualifying employer securities described in Section 407(d)(5) of the Act, owned by one or more eligible individual account plan(s) (as defined in Section 407(d)(3) of the Act) maintained by the same employer, provided that substantially all of the participants in the plan(s) are, or have been, employed by the issuer of such securities or by members of a group of affiliated corporations (as determined under Section 407(d)(7) of the Act) of which the issuer is a member.
(4) For purposes of paragraph (h)(3), a "related group" of employee benefit plans consists of every group of two or more employee benefit plans
(i) Each of which receives 10 percent or more of its aggregate contributions from the same employer or from members of the same controlled group of corporations (as determined under Section 1563(a) of the Internal turnover Code, without regard to Section 1563(a)(4) thereof); or
(ii) Each of which is either maintained by, or maintained pursuant to a collective bargaining agreement negotiated by, the same employee organization or affiliated employee organizations. For purposes of this paragraph, an "affiliate" of an employee organization means any person controlling, controlled by, or under common control with such organization, and includes any organization chartered by the same parent body, or governed by the same constitution and bylaws, or having the relation of parent and subordinate.
(iii) Governmental mortgage pools. (1) Where a plan acquires a guaranteed governmental mortgage pool certificate, as defined in paragraph (i)(2), the plan's assets include the certificate and all of its rights with respect to such certificate under applicable law, but do not, solely by reason of the plan's holding of such certificate, include any of the mortgages underlying such certificate.
(2) A "guaranteed governmental mortgage pool certificate" is a certificate backed by, or evidencing an interest in, specified mortgages or participation interests therein and with respect to which interest and principal payable pursuant to the certificate is guaranteed by the United States or an agency or instrumentality thereof. The term "guaranteed governmental mortgage pool certificate" includes a mortgage pool certificate with respect to which interest and principal payment pursuant to the certificate is guaranteed by:
(i) The Government National Mortgage Association;
(ii) The Federal Home Loan Mortgage Corporation; or
(iii) The Federal National Mortgage Association.
(j) Examples. The principles of this Section are illustrated by the following examples:
(1) A plan, P. acquires debentures issued by a corporation, T. pursuant to a private offering. T is engaged primarily in investing and reinvesting in precious metals on behalf of its shareholders, all of which are benefit plan investors. By its terms, the debenture is convertible to common stock of T at P's option. At the time of P's acquisition of the debentures, the conversion feature is incidental to T's obligation to pay interest and principal. Although T is not an operating company, P's assets do not include an interest in the underlying assets of T because P has not acquired an equity interest in T. However, if P exercises its option to convert the debentures to common stock, it will have acquired an equity interest in T at that time and (assuming that the common stock is not a publicly-offered security and that there has been no change in the composition of the other equity investors in T) P's assets would then include an undivided interest in the underlying assets of T.
(2) A plan, P. acquires a limited partnership interest in a limited partnership, U. which is established and maintained by A, a general partner in U. U has only one class of limited partnership interests. U is engaged in the business of investing and reinvesting in securities. Limited partnership interests in U are offered privately pursuant to an exemption from the registration requirements of the Securities Act of 1933. P acquires 15 percent of the value of all the outstanding limited partnership interests in U. and, at the time of P's investment, a governmental plan owns 15 percent of the value of those interests. U is not an operating company because it is engaged primarily in the investment of capital. In addition, equity participation by benefit plan investors is significant because immediately after P's investment such investors hold more than 25 percent of the limited partnership interests in U. Accordingly, P's assets include an undivided interest in the underlying assets of U. and A is a fiduciary of P with respect to such assets by reason of its discretionary authority and control over U's assets. Although the governmental plan's investment is taken into account for purposes of determining whether equity participation by benefit plan investors is significant, nothing in this Section imposes fiduciary obligations on A with respect to that plan.
(3) Assume the same facts as in paragraph (j)(2), except that P acquires only 5 percent of the value of all the outstanding limited partnership interests in U. and that benefit plan investors in the aggregate hold only 10 percent of the value of the limited partnership interests in U. Under these facts, there is no significant equity participation by benefit plan investors in U. and, accordingly, P's assets include its limited partnership interest in U. but do not include any of the underlying assets of U. Thus, A would not be a fiduciary of P by reason of P's investment.
(4) Assume the same facts as in paragraph (j)(3) and that the aggregate value of the outstanding limited partnership interests in U is $10,000 (and that the value of the interests held by benefit plan investors is thus $1000). Also assume that an affiliate of A owns limited partnership interests in U having a value of $6500. The value of the limited partnership interests held by A's affiliate are disregarded for purposes of determining whether there is significant equity participation in U by benefit plan investors. Thus, the percentage of the aggregate value of the limited partnership interests held by benefit plan investors in U for purposes of such a determination is approximately 28.6% ($1000/$3500). Therefore there is significant benefit plan investment in T.
(5) A plan, P. invests in a limited partnership, V, pursuant to a private offering. There is significant equity participation by benefit plan investors in V. V acquires equity positions in the companies in which it invests, and, in connection with these investments, V negotiates terms that give it the right to participate in or influence the management of those companies. Some of these investments are in publicly-offered securities and some are in securities acquired in private offerings. During its most recent valuation period, more than 50 percent of V's assets, valued at cost, consisted of investments with respect to which V obtained management rights of the kind described above. V's managers routinely consult informally with, and advise, the management of only one portfolio company with respect to which it has management rights, although it devotes substantial resources to its consultations with that company. With respect to the other portfolio companies, V relies on the managers of other entities to consult with and advise the companies' management. V is a venture capital operating company and therefore P has acquired its limited partnership investment, but has not acquired an interest in any of the underlying assets of V. Thus, none of the managers of V would be fiduciaries with respect to P solely by reason of its investment. In this situation, the mere fact that V does not participate in or influence the management of all its portfolio companies does not affect its characterization as a venture capital operating company.
(6) Assume the same facts as in paragraph (j)(5) and the following additional facts: V invests in debt securities as well as equity securities of its portfolio companies. In some cases V makes debt investments in companies in which it also has an equity investment; in other cases V only invests in debt instruments of the portfolio company. V's debt investments are acquired pursuant to private offerings and V negotiates covenants that give it the right to substantially participate in or to substantially influence the conduct of the management of the companies issuing the obligations. These covenants give V more significant rights with respect to the portfolio companies' management than the covenants ordinarily found in debt instruments of established, creditworthy companies that are purchased privately by institutional investors. V routinely consults with and advises the management of its portfolio companies. The mere fact that V's investments in portfolio companies are debt, rather than equity, will not cause V to fail to be a venture capital operating company, provided it actually obtains the right to substantially participate in or influence the conduct of the management of its portfolio companies and provided that in the ordinary course of its business it actually exercises those rights.
(7) A plan, P. invests (pursuant to a private offering) in a limited partnership, W. that is engaged primarily in investing and reinvesting assets in equity positions in real property. The properties acquired by W are subject to long-term leases under which substantially all management and maintenance activities with respect to the property are the responsibility of the lessee. W is not engaged in the management or development of real estate merely because it assumes the risks of ownership of income-producing real property, and W is not a real estate operating company. If there is significant equity participation in W by benefit plan investors, P will be considered to have acquired an undivided interest in each of the underlying assets of W.
(8) Assume the same facts as in paragraph (j)(7) except that W owns several shopping centers in which individual stores are leased for relatively short periods to various merchants (rather than owning properties subject to long-term leases under which substantially all management and maintenance activities are the responsibility of the lessee). W retains independent contractors to manage the shopping center properties. These independent contractors negotiate individual leases, maintain the common areas and conduct maintenance activities with respect to the properties. W has the responsibility to supervise and the authority to terminate the independent contractors. During its most recent valuation period more than 50 percent of W's assets, valued at cost, are invested in such properties. W is a real estate operating company. The fact that W does not have its own employees who engage in day-today management and development activities is only one factor in determining whether it is actively managing or developing real estate. Thus, P's assets include its interest in W. but do not include any of the underlying assets of W.
(9) A plan, P. acquires a limited partnership interest in X pursuant to a private offering. There is significant equity participation in X by benefit plan investors. X is engaged in the business of making "convertible loans" which are structured as follows: X lends a specified percentage of the cost of acquiring real property to a borrower who provides the remaining capital needed to make the acquisition. This loan is secured by a mortgage on the property. Under the terms of the loan, X is entitled to receive a fixed rate of interest payable out of the initial cash flow from the property and is also entitled to that portion of any additional cash flow which is equal to the percentage of the acquisition cost that is financed by its loan. Simultaneously with the making of the loan, the borrower also gives X an option to purchase an interest in the property for the original principal amount of the loan at the expiration of its initial term. X's percentage interest in the property, if it exercises this option, would be equal to the percentage of the acquisition cost of the property which is financed by its loan. The parties to the transaction contemplate that the option ordinarily will be exercised at the expiration of the loan term if the property has appreciated in value. X and the borrower also agree that, if the option is exercised, they will form a limited partnership to hold the property. X negotiates loan terms which give it rights to substantially influence, or to substantially participate in, the management of the property which is acquired with the proceeds of the loan. These loan terms give X significantly greater rights to participate in the management of the property than it would obtain under a conventional mortgage loan. In addition, under the terms of the loan, X and the borrower ratably share any capital expenditures relating to the property. During its most recent valuation period, more than 50 percent of the value of X's assets valued at cost consisted of real estate investment of the kind described above. X, in the ordinary course of its business, routinely exercises its management rights and frequently consults with and advises the borrower and the property manager. Under these facts, X is a real estate operating company. Thus, P's assets include its interest in X, but do not include any of the underlying assets of X.
(10) In a private transaction, a plan, P acquires a 30 percent participation in a debt instrument that is held by a bank. Since the value of the participation certificate relates solely to the debt instrument, that debt instrument is, under paragraph (g), treated as the sole asset of a separate entity. Equity participation in that entity by benefit plan investors is significant since the value of the plan's participation exceeds 25 percent of the value of the instrument. In addition, the hypothetical entity is not an operating company because it is primarily engaged in the investment of capital (i.e., holding the debt instrument). Thus, P's assets include the participation and an undivided interest in the debt instrument, and the bank is a fiduciary of P to the extent it has discretionary authority or control over the debt instrument.
(11) In a private transaction, a plan, P. acquires 30% of the value of class equity securities issued by an operating company, Y. These securities provide that dividends shall be paid solely out of earnings attributable to certain tracts of undeveloped land that are held by Y for investment. Under paragraph (g), the property is treated as the sole asset of a separate entity. Thus, even though Y is an operating company, the hypothetical entity whose sole assets are the undeveloped tracts of land is not an operating company. Accordingly, P is considered to have acquired an undivided interest in the tracts of land held by Y. Thus, Y would be a fiduciary of P to the extent it exercises discretionary authority or control over such property.
(12) A medical benefit plan, P. acquires a beneficial interest in a trust, Z. that is not an insurance company licensed to do business in a State. Under this arrangement, Z will provide the benefits to the participants and beneficiaries of P that are promised under the terms of the plan. Under paragraph (h)(2), P's assets include its beneficial interest in Z and an undivided interest in each of its underlying assets. Thus, persons with discretionary authority or control over the assets of Z would be fiduciaries of P.
(k) Effective date and transitional rules.
(1) In general, this Section is effective for purposes of identifying the assets of a plan on or after March 13, 1987. Except as a defense, this Section shall not apply to investments in an entity in existence on March 13, 1987, if no plan subject to Title I of the Act or plan described in Section 4975(e)(1) of the Code (other than a plan described in Section 4975(g)(2) or 4975(g)(3)) acquires an interest in the entity from an issuer or underwriter at any time on or after March 13, 1987 except pursuant to a contract binding on the plan in effect on March 13, 1987 with an issuer or underwriter to acquire an interest in the entity.
(2) Notwithstanding paragraph (k)(l), this Section shall not, except as a defense, apply to a real estate entity described in Section 11018(a) of Pub. L. 99-272.
(Added by 51 FR 41262 on November 13, 1986, effective Mar. 13, 1987.)
Section 2510.3-102. Definition of "plan assets" participant contributions.
(a) Participant contributions. For purposes of Subtitle A and Parts 1 and 4 of Subtitle B of Title I of ERISA and Section 4975 of the Internal turnover Code only (but without any implication for and may not be relied upon to bar criminal prosecutions under 18 U.S.C. 664), the assets of the plan include amounts (other than union dues) that a participant or beneficiary pays to an employer, or amounts that a participant has withheld from his wages by an employer, for contribution to the plan as of the earliest date on which such contributions can reasonably be segregated from the employer's general assets, not to exceed 90 days from the date on which such amounts are received by the employer (in the case of amounts that a participant or beneficiary pays to an employer) or the date on which such amounts would otherwise have been payable to the participant in cash (in the case of amounts withheld by an employer from a participant's wages).
(1) Employer W is a large national corporation that has several payroll centers. Since each payroll center has a different pay period and each center maintains separate accounts on its books for purposes of accounting for that center's payroll deductions, the company has adopted a procedure under which each payroll center promptly forwards figures representing its total payroll deductions for each plan for such month to a centralized location where amounts from all centers are promptly totaled and a single check representing the aggregate participant contributions for the month is issued promptly to the plan by the employer. W has reasonably concluded that this procedure permits segregation of participant contributions at the earliest practicable time. Under paragraph (a), the assets of the plan include the participant contributions as of the date on which the employer issues the check to the plan.
(2) Employer X is a small company with a small number of employees at a single payroll location. X maintains a contributory profit-sharing plan in which all of its employees participate. X's practice is to commingle accumulated participant contributions with its general assets and to issue a single check to the trust that is maintained under the plan in the amount of such accumulated contributions once each quarter. In view of the relatively small number of employees and the fact that they are paid from a single location, X could reasonably be expected to transmit participant contributions to a trust within 10 days of the close of each pay period. The assets of the plan include the participant contributions attributable to any pay period as of the date 10 days from the close of such period.
(b) Examples. The requirements of this (c) Effective date. This Section is effective Section are illustrated by the following examples: August 15, 1988.
COVERAGE
Act Section 4.
(a) Except as provided in Subsection (b) and in sections 201, 301, and 401, this Title shall apply to any employee benefit plan if it is established or maintained
(1) by any employer engaged in commerce or in any industry or activity affecting commerce;
(2) by any employee organization or organizations representing employees engaged in commerce or in any industry or activity affecting commerce; or
(3) by both.
(b) The provisions of this Title shall not apply to any employee benefit plan if
(1) such plan is a governmental plan (as defined in Section 3(32));
(2) such plan is a church plan (as defined in Section 3(33)) with respect to which no election has been made under Section 410(d) of the Internal turnover Code of 1986;
(3) such plan is maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws;
(4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or
(5) such plan is an excess benefit plan (as defined in Section 3(36)) and is unfunded.
Subtitle B - Regulatory Provisions
Part 1 Reporting and Disclosure
DUTY OF DISCLOSURE AND REPORTING
Act Section 101.
(a) The administrator of each employee benefit plan shall cause to be furnished in accordance with Section 104(b) to each participant covered under the plan and to each beneficiary who is receiving benefits under the plan
(1) a summary plan description described in Section 102(a)(l); and
(2) the information described in sections 104(b)(3) and 105(a) and (c).
(b) The administrator shall, in accordance with Section 104(a) file with:
(1) the summary plan description described in Section 102(a)(l);
(2) a plan description containing the matter required in Section 102(b);
(3) modifications and changes referred to in Section 102(a)(2);
(4) the annual report containing the information required by Section 103; and
(5) terminal and supplementary reports as required by Subsection (c) of this Section.
(c ) (l) Each administrator of an employee pension benefit plan which is winding up its affairs (without regard to the number of participants remaining in the plan) shall, in accordance with regulations prescribed by the Secretary, file such terminal reports as the Secretary may consider necessary. A copy of such report shall also be filed with the Pension Benefit Guaranty Corporation.
(2) The Secretary may require terminal reports to be filed with regard to any employee welfare benefit plan which is winding up its affairs in accordance with regulations promulgated by the Secretary.
(3) The Secretary may require that a plan described in paragraph (1) or (2) file a supplementary or terminal report with the annual report in the year such plan is terminated and that a copy of such supplementary or terminal report in the case of a plan described in paragraph (1) be also filed with the Pension Benefit Guaranty Corporation.
(d) NOTICE OF FAILURE TO MEET MINIMUM FUNDING STANDARDS.
(1) IN GENERAL. If an employer maintaining a plan other than a multi-employer plan fails to make a required installment or other payment required to meet the minimum funding standard under Section 302 to a plan before the 60th day following the due date for such installment or other payment, the employer shall notify each participant and beneficiary (including an alternate payee as defined in Section 206(d)(3)(K)) of such plan of such failure. Such notice shall be made at such time and in such manner as the Secretary may prescribe.
(2) SUBSECTION NOT TO APPLY IF WAIVER PENDING. This Subsection shall not apply to any failure if the employer has filed a waiver request under Section 303 with respect to the plan year to which the required installment relates, except that if the waiver request is denied, notice under paragraph (1) shall be provided within 60 days after the date of such denial.
(3) DEFINITIONS. For purposes of this Subsection, the terms "required installment" and "due date" have the same meanings given such terms by Section 302(e).
(e) NOTICE OF TRANSFER OF EXCESS PENSION ASSETS TO HEALTH BENEFITS ACCOUNTS.
(1) NOTICE TO PARTICIPANTS. Not later than 60 days before the date of a qualified transfer by an employee pension benefit plan of excess pension assets to a health benefits account, the administrator of the plan shall notify (in such manner as the Secretary may prescribe) each participant and beneficiary under the plan of such transfer. Such notice shall include information with respect to the amount of excess pension assets, the portion to be transferred, the amount of health benefits liabilities expected to be provided with the assets transferred, and the amount of pension benefits of the participant which will be non-forfeitable immediately after the transfer.
(2) NOTICE TO SECRETARIES, ADMINISTRATOR, AND EMPLOYEE ORGANIZATIONS.
(A) IN GENERAL. Not later than 60 days before the date of any qualified transfer by an employee pension benefit plan of excess pension assets to a health benefits account, the employer maintaining the plan from which the transfer is made shall provide the Secretary, the Secretary of the Treasury, the administrator, and each employee organization representing participants in the plan a written notice of such transfer. A copy of any such notice shall be available for inspection in the principal office of the administrator.
(B) INFORMATION RELATING TO TRANSFER. Such notice shall identify the plan from which the transfer is made, the amount of the transfer, a detailed accounting of assets projected to be held by the plan immediately before and immediately after the transfer, and the current liabilities under the plan at the time of the transfer.
(C) AUTHORITY FOR ADDITIONAL REPORTING REQUIREMENTS. The Secretary may prescribe such additional reporting requirements as may be necessary to carry out the purposes of this Section.
(3) DEFINITIONS. For purposes of paragraph (1), any term used in such paragraph which is also used in Section 420 of the Internal turnover Code of 1986 (as in effect on January 1, 1991) shall have the same meaning as when used in such Section.
(f) INFORMATION NECESSARY TO COMPLY WITH MEDICARE AND MEDICAID COVERAGE DATA BANK REQUIREMENTS.
(1) PROVISION OF INFORMATION BY GROUP HEALTH PLAN UPON REQUEST OF EMPLOYER.
(A) IN GENERAL. An employer shall comply with the applicable requirements of Section 1144 of the Social Security Act (as added by Section 13581 of the Omnibus Budget Reconciliation Act of 1993). Upon the request of an employer maintaining a group health plan, any plan sponsor, plan administrator, insurer, third-party administrator, or other person who maintains under the plan the information necessary to enable the employer to comply with the applicable requirements of Section 1144 of the Social Security Act shall, in such form and manner as may be prescribed in regulations of the Secretary (in consultation with the Secretary of Health and Human Services), provide such information (not inconsistent with paragraph (2))
(i) in the case of a request by an employer described in subparagraph (B) and a plan that is not a multi-employer plan or a component of an arrangement described in subparagraph (C), to the Medicare and Medicaid Coverage Data Bank;
(ii) in the case of a plan that is a multi-employer plan or is a component of an arrangement described in subparagraph (C), to the employer or to such Data Bank, at the option of the plan; and
(iii) in any other case, to the employer or to such Data Bank, at the option of the employer.
(B) EMPLOYER DESCRIBED. An employer is described in this subparagraph for any calendar year if such employer normally employed fewer than 50 employees on a typical business day during such calendar year.
(C) ARRANGEMENT DESCRIBED. An arrangement described in this subparagraph is any arrangement in which two or more employers contribute for the purpose of providing group health plan coverage for employees.
(2) INFORMATION NOT REQUIRED TO BE PROVIDED. Any plan sponsor, plan administrator, insurer, third-party administrator, or other person described in paragraph (1)(A) (other than the employer) that maintains the information under the plan shall not provide to an employer in order to satisfy the requirements of Section 1144 of the Social Security Act, and shall not provide to the Data Bank under such Section, information that pertains in any way to
(A) the health status of a participant, or of the participant's spouse, dependent child, or other beneficiary,
(B) the cost of coverage provided to any participant or beneficiary, or
(C) any limitations on such coverage specific to any participant or beneficiary.
(3) REGULATIONS. The Secretary may, in consultation with the Secretary of Health and Human Service, prescribe such regulations as are necessary to carry out this Subsection.
Amendments
P.L. 103-66, Section 4301(b)(l):
Amended ERISA Section 101 by redesignating Subsection (f) as Subsection (g) and by inserting after Subsection (e) the new Subsection (f) to read as above.
The above amendments are effective on August 10, 1993. Any plan amendment required to be made by Act. Section 4301 need not he made before the first plan year beginning on or after January 1, 1994 if: (1) the plan is operated in accordance with Act Section 4301 during the period after August 9,1993 and before such first plan year, and (2) the amendment applies retroactively to this period. A plan will not he treated as failing to be operated in accordance with plan provisions merely because it operates in accordance with the effective date requirements.
P.L. 101-508, 8ec. 12012(d)(I):
Amended ERISA Section 101 by redesignating Subsection (e) as Subsection (f) and adding new Subsection (e) to read as above effective for qualified transfers under Code Section 420 made after November 5,1990.
P.L. 101-239, Section 7881(b)(5)(A):
Amended ERISA Section 10l(d)(1) by striking "an employer of a plan" and inserting "an employer maintaining a plan" effective for plan years beginning after December 31, 1987.
P.L. 101-239, Section 7881(b)(5)(C):
Amended P.L. 100203, Section 9304(d) by striking "Section"and inserting "Effective with respect to plan years beginning after December 31, 1987, Section" effective for plan years beginning after December 31, 1987.
P.L. 101-7.39, -7894(b)(1):
Amended the heading for part I of subtitle B of Title I of ERISA by striking "Part I" and inserting "Part 1" effective September 2, 1974.
P.L. 101-239, Section 7894(b)(2):
Amended ERISA Section 10l(a)(2) by striking "Section" and inserting "sections" effective September 2, 1974.
P.L. 100-203, Section 9304(d):
Amended ERISA Section 101 by redesignating Subsection (d) as (e) and adding new Subsection (d) to read as above, effective for plan years beginning after December 31, 1987.
.095 Committee Report on P.L. 100-203 Conference Committee Report. Under the (House) bill, three installments of estimated contributions are required during the plan year, with the total contribution due within 21/2 months after the end of the plan year. The amount of each installment is 1/4 of the lesser of (1) 80 percent of the amount required to be contributed for the current plan year or (2) 90 percent of the amount required to be contributed for the preceding plan year.
An excise tax is imposed if the full amount of any required installment is not paid. The excise tax is determined by applying the interest rate for underpayment of income taxes to the amount of the underpayment for the period of the underpayment. The period of the underpayment begins on the due date of the installment and ends on the earlier of the date on which the underpayment is contributed to the plan or the date the total contribution is due. Each member of the employer's controlled group is jointly and severally liable for the tax.
The acceleration of the due date for required plan contributions generally is effective for plan years beginning after December 31, 1988, with a phase-in rule applying for plan years beginning in 1988. The provision requiring plan contributions to be made in installments is effective for plan years beginning after December 31, 1987, with a transition rule applicable for 1988 plan years.
(The Finance Committee amendment provides:) Similar to the Ways and Means Committee bill, except that four installments are required during the plan year, with the total contribution due within 81/2 months after the end of the plan year. The amount of each required installment is 1/4 of the lesser of (1) 90 percent of the amount required to be contributed for the current plan year or (2) 100 percent of the amount required to be contributed for the preceding plan year.
Failure to make installments. Same as the Ways and Means Committee bill, except that interest is paid to the plan rather than as an excise tax, and the interest rate on missed contributions is the greater of (1) 175 percent of the mid-term applicable Federal interest rate (AFR) or (2) the rate of interest taken into account in determining costs under the plan. In addition, a lien arises if a required installment is not paid in full. The employer is required to notify employees of the failure to make required installments.
Failure to make total contribution for plan year. Same as the Ways and Means Committee bill. In addition, the 5-percent excise tax is increased to 10 percent, and a lien arises in favor of the plan if the required contribution is not paid in full. The employer is required to notify employees of the failure to make contributions.
The provisions apply for plan years beginning after December 31,1987.
The conference agreement generally follows the Finance Committee amendment, with modifications.
With respect to the interest rate applicable to a failure to make contributions when due, the conference agreement clarifies that the interest rate continues at the specified rate until the missed contributions are actually paid to the plan.
In the case of a plan with a funded ratio of less than 100 percent, a statutory tax lien arises on all controlled group property in favor of the plan 60 days after the due date of an unpaid contribution (whether or not a waiver application is pending). The amount of the lien is the cumulative missed contributions in excess of $1 million. Missed contributions originally due before the effective date are not subject to this lien provision (but they are taken into account in applying the $1 million rule).
Under the conference agreement, the employer and each member of the controlled group that includes the employer are liable for contributions required under the minimum funding rules. However, this controlled group liability does not alter the rules for determining the extent to which an employer's contributions to a plan are deductible. Thus, in general, a deduction for a contribution is available under Section 404 only for the employer who directly employs the participants.
.10 Conference Committee Explanation (P.L. 93~06). Plans subject to the provisions and exemptions. Under the conference substitute, the new reporting and disclosure requirements are to be administered by the Secretary of Labor and are to be applied to all pension and welfare plans established or maintained by an employer or employee organization engaged in, or affecting, interstate commerce. Governmental plans, certain church plans, workmen's compensation and unemployment compensation plans, plans maintained outside the United States for the benefit of persons substantially all of whom are nonresident aliens, and so-called excess benefit plans, which provide benefits in addition to those for which deductions may be taken under the tax laws, are exempted from the requirements. The Secretary of Labor also is authorized to waive and modify certain of these requirements for employee benefit plans.
All plans of the types subject to the reporting and disclosure provisions are to be required to file an annual report with the Secretary of Labor regardless of the number of participants involved. However, simplified reports may be authorized for plans with fewer than 100 participants.
Reports on termination. In addition to the annual reports which must be filed with the Secretary of Labor, special terminal reports are required to be filed for pension plans that are winding up their affairs. These terminal reports may also be required by the Secretary of Labor for welfare plans. Also in the year a plan is terminated the Secretary may require the supplementary information to be filed with the annual report.
Regulations
Reg. Section 2520.101-1 was adopted by FR Doc. 76-11859 (41 FR 16957) under "Title 29-Labor; Chapter XXV Office of Employee Benefits Security, Subchapter C Reporting and Disclosure Under the Employee Retirement Income Security Act of 1974; Part 252-Rules and Regulations for Reporting and Disclosure." The regulation was filed with the Federal Register on April 22, 1976, and published in the Federal Register on April 23, 1976.
Subpart A General Reporting and Disclosure Requirements
Section 2520.101-1 Duty of reporting and disclosure. The procedures for implementing the plan administrator's duty of reporting to the Secretary of Labor and disclosing information to participants and beneficiaries are located in Subparts D, E and F of this part.
PLAN DESCRIPTION AND SUMMARY PLAN DESCRIPTION
Act Section 102.
(a) (l) A summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries as provided in Section 104(b). The summary plan description shall include the information described in Subsection (b), shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan. A summary of any material modification in the terms of the plan and any change in the information required under Subsection (b) shall be written in a manner calculated to be understood by the average plan participant and shall be furnished in accordance with Section 104(b)(1).
(2) A plan description (containing the information required by Subsection (b)) of any employee benefit plan shall be prepared on forms prescribed by the Secretary, and shall be filed with the Secretary as required by Section 104(a)(1). Any material modification in the terms of the plan and any change in the information described in Subsection (b) shall be filed in accordance with Section 104(a)(l)(D).
(b) The plan description and summary plan description shall contain the following information: The name and type of administration of the plan; the name and address of the person designated as agent for the service of legal process, if such person is not the administrator, the name and address of the administrator, names, titles, and addresses of any trustee or trustees (if they are persons different from the administrator); a description of the relevant provisions of any applicable collective bargaining agreement; the plan's requirements respecting eligibility for participation and benefits; a description of the provisions providing for non-forfeitable pension benefits; circumstances which may result in disqualification, ineligibility, or denial or loss of benefits; the source of financing of the plan and the identity of any organization through which benefits are provided; the date of the end of the plan year and whether the records of the plan are kept on a calendar, policy, or fiscal year basis; the procedures to be followed in presenting claims for benefits under the plan and the remedies available under the plan for the redress of claims which are denied in whole or in part (including procedures required under Section 503 of this Act).
Regulations
Reg. Section 2520.102-1 was adopted by FR Doc. 7-11859 (41 FR 16957) under "Title 29-Labor; Chapter XXV- Office of Employee Benefits Security, Subchapter C Reporting and Disclosure Under the Employee Retirement Income Security Act of 1974; Part 252-Rules and Regulations for Reporting and Disclosure." The regulation was filed with the Federal Register on April 22, 1976, and published in the Federal Register on April 23, 1976. Reg. Sections 2520.102-2 through 2520.1024 were adopted by FR Doc. 77-7637, filed with the Federal Register on March 11, 1977, and published in the Federal Register on March 15, 1977 (42 FR 14266). Reg. Section 2520.102-3(m) and 2520.102-3(t) are interim as well as proposed regulations. The regulations are effective March 15, 1977. Reg. Section 2520.102-3 was amended by FR Doc. 20810, filed with the Federal Register on July 18, 1977, published in the Federal Register on July 19, 1977 effective July 19, 1977 (42 FR 37178). Reg. Section 2520.102-5 was added by FR Doc. 81-2105, filed with the Federal Register on January 19, 1981, published in the Federal Register on January 21, 1981, effective February 20, 1981 (46 FR 5cS82).
Section 2520.102-1 Plan description.
(a) The plan description required by Section 102 of the Act shall consist of a summary plan description as described in Section 102(b) of the Act and Sections 2520.102-2 and 2520.102-3 thereunder, except as provided in paragraph (b) of this Section.
(b) For purposes of Section 2520.104-22, the limited exemption for apprenticeship plans, the plan description shall consist of a Department of Labor Form EBS-1 "Plan Description" completed in accordance with Section 2520.104a-l(a) and the instructions to the Form. (Amended by 44 FR 31640, effective June 1, 1979.)
Section 2520.102-1 Plan description. The plan description required by Section 102 of the Act shall consist of a summary plan description as described in Section 102(b) of the Act and sections Sections 2520.102-2 and 2520.102-3 thereunder.
Section 2520.102-2 Style and format of summary plan description. -
(a) Method of presentation. The summary plan description shall be written in a manner calculated to be understood by the average plan participant and shall be sufficiently comprehensive to apprise the plan's participants and beneficiaries of their rights and obligations under the plan. In fulfilling these requirements, the plan administrator shall exercise considered judgment and discretion by taking into account such factors as the level of comprehension and education of typical participants in the plan and the complexity of the terms of the plan. Consideration of these factors will usually require the limitation or elimination of technical jargon and of long, complex sentences, the use of clarifying examples and illustrations, the use of clear cross-references and a table of contents.
(b) General format. The format of the summary plan description must not have the effect of misleading, misinforming or failing to inform participants and beneficiaries. Any description of exceptions, limitations, reductions, and other restrictions of plan benefits shall not be minimized, rendered obscure, or otherwise made to appear unimportant. Such exceptions, limitations, reductions, or restrictions of plan benefits shall be described or summarized in a manner not less prominent than the style, captions, printing type, and prominence used to describe or summarize plan benefits. The advantages and disadvantages of the plan shall be presented without either exaggerating the benefits or minimizing the limitations. The description or summary of restrictive plan provisions need not be disclosed in the summary plan description in close conjunction with the description or summary of benefits, provided that adjacent to the benefit description the page on which the restrictions are described is noted.
(c) Foreign languages. In the case of either
(1) A plan that covers fewer than 100 participants at the beginning of a plan year, and in which 25 percent or more of all plan participants are literate only in the same non-English language, or
(2) A plan which covers 100 or more participants at the beginning of the plan year, and in which the lesser of:
(i) 500 or more participants, or
(ii) 100 or more of all plan participants are literate only in the same non-English language, so that a summary plan description in English would fail to inform these participants adequately of their rights and obligations under the plan, the plan administrator for such plan shall provide these participants with an English-language summary plan description which prominently displays a notice, in the non-English language common to these participants, offering them assistance. The assistance provided need not involve written materials, but shall be given in the non-English language common to these participants and shall be calculated to provide them with a reasonable opportunity to become informed as to their rights and obligations under the plan. The notice offering assistance contained in the summary plan description shall clearly set forth in the non-English language common to such participants the procedures they must follow in order to obtain such assistance.
Example. Employer A maintains a pension plan which covers 1000 participants. At the beginning of a plan year five hundred of Employer A's covered employees are literate only in Spanish, 101 are literate only in Vietnamese, and the remaining 399 are literate in English. Each of the 1000 employees receives a summary plan description in English, containing an assistance notice in both Spanish and Vietnamese stating the following:
This booklet contains a summary in English of your plan rights and benefits under Employer A Pension Plan. If you have difficulty understanding any part of this booklet, contact Mr. John Doe, the plan administrator, at his office in Room 123, 456 Main St., Anywhere City, State 20001. Office hours are from 8:30 A.M. to 5:00 P.M. Monday through Friday. You may also call the plan administrator's office at (202) 555-2345 for assistance. (Added by 42 FR 14266, effective March 15, 1977.)
Section 2520.102-3 Contents of summary plan description. Section 102 of the Act specifies information that must be included in the summary plan description. The summary plan description must accurately reflect the contents of the plans as of a date not earlier than 120 days prior to the date such summary plan description is disclosed. The following information shall be included in the summary plan description of both employee welfare benefit plans and employee pension benefit plans, except as stated otherwise in Subsection (j) through (n):
(a) The name of the plan, and, if different, the name by which the plan is commonly known by its participants and beneficiaries;
(b) The name and address of
(1) In the case of a single employer plan, the employer whose employees are covered by the plan,
(2) In the case of a plan maintained by an employee organization for its members, the employee organization that maintains the plan,
(3) In the case of a collectively-bargained plan established or maintained by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, parent, or most significant employer of a group of employers all of which contribute to the same plan, or other similar representative of the parties who established or maintain the plan, as well as:
(i) A statement that a complete list of the employers and employee organizations sponsoring the plan may be obtained by participants and beneficiaries upon written request to the plan administrator, and is available for examination by participants and beneficiaries, as required by Section Section 2520.104b-1 and 2520.104b-30, or,
(ii) A statement that participants and beneficiaries may receive from the plan administrator, upon written request, information as to whether a particular employer or employee organization is a sponsor of the plan and, if the employer or employee organization is a plan sponsor, the sponsor's address.
(4) In the case of a plan established or maintained by two or more employers, the association, committee, joint board of trustees, parent, or most significant employer of a group of employers all of which contribute to the same plan, or other similar representative of the parties who established or maintain the plan, as well as:
(i) A statement that a complete list of the employers sponsoring the plan may be obtained by participants and beneficiaries upon written request to the plan administrator, and is available for examination by participants and beneficiaries, as required by Section Section 2520.104b-1 and 2520.104b-30, or,
(ii) A statement that participants and beneficiaries may receive from the plan administrator, upon written request, information as to whether a particular employer is a sponsor of the plan and, if the employer is a plan sponsor, the sponsor's address. (Amended by 42 FR 37178, effective July 19, 1977.)
(c) The employer identification number (EIN) assigned by the Internal turnover Service to the plan sponsor and the plan number assigned by the plan sponsor. (For further detailed explanation, see the instructions to the plan description Form EBS-I and "Identification Numbers Under ERISA" (Publ. 1004), published jointly by DOL, IRS, and PBGC);
(d) The type of pension or welfare plan, e.g., for pension plans - defined benefit, money purchase, profit sharing, etc., and for welfare plans - hospitalization, disability, pre-paid legal service, etc.;
(e) The type of administration of the plan, e.g., contract administration, insurer administration, etc.;
(f) The name, business address, and business telephone number of the plan administrator as that term is defined by Section 3(16) of the Act;
(g) The name of the person designated as agent for service of legal process, and the address at which process may be served on such person, and in addition, a statement that service of legal process may be made upon a plan trustee or the plan administrator;
(h) The name, Title, and address of the principal place of business of each trustee of the plan;
(i) If a plan is maintained pursuant to one or more collective bargaining agreements, a statement that the plan is so maintained, and that a copy of any such agreement may be obtained by participants and beneficiaries upon written request to the plan administrator, and is available for examination by participants and beneficiaries, as required by Sections 2520.104b-1 and 2520.104b-30. For the purpose of this paragraph, a plan is maintained pursuant to a collective bargaining agreement if such agreement controls any duties, rights or benefits under the plan, even though such agreement has been superseded in part for other purposes;
(j) The plan's requirements respecting eligibility for participation and for benefits. The summary plan description shall describe the plan's provisions relating to eligibility to participate in the plan, such as age or years of service requirements, and the items listed in subparagraphs (1) or (2) as appropriate:
(1) For employee pension benefit plans, it shall also include a statement describing the plan's normal retirement age, as that term is defined in Section 3(24) of the Act, and a statement describing any other conditions which must be met before a participant will be eligible to receive benefits. Such plan benefits shall be described or summarized.
(2) For employee welfare benefit plans, it shall also include a statement of the conditions pertaining to eligibility to receive benefits, and a description or summary of the benefits. In the case of a welfare plan providing extensive schedules of benefits (a medical care plan, for example), only a general description is required if reference is made to detailed schedules of benefits which are available without cost to any participant or beneficiary who so requests;
(k) In the case of an employee pension benefit plan, a statement describing any joint and survivor benefits provided under the plan, including any requirement that an election be made as a condition to select or reject the joint and survivor annuity;
(1) For both pension and welfare benefit plans, a statement clearly identifying circumstances which may result in disqualification, ineligibility, or denial, loss, forfeiture or suspension of any benefits that a participant or beneficiary might otherwise reasonably expect the plan to provide on the basis of the description of benefits required by (j) and (k) above.
(m) For an employee pension benefit plan the following information:
(1) if the benefits of the plan are not insured under Title IV of the Act, a statement of this fact, and the reason for the lack of insurance; and
(2) if the benefits of the plan are insured under Title IV of the Act, a statement of this fact, a summary of the pension benefit guaranty provisions of Title IV, and a statement indicating that further information on the provisions of Title IV can be obtained from the plan administrator or the Pension Benefit Guaranty Corporation. The address of the PBGC shall be provided.
(3) a summary plan description will be deemed to have complied with subparagraph (2) if it includes the following statement in the summary plan description:
Benefits under this plan are insured by the Pension Benefit Guaranty Corporation (PBGC) if the plan terminates. Generally, the PBGC guarantees most vested normal age retirement benefits, early retirement benefits, and certain disability and survivor's pensions. However, PBGC does not guarantee all types of benefits under covered plans, and the amount of benefit protection is subject to certain limitations.
The PBGC guarantees vested benefits at the level in effect on the date of plan termination. However, if a plan has been in effect less than five years before it terminates, or if benefits have been increased within the five years before plan termination, the whole amount of the plan's vested benefits or the benefit increase may not be guaranteed. In addition, there is a ceiling on the amount of monthly benefit that PBGC guarantees, which is adjusted periodically.
For more information on the PBGC insurance protection and its limitations, ask your Plan Administrator or the PBGC. Inquiries to the PBGC should be addressed to the Office of Communications, PBGC, 2020 K Street NW., Washington, D.C. 20006. The PBGC Office of Communications may also be reached by calling 202-254-4817. (Added by 42 FR 37178, effective July 19, 1977.)
(n) In the case of an employee pension benefit plan, a description and explanation of the plan provisions for determining years of service for eligibility to participate, vesting, and breaks in service, and years of participation for benefit accrual. The description shall state the service required to accrue full benefits and the manner in which accrual of benefits is prorated for employees failing to complete full service for a year.
(o) In the case of an employee pension benefit plan that will use the "cutback" rule of Internal turnover Service turnover Ruling 76-378, IRB 1976-40, October 4, 1976, to make retroactive changes in the vesting or accrual provisions described in the summary plan description, a statement that certain provisions of the plan are subject to amendment which directly or indirectly modifies certain plan rights and benefits, the nature of such modifications, the identification by reference of such plan provisions, and the identification by reference of the portions of the summary plan description where such provisions are described. Such statement may be either printed within the text of the summary plan description or it may be printed in a separate sheet and disclosed together with the summary plan description.
(p) The sources of contributions to the plan for example, employer, employee organization, employees and the method by which the amount of contribution is calculated. Defined benefit pension plans may state without further explanation that the contribution is actuarially determined.
(q) The identity of any funding medium used for the accumulation of assets through which benefits are provided. The summary plan description shall identify any insurance company, trust fund, or any other institution, organization, or entity which maintains a fund on behalf of the plan or through which the plan is funded or benefits are provided.
(r) The date of the end of the year for purposes of maintaining the plan's fiscal records;
(s) The procedures to be followed in presentingclaims for benefits under the plan and the remedies available under the plan for the redress of claims which are denied in whole or in part (including procedures required under Section 503 of Title I of the Act); and
(t) (l) The statement of ERISA rights authorized by Section 104(c) of the Act, containing the items of information applicable to the plan included in the model statement of subparagraph (2) of this paragraph. Items which are not applicable to the plan are not required to be included. The statement may contain explanatory and descriptive provisions in addition to those prescribed in paragraph (t)(2) of this Section. However, the style and format of the statement must not have the effect of misleading, misinforming or failing to inform participants and beneficiaries of a plan. All such information shall be written in a manner calculated to be understood by the average plan participant, taking into account factors such as the level of comprehension and education of typical participants in the plan and the complexity of the items required under this subparagraph to be included in the statement. Inaccurate, incomprehensible or misleading explanatory material will fail to meet the requirements of this Section. The statement of ERISA rights (the model statement or a statement prepared by the plan), must appear as one consolidated statement. If a plan finds it desirable to make additional mention of certain rights elsewhere in the summary plan description, it may do so. The summary plan description may state that the statement of ERISA rights is required by federal law and regulation.
(2) A summary plan description will be deemed to comply with the requirements of paragraph (e)(l) of this Section if it includes the following statement; items of information which are not applicable to a particular plan may be deleted: As a participant in (name of plan) you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to:
Examine, without charge, at the plan administrator's office and at other specified locations, such as worksites and union halls, all plan documents, including insurance contracts, collective bargaining agreements and copies of all documents filed by the plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions.
Obtain copies of all plan documents and other plan information upon written request to the plan administrator. The administrator may make a reasonable charge for the copies.
Receive a summary of the plan's annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report.
Obtain a statement telling you whether you have a right to receive a pension at normal retirement age and if so, what your benefits would be at normal retirement age if you stop working under the plan now. If you do not have a right to a pension, the statement will tell you how many more years you have to work to get a right to a pension. This statement must be requested in writing and is not required to be given more than once a year. The plan must provide the statement free of charge.
In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called "fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a (pension, welfare) benefit or exercising your rights under ERISA. If your claim for a (pension, welfare) benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that plan fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. (Added by 42 FR 37178, effective July 19, 1977.)
Section 2520.1024 Option for different summary plan descriptions. In some cases an employee benefit plan may provide different benefits for various classes of participants and beneficiaries. For example, a plan amendment altering benefits may apply to only those participants who are employees of an employer when the amendment is adopted and to employees who later become participants, but not to participants who no longer are employees when the amendment is adopted. (See Section 2520.104b-4.) Similarly, a plan may provide for different benefits for participants employed at different plants of the employer, or for different classes of participants in the same plant. In such cases the plan administrator may fulfill the requirement to furnish a summary plan description to participants covered under the plan and beneficiaries receiving benefits under the plan by furnishing to each member of each class of participants and beneficiaries a copy of a summary plan description appropriate to that class. Each summary plan description so prepared shall follow the style and format prescribed in Section 2520.102-2, and shall contain all information which is required to be contained in the summary plan description under Section 2520.102-3. It may omit information which is not applicable to the class of participants or beneficiaries to which it is furnished. It should also clearly identify on the first page of the text the class of participants and beneficiaries for which it has been prepared and the plan's coverage of other classes. If the classes which the employee benefit plan covers are too numerous to be listed adequately on the first page of the text of the summary plan description, they may be listed elsewhere in the text so long as the first page of the text contains a reference to the page or pages in the text which contain this information. If the plan administrator elects to prepare more than one summary plan description, each such summary plan description shall be filed with the Secretary in the manner provided in Section 2520.104a-3(b). (Added by 42 FR 14266, effective March 15,1977.)
Section 2520.102-5 Limited exemption with respect to summary plan descriptions of welfare plans providing benefits through a qualified health maintenance organization.
(a) The summary plan description of an employee welfare benefit plan under which some or all benefits are provided through membership in one or more qualified health maintenance organizations, as defined in Section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. Section 30Qe-9(d), shall not be required to include, with respect to any such qualified health maintenance organization, the information described in sections 102-3(j)(2), 102-3(1), 102-3(q) and 102-3(s) of this Part 2520, provided that:
(1) Such summary plan description contains a notice of the type described in paragraph (b) of this Section;
(2) Any request made in the manner described in paragraph (b)(4) of this Section is transmitted promptly by the plan administrator to any such organization in which the person making the request is eligible for membership as a benefit under the plan; and
(3) The plan administrator furnishes, in the manner described in Section 104b-1 of this Part 2520, to each person to whom such summary plan description is furnished, the identity of all such qualified health maintenance organizations in which such person is eligible for membership as a benefit under the plan at a date no later than the date when the option of membership in the qualified health maintenance organization is offered to such person.
(b) The notice referred to in paragraph (a) of this Section shall indicate:
(1) The availability of membership in one or more qualified health maintenance organizations as defined in Section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. Section 30e-9(d), as an option under the plan;
(2) Whether such membership is made available as the sole benefit under the plan, in addition to one or more other benefits, or as an alternative to one or more other benefits;
(3) That each such organization in which membership is available to the participant or beneficiary will supply him or her upon request, written materials concerning (i) the nature of services provided to members; (ii) conditions pertaining to eligibility to receive such services (other than general conditions pertaining to eligibility for participation in the plan) and circumstances under which services may be denied; and (iii) the procedures to be followed in obtaining such services, and the procedures available for the review of claims for services which are denied in whole or in part; and
(4) That requests for the materials described in paragraph (b)(3) of this Section may be addressed to the plan administrator. (Added by 46 FR 5882, originally scheduled to be effective February 20, 1981. However, the effective date was delayed under the President's regulation freeze until March 30, 1981 (46 FR 11253).)
Act Section 103.
(a) (l) (A) An annual report shall be published with respect to every employee benefit plan to which this part applies. Such report shall be filed with the Secretary in accordance with Section 104(a), and shall be made available and furnished to participants in accordance with Section 104(b).
(B) The annual report shall include the information described in subsections (b) and (c) and where applicable subsections (d) and (e) and shall also include
(i) a financial statement and opinion, as required by paragraph (3) of this Subsection, and
(ii) an actuarial statement and opinion, as required by paragraph (4) of this Subsection.
(2) If some or all of the information necessary to enable the administrator to comply with the requirements of this Title is maintained by
(A) an insurance carrier or other organization which provides some or all of the benefits under the plan, or holds assets of the plan in a separate account,
(B) a bank or similar institution which holds some or all of the assets of the plan in a common or collective trust or a separate trust, or custodial account, or
(C) a plan sponsor as defined in Section 3(16)(B), such carrier, organization, bank, institution, or plan sponsor shall transmit and certify the accuracy of such information to the administrator within 120 days after the end of the plan year (or such other date as may be prescribed under regulations of the Secretary)
(3) (A) Except as provided in subparagraph (C), the administrator of an employee benefit plan shall engage, on behalf of all plan participants, an independent qualified public accountant, who shall conduct such an examination of any financial statements of the plan, and of other books and records of the plan, as the accountant may deem necessary to enable the accountant to form an opinion as to whether the financial statements and schedules required to be included in the annual report by Subsection (b) of this Section are presented fairly in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Such examination shall be conducted in accordance with generally accepted auditing standards, and shall involve such tests of the books and records of the plan as are considered necessary by the independent qualified public accountant. The independent qualified public accountant shall also offer his opinion as to whether the separate schedules specified in Subsection (b)(3) of this Section and the summary material required under Section 104(b)(3) present fairly, and in all material respects the information contained therein when considered in conjunction with the financial statements taken as a whole. The opinion by the independent qualified public accountant shall be made a part of the annual report. In a case where a plan is not required to file an annual report, the requirements of this
(B) In offering his opinion under this Section the accountant may rely on the correctness of any actuarial matter certified to by an enrolled actuary, if he so states his reliance.
(C) The opinion required by subparagraph (A) need not be expressed as to any statements required by Subsection (b)(3)(G) prepared by a bank or similar institution or insurance carrier regulated and supervised and subject to periodic examination by a State or Federal agency if such statements are certified by the bank, similar institution, or insurance carrier as accurate and are made a part of the annual report.
(D) For purposes of this Title, the term "qualified public accountant" means
(i) a person who is a certified public accountant, certified by a regulatory authority of a State;
(ii) a person who is a licensed public accountant, licensed by a regulatory authority of a State; or
(iii) a person certified by the Secretary as a qualified public accountant in accordance with regulations published by him for a person who practices in States where there is no certification or licensing procedure for accountants.
(4) (A) The administrator of an employee pension benefit plan subject to the reporting requirement of Subsection (d) of this Section shall engage, on behalf of all plan participants, an enrolled actuary who shall be responsible for the preparation of the materials comprising the actuarial statement required under Subsection (d) of this Section. In a case where a plan is not required to file an annual report, the requirement of this paragraph shall not apply, and, in a case where by reason of Section 104(a)(2), a plan is required only to file a simplified report, the Secretary may waive the requirement of this paragraph.
(B) The enrolled actuary shall utilize such assumptions and techniques as are necessary to enable him to form an opinion as to whether the contents of the matters reported under Subsection (d) of this Section
(i) are in the aggregate reasonably related to the experience of the plan and to reasonable expectations; and
(ii) represent his best estimate of anticipated experience under the plan. The opinion by the enrolled actuary shall be made with respect to, and shall be made a part of, each annual report.
(C) For purposes of this Title, the term "enrolled actuary" means an actuary enrolled under subtitle C of Title III of this Act.
(D) In making a certification under this Section the enrolled actuary may rely on the correctness of any accounting matter under Section 103(b) as to which any qualified public accountant has expressed an opinion, if he so states his reliance.
(b) An annual report under this Section shall include a financial statement containing the following information:
(1) With respect to an employee welfare benefit plan: a statement of assets and liabilities; a statement of changes in fund balance; and a statement of changes in financial position. In the notes to financial statements, disclosures concerning the following items shall be considered by the accountant: a description of the plan including any significant changes in the plan made during the period and the impact of such changes on benefits; a description of material lease commitments, other commitments, and contingent liabilities; a description of agreements and transactions with persons known to be parties in interest; a general description of priorities upon termination of the plan, information concerning whether or not a tax ruling or determination letter has been obtained; and any other matters necessary to fully and fairly present the financial statements of the plan.
(2) With respect to an employee pension benefit plan: a statement of assets and liabilities, and a statement of changes in net assets available for plan benefits which shall include details of turnovers and expenses and other changes aggregated by general source and application. In the notes to financial statements, disclosures concerning the following items shall be considered by the accountant: a description of the plan including any significant changes in the plan made during the period and the impact of such changes on benefits; the funding policy (including policy with respect to prior service cost), and any changes in such policies during the year; a description of any significant changes in plan benefits made during the period; a description of material lease commitments, other commitments, and contingent liabilities; a description of agreements and transactions with persons known to be parties in interest; a general description of priorities upon termination of the plan, information concerning whether or not a tax ruling or determination letter has been obtained and any other matters necessary to fully and fairly present the financial statements of such pension plan.
(3) With respect to all employee benefit plans; the statement required under paragraph (1) or (2) shall have attached the following information in separate schedules:
(A) a statement of the assets and liabilities of the plan aggregated by categories and valued at their current value, and the same data displayed in comparative form for the end of the previous fiscal year of the plan;
(B) a statement of receipts and disbursements during the preceding twelve-month period aggregated by general sources and applications;
(C) a schedule of all assets held for investment purposes aggregated and identified by issuer, borrower, or lessor, or similar party to the transaction (including a notation as to whether such party is known to be a party in interest), maturity date, rate of interest collateral, par or maturity value, cost, and current value;
(D) a schedule of each transaction involving a person known to be party in interest, the identity of such party in interest and his relationship or that of any other party in interest to the plan, a description of each asset to which the transaction relates; the purchase or selling price in case of a sale or purchase, the rental in case of a lease, or the interest rate and maturity date in case of a loan; expenses incurred in connection with the transaction; the cost of the asset, the current value of the asset, and the net gain (or loss) on each transaction;
(E) a schedule of all loans or fixed income obligations which were in default as of the close of the plan's fiscal year or were classified during the year as uncollectable and the following information with respect to each loan on such schedule (including a notation as to whether parties involved are known to be parties in interest): the original principal amount of the loan, the amount of principal and interest received during the reporting year, the unpaid balance the identity and address of the obliger, a detailed description of the loan (including date of making and maturity, interest rate, the type and value of collateral, and other material terms), the amount of principal and interest overdue (if any) and an explanation thereof;
(F) a list of all leases which were in default or were classified during the year as uncollectable; and the following information with respect to each lease on such schedule (including a notation as to whether parties involved are known to be parties in interest): the type of property leased (and, in the case of fixed assets such as land, buildings, leasehold, and so forth, the location of the property), the identity of the lessor or lessee from or to whom the plan is leasing, the relationship of such lessors and lessees, if any, to the plan, the employer employee organization, or any other party in interest, the terms of the lease regarding rent, taxes, insurance, repairs, expenses, and renewal options; the date the leased property was purchased and its cost, the date the property was leased and its approximate value at such date, the gross rental receipts during the reporting period, expenses paid for the leased property during the reporting period, the net receipts from the lease, the amounts in arrears and a statement as to what steps have been taken to collect amounts due or otherwise remedy the default;
(G) if some or all of the assets of a plan or plans are held in a common or collective trust maintained by a bank or similar institution or in a separate account maintained by an insurance carrier or a separate trust maintained by a bank as trustee, the report shall include the most recent annual statement of assets and liabilities of such common or collective trust, and in the case of a separate account or a separate trust, such other information as is required by the administrator in order to comply with this Subsection; and
(H) a schedule of each reportable transaction, the name of each party to the transaction (except that, in the case of an acquisition or sale of a security on the market, the report need not identify the person from whom the security was acquired or to whom it was sold) and a description of each asset to which the transaction applies; the purchase or selling price in case of a sale or purchase, the rental in case of a lease, or the interest rate and maturity date in case of a loan, expenses incurred in connection with the transaction; the cost of the asset, the current value of the asset, and the net gain (or loss) on each transaction. For purposes of the preceding sentence, the term "reportable transaction" means a transaction to which the plan is a party if such transaction is
(i) a transaction involving an amount in excess of 3 percent of the current value of the assets of the plan;
(ii) any transaction (other than a transaction respecting a security) which is part of a series of transactions with or in conjunction with a person in a plan year, if the aggregate amount of such transaction exceeds 3 percent of the current value of the assets of the plan;
(iii) a transaction which is part of a series of transactions respecting one or more securities of the same issuer, if the aggregate amount of such transactions in the plan year exceeds 3 percent of the current value of the assets of the plan; or
(iv) a transaction with or in conjunction with a person respecting a security, if any other transaction with or in conjunction with such person in the plan year respecting a security is required to be reported by reason of clause (i).
(4) The Secretary may, by regulation, relieve any plan from filing a copy of a statement of assets and liabilities (or other information) described in paragraph (3)(G) if such statement and other information is filed with the Secretary by the bank or insurance carrier which maintains the common or collective trust or separate account.
(c) The administrator shall furnish as a part of a report under this Section the following information:
(1) The number of employees covered by the plan.
(2) The name and address of each fiduciary.
(3) Except in the case of a person whose compensation is minimal (determined under regulations of the Secretary) and who performs solely ministerial duties (determined under such regulations), the name of each person (including but not limited to, any consultant, broker, trustee, accountant, insurance carrier, actuary, administrator, investment manager, or custodian who rendered services to the plan or who had transactions with the plan) who received directly or indirectly compensation from the plan during the preceding year for services rendered to the plan or its participants, the amount of such compensation, the nature of his services to the plan or its participants, his relationship to the employer of the employees covered by the plan, or the employee organization, and any other office, position, or employment he holds with any party in interest.
(4) An explanation of the reason for any change in appointment of trustee, accountant, insurance carrier, enrolled actuary, administrator, investment manager, or custodian.
(5) Such financial and actuarial information including but not limited to the material described in subsections (b) and (d) of this Section as the Secretary may find necessary or appropriate.
(d) With respect to an employee pension benefit plan (other than (A)) a profit sharing, savings, or other plan, which is an individual account plan, (B) a plan described in Section 301(b), or (C) a plan described both in Section 4021(b) and in paragraph (1), (2), (3), (4), (5), (6), or (7) of Section 301(a)) an annual report under this Section for a plan year shall include a complete actuarial statement applicable to the plan year which shall include the following:
(1) The date of the plan year, and the date of the actuarial valuation applicable to the plan year for which the report is filed.
(2) The date and amount of the contribution (or contributions) received by the plan for the plan year for which the report is filed and contributions for prior plan years not previously reported.
(3) The following information applicable to the plan year for which the report is filed: the normal costs, the accrued liabilities, an identification of benefits not included in the calculation; a statement of the other facts and actuarial assumptions and methods used to determine costs, and a justification for any change in actuarial assumptions or cost methods; and the minimum contribution required under Section 302.
(4) The number of participants and beneficiaries, both retired and non-retired, covered by the plan.
(5) The current value of the assets accumulated in the plan, and the present value of the assets of the plan used by the actuary in any computation of the amount of contributions to the plan required under Section 302 and a statement explaining the basis of such valuation of present value of assets.
(6) Information required in regulations of the Pension Benefit Guaranty Corporation with respect to:
(A) the current value of the assets of the plan,
(B) the present value of all non-forfeitable benefits for participants and beneficiaries receiving payments under the plan,
(C) the present value of all non-forfeitable benefits for all other participants and beneficiaries,
(D) the present value of all accrued benefits which are not non-forfeitable (including a separate accounting of such benefits which are benefit commitments, as defined in Section 4001(a)(16)), and
(E) the actuarial assumptions and techniques used in determining the values described in subparagraphs (A) through (D).
(7) A certification of the contribution necessary to reduce the accumulated funding deficiency.
(8) A statement by the enrolled actuary
(A) that to the best of his knowledge the report is complete and accurate, and
(B) the requirements of Section 302(c)(3) (relating to reasonable actuarial assumptions and methods) have been complied with.
(9) A copy of the opinion required by Subsection (a)(4).
(10) A statement by the actuary which discloses
(A) any event which the actuary has not taken into account, and
(B) any trend which, for purposes of the actuarial assumptions used, was not assumed to continue in the future, but only if, to the best of the actuary's knowledge, such event or trend may require a material increase in plan costs or required contribution rates.
(11) If the current value of the assets of the plan is less than 70 percent of the current liability under the plan (within the meaning of Section 302(d)(7)), the percentage which such value is of such liability.
(12) Such other information regarding the plan as the Secretary may by regulation require.
(13) Such other information as may be necessary to fully and fairly disclose the actuarial position of the plan.
Such actuary shall make an actuarial valuation of the plan for every third plan year, unless he determines that a more frequent valuation is necessary to support his opinion under Subsection (a)(4) of this Section.
(e) If some or all of the benefits under the plan are purchased from and guaranteed by an insurance company, insurance service, or other similar organization, a report under this Section shall include a statement from such insurance company, service, or other similar organization covering the plan year and enumerating
(1) the premium rate for subscription charge and the total premium or subscription charges paid to each such carrier, insurance service, or other similar organization and the approximate number of persons covered by each class of such benefits; and
(2) the total amount of premiums received, the approximate number of persons covered by each class of benefits, and the total claims paid by such company, service, or other organization; dividends or retroactive rate adjustments, commissions, and administrative service or other fees or other specific acquisition costs paid by such company, service, or other organization; any amounts held to provide benefits after retirement; the remainder of such premiums; and the names and addresses of the brokers, agents, or other persons to whom commissions or fees were paid, the amount paid to each, and for what purpose. If any such company, service, or other organization does not maintain separate experience records covering the specific groups it serves, the report shall include in lieu of the information required by the foregoing provisions of this paragraph (A) a statement as to the basis of its premium rate or subscription charge, the total amount of premiums or subscription charges received from the plan, and a copy of the financial report of the company, service or other organization and (B) if such company, service, or organization incurs specific costs in connection with the acquisition or retention of any particular plan or plans, a detailed statement of such costs.
Amendments
P.L. 101-239, Section 7881(j)(1):
Amended ERISA Section 103(d)(11) by striking "60 percent" and inserting "70 percent" and by striking "such percentage" and inserting "the percentage which such value is of such liability" effective with respect to reports required to be filed after December 31, 1987.
P.L. 100-203, Section 9342(a)(I):
Amended ERISA Section 103(d) by redesignating paragraphs (11) and (12) as paragraphs (12) and (13), respectively, and by inserting paragraph (11) to read as above, effective with respect to reports required to be filed after December 31, 1987.
P.L. 99-272, Section 11016(b)(I):
Amended ERISA Section 103(d)(6) to read as above, effective on April 7,1986.
Prior to the amendment, ERISA Section 103(d)(6) read as follows:
(6) The present value of all of the plan's liabilities for non-forfeitable pension benefits allocated by the termination priority categories as set forth in Section 4044 of this Act, and the actuarial assumptions used in these computations. The Secretary shall establish regulations defining (for purposes of this Section) "termination priority categories" and acceptable methods, including approximate methods, for allocating the plan's liabilities to such termination priority categories.
P.L. 9-364, Section 307:
Added new Subsection 103(d)(l0) to read as above and renumbered old subsections 103(d)(10) and (11) to be 103(11) and (12), respectively.
.09 Committee Report on P.L. 100-203 Conference Committee Report. Ways and Means Committee bill: The report that employees are required to receive annually is required to include a statement of the extent to which the plan is funded. This provision applies to plan years beginning after December 31, 1987.
Conference Agreement: The conference agreement follows the Ways and Means Committee bill, except that the requirement only applies to plans that are funded below 70 percent of current liability.
Education and Labor Committee bill: The bill deletes the provision under which the statute of limitations begins to run on the date a report is filed from which the plaintiff could reasonably be expected to have obtained knowledge of a breach of fiduciary liability.
Conference Agreement: The conference agreement follows the Education and Labor Committee bill.
This provision applies to reports filed after December 31, 1987.
Education and Labor Committee bill: The bill provides that the Secretary of Labor may assess a civil penalty of up to $1,000 a day from the date of a plan administrator's failure or refusal to file an annual report. In addition, an annual report that has been rejected is not to be treated as having been filed for purposes of this penalty.
Conference Agreement: The conference agreement follows the Education and Labor Committee bill with the clarification that the penalty is to reflect the materiality of the failure. This provision applies for reports due after December 31, 1987.
.095 Senate Committee Report (P.L. 96-364). Under the bill, an actuary performing a plan valuation will be required to disclose events which could have a material adverse effect on the plan. Where such events occur after the date of the valuation but before the valuation is published so that they are not reflected in the valuation, the actuary would nevertheless be required to disclose their occurrence in an attachment or footnote to the valuation. The bill would also require the actuary to disclose trends which have occurred in the past but which he is assuming will not continue in the future. The Committees intend that in fulfilling these requirements, an enrolled actuary will make appropriate inquiries of plan sponsors but will not be required to make further inquiry unless, under the circumstances, further inquiry is considered necessary because of information already known to the actuary. The Committees expect that material failure to comply with the provision could be an important factor to be considered by the Joint Board for the Enrollment of Actuaries in a disentailment proceeding. The Committees do not intend the provision to cause an actuary to assume the role of an auditor.
.10 Conference Committee Explanation (P.L. 93-406). Contents of annual report. The annual report generally is to include audited financial statements for both welfare plans and pensions plans. With respect to welfare plans the statement is to include a statement of assets and liabilities, a statement of changes in fund balance, and a statement of changes in financial position. With respect to employee pension plans the statement is to include a statement of assets and liabilities and a statement of changes in net assets available for plan benefits, including details as to turnovers and expenses and other changes aggregated by general source and application.
In the notes to the annual financial statement, the accountant is to disclose any significant changes in the plan, material lease commitments and contingent liabilities, any agreements and transactions with persons known to be parties-in-interest, information as to whether a tax ruling or determination letter has been obtained, and any other relevant matters necessary to fairly present the financial status of the plan. In addition, in the case of employee pension plans the notes should also deal with funding policy (including policy with respect to prior service costs and changes in such policies during the year). An accountant may rely on the correctness of any actuarial matter certified by any enrolled actuary if the accountant indicates his reliance on such certification.
In addition to the audited financial statement, the annual report is to include for all employee benefit plans a statement on separate schedules showing among other things, a statement of plan assets and liabilities aggregated by categories, a statement of receipts and disbursements, a schedule of all assets held for investment purposes aggregated and identified by issuer, borrower, or lessee and a schedule of each transaction involving a person known to be a party-in-interest. Also, a schedule of all loans and leases in default at the end of the year or which are classified during the year as uncollectible is to be included in the annual report.
There is also to be supplied with the annual report a schedule listing each transaction which exceeds 3 percent of the value of the fund. If some or all of the assets of a plan are held in a common or collective trust maintained by a bank or similar institution the annual report is to include the most recent annual statement of assets and liabilities of the common or collective trust. (The Secretary of Labor will have authority to prescribe for the filing of a master copy of the annual statement of this common or collective trust in order to avoid duplicative filings of this statement by plans participating in this common or collective trust.)
With respect to persons employed by the plan the annual report is to include the name and address of each fiduciary, the name of each person who receives more than minimal compensation from the plan for services rendered, along with the amount of compensation (or who performs duties which are not ministerial), the nature of the services, and the relationship to the employer or any other party in interest to the plan. Also, the reasons for any changes in trustees, accountant, actuary, investment manager, or administrator are to be provided in the annual report.
As indicated in the discussion of the funding provisions, under the conference agreement, the annual report is to include an actuarial statement for all pension plans which are subject to the funding requirements of Title I. If plan benefits are purchased from, and guaranteed by, an insurance company, the annual report is to include the premiums paid, benefits paid, charges for administrative expenses, commissions and other information. The insurance carrier is to certify to the plan administrator the information needed to comply with the annual reporting requirements within 120 days after the close of the plan year, or within such other period as is prescribed by the Secretary of Labor.
The annual report for a plan is to be filed within 210 days after the close of the plan year or within such period of time as the Secretary of Labor may require in order to reduce the necessity for duplicate filing with the Internal turnover Service. The Secretary of Labor may reject the filing of an annual report if he finds that it is incomplete or there is a material qualification in the accountant's or actuary's opinion. If a revised report is not submitted within 45 days after rejection, the Secretary may retain an accountant to perform an audit, or retain an actuary, whichever is appropriate, or bring a civil action for legal or equitable relief. The plan is to bear the costs of any expenses of an audit or actuarial report.
Accountant and actuary reports. Every plan is to retain on behalf of its participants an independent qualified public accountant who annually is to prepare an audited financial statement of the plan's operations. The accountant is to give an opinion as to whether the financial statements of the plan conform with generally accepted accounting principles and the statement is to be based upon an examination in accordance with generally accepted auditing standards. An accountant's opinion is not to be required for statements prepared by banks or similar institutions or an insurance carrier if the statements of the bank or insurance carrier are certified by the bank and are made part of an annual report. For purposes of this provision a qualified public accountant includes certified public accountants, licensed public accountants and any person certified by the Secretary as a qualified public accountant in accordance with regulations published by him for a person who practices in a State where there is no certification or licensing procedure for accountants. Further, to the extent a plan is not required to make an annual report to the Secretary of Labor an annual audit is not required (and an independent, qualified public accountant need not be retained). Also the Secretary of Labor may waive the requirement of an audited financial statement in cases where simplified annual reports are permitted to be filed.
Every plan subject to the funding requirements of Title I must retain an enrolled actuary who is to prepare an actuarial statement on an annual basis. This statement is to show the present value of all plan liabilities for non-forfeitable pension benefits allocated by the termination priority categories. The actuary is to supply a statement to be filed with the annual report as to his opinion as to whether the actuarial statements of the plan are reasonably related to the experience of the plan and to the reasonable expectations of the plan. The actuary is to use assumptions and techniques as are necessary to form an opinion as to whether the contents of the matters upon which he reports are in the aggregate reasonably related to the experience of the plan and to reasonable expectations, and represent his best estimate of anticipated experience under the plan. The actuarial statement is not required for plans which need not file annual reports, and may be waived by the Secretary of Labor for plans for which simplified annual reports are allowed.
Regulations
The following regulations on annual reporting requirements were adopted effective generally for plan years beginning in 1977, by FR Doc. 78-6073 under "Title 2 Labor," "Chapter XXY Pension and Welfare Benefit Programs, Department of Labor," "Part 252-Rules and Regulations for Reporting and Disclosure." The regulations were filed with the Federal Register on March 9, 1978, and published in the Federal Register on March 10, 1978 (41 FR 10130).
Subpart C Annual Report Requirements
Section 2520.103-1 Contents of the annual report.
(a) General. The administrator of a plan required to file an annual report in accordance with Section 104(a)(1)(A) of the Act shall include with the annual report the information prescribed in paragraph (a)(l) of this Section or in the limited exemption or alternative method of compliance described in paragraph (a)(2) of this Section.
(1) The annual report shall contain the information prescribed in Section 103 of the Act.
(2) Under the authority of sections 104(a)(3) and 110 of the Act, a limited exemption or alternative method of compliance is prescribed for employee welfare and pension benefit plans, respectively, which cover 100 or more participants at the beginning of the plan year. A plan electing the limited exemption or alternative method of compliance shall file an annual report containing the information prescribed in paragraph (b) of this Section and shall furnish a summary annual report as prescribed in Section 2520.104b-10. (Amended on March 1, 1989 by 54 FR 8624.)
(b) Contents of the annual report for plans with 100 or more participants electing the limited exemption or alternative method of compliance. Except as provided in paragraph (d) of this Section and in Sections 2520.103-2 and 2520.104-44, the annual report of an employee benefit plan covering 100 or more participants at the beginning of the plan year which elects the limited exemption or alternative method of compliance described in paragraph (a)(2) shall include:
(1) A completed Form 5500 "Annual Return/Report of Employee Benefit Plan (with 100 or more participants)" and any statements or schedules required to be attached to the form, including Schedule A "Insurance Information," Schedule B "Actuarial Information," Schedule C "Service Provider/Trustee/Service Provider Termination Information," and the financial schedules described in Section 2520.103-10. See the instructions ("What to File" and "Specific Instructions") for this form. (Amended on March 1, 1989 by 54 FR 8624.)
(2) Separate financial statements (in addition to the information required by paragraph (b)(l) of this Section), if such financial statements are prepared in order for the independent qualified public accountant to form the opinion required by Section 103(a)(3)(A) of the Act and Section 2520.103-l(b)(5). These statements shall include the following:
(i) Except as provided in Section 2520.103-7, a statement of assets and liabilities at current value presented in comparative form for the beginning and end of the year. The statement of plan assets and liabilities shall include the assets and liabilities required to be reported on Form 5500; however, the assets and liabilities may be aggregated into categories in a manner other than that used on Form 5500. (Amended on March 1, 1989 by 54 FR 8624.)
(ii) Separate or combined statements of plan income and expenses and of changes in net assets which include the categories of income, expense, and changes in assets required to be reported on the Form 5500; however, the income, expense, and changes in net assets may be aggregated into categories in a manner other than that used on Form 5500. (Amended on March 1, 1989 by 54 FR 8624.)
(3) Notes to the financial statements described in paragraphs (b)(l) or (2) of this Section which contain a description of the accounting principles and practices reflected in the financial statements and, if applicable, variances from generally accepted accounting principles; a description of the plan, including any significant changes in the plan made during the period and the impact of such changes on benefits; the funding policy (including policy with respect to prior service cost) and any changes in such policy from the prior year, a description of material lease commitments, other commitments, and contingent liabilities, a description of agreements and transactions with persons known to be parties in interest; a general description of priorities upon termination of the plan; information concerning whether or not a tax ruling or determination letter has been obtained; an explanation of the differences, if any, between the information contained in the separate financial statements and the assets, liabilities, income, expenses and changes in net assets as required to be reported on the Form 5500, and any other matters necessary to fully and fairly present the financial condition of the plan. (Amended on March I, 1989 by 54 FR 8624.)
(4) In the case of a plan, some or all of the assets of which are held in a pooled separate account maintained by an insurance company, or a common or collective trust maintained by a bank or similar institution, a copy of the annual statement of assets and liabilities of such account or trust for the fiscal year of the account or trust which ends with or within the plan year for which the annual report is made as required under Section 2520.103-3 or Section 2520.103-4. See Section 2520.103-9 for direct filing with the Secretary of such statements by banks or insurance companies.
(5) A report of an independent qualified public accountant.
(i) Technical requirements. The accountant's report
(A) Shall be dated;
(B) Shall be signed manually;
(C) Shall indicate the city and state where issued; and
(D) Shall identify without detailed enumeration the financial statements and schedules covered by the report.
(ii) Representations as to the audit. The accountant's report
(A) Shall state whether the audit was made in accordance with generally accepted auditing standards; and
(B) Shall designate any auditing procedures deemed necessary by the accountant under the circumstances of the particular case which have been omitted, and the reasons for their omission. Authority for the omission of certain procedures which independent accountants might ordinarily employ in the course of an audit made for the purpose of expressing the opinions required by paragraph (b)(5)(iii) of this Section is contained in Sections 2520.103-8 and 2520.103-12. (Amended by 51 FR 41285 on Nov. 13, 1986; amended on March 1, 1989 by 54 FR 8624.)
(iii) Opinion to be expressed. The accountant's report shall state clearly:
(A) The opinion of the accountant in respect of the financial statements and schedules covered by the report and the accounting principles and practices reflected therein; and
(B) The opinion of the accountant as to the consistency of the application of the accounting principles with the application of such principles in the preceding year or as to any changes in such principles which have a material effect on the financial statements.
(iv) Exceptions. Any matters to which the accountant takes exception shall be clearly identified, the exception thereto specifically and clearly stated, and, to the extent practicable, the effect of the matters to which the accountant takes exception on the related financial statements given. The matters to which the accountant takes exception shall be further identified as (A) those that are the result of DOL regulations, and (B) all others.
(c) Contents of the annual report for plans with fewer than 100 participants. Except as provided in paragraph (d) of this Section and in Sections 2520.104-43 and 2520.104a-6, the annual report of an employee benefit plan which covers fewer than 100 participants at the beginning of the plan year shall be a completed Form 5500-C "Return/Report of Employee Benefit Plan (with fewer than 100 participants)," or a completed 5500-R "Registration Statement of Employee Benefit Plan (with fewer than 100 Participants)," and any statements or schedules which are required to be attached to these forms, including Schedule A "Insurance Information," and Schedule B "Actuarial Information." See the instructions ("What to File" and "Specific Instructions") for these forms. (Amended on July 29, 1980 by 45 FR 51446; amended on March 1, 1989 by 54 FR 8624.)
(d) Special rule. If a plan has between 80 and 120 participants (inclusive) as of the beginning of the plan year, the plan may elect to file the same category of form (i.e. either Form 5500 and attachments or Form 5500-C, or R) that is filed the previous year. (Added on July 29, 1980 by 45 FR 51446; amended on March 1, 1989 by 54 FR 8624.)
(e) Plans which participate in a master trust. The plan administrator of a plan which participates in a master trust shall file an annual report on Form 5500, 5500-C, or 5500-R, as appropriate, in accordance with the specific instructions relating to master trusts on those forms and instructions thereto. For purposes of annual reporting, a master trust is a trust for which a regulated financial institution serves as trustee or custodian (regardless of whether such institution exercises discretionary authority or control respecting the management of assets held in the trust) and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For purpose of this paragraph, a regulated financial institution is a bank, trust company, or similar financial institution regulated, supervised, and subject to periodic examination by a State or Federal agency. Common control is determined on the basis of all relevant facts and circumstances (whether or not such employers are incorporated). (Added on December 10, 1981, by 46 FR 61074; amended on March 1, 1989 by 54 FR 8624.)
Section 2520.103-2 Contents of the annual report for a group insurance arrangement. -
(a) General.
(1) A trust or other entity described in Section 2520.104-43(b) that files an annual report for purposes of Section 2520.104-43 shall include in such report the items set forth in paragraph (b) of this Section.
(b) Contents.
(1) A completed Form 5500 "Annual Return/Report of Employee Benefit Plan (with 100 or more participants)" and any statements or schedules required to be attached to the form, including Schedule A "Insurance Information," Schedule C "Service Provider/Trustee/ Service Provider Termination Information," and the financial schedules described in Section 2520.103-10. See the instructions ("What to File" and "Specific Instructions") for this form. (Amended on March 1, 1989 by 54 FR 8624.)
(2) Separate financial statements (in addition to the information required by paragraph (b)(l) of this Section), if such financial statements are prepared in order for the independent qualified public accountant to form the opinion required by Section 103(a)(3)(A) of the Act and Section 2520.103-2(b)(5). These financial statements shall include the following:
(i) Except as provided in Section 2520.103-7, a statement of all trust assets and liabilities at current value presented in comparative form for the beginning and end of the year. The statement of trust assets and liabilities shall include the assets and liabilities required to be reported on the Form 5500; however, the assets and liabilities may be aggregated into categories in a manner other than that used on Form 5500. (Amended on March 1, 1989 by 54 FR 8624.)
(ii) Separate or combined statements of all trust income and expenses and changes in net assets which includes the categories of income, expense, and changes in assets required to be reported on the Form 5500; however, the income, expense, and changes in assets may be aggregated into categories in a manner other than that used on Form 5500. (Amended on March 1, 1989 by 54 FR 8624.)
(3) Notes to the financial statements described in paragraphs (b)(l) or (2) of this Section which contain a description of the accounting principles and practices reflected in the financial statements and, if applicable, variances from generally accepted accounting principles; a description of the group insurance arrangement including any significant changes in the group insurance arrangement made during the period and the impact of such changes on benefits; a description of material lease commitments, other commitments, and contingent liabilities; a description of agreements and transactions with persons known to be parties in interest; a general description of priorities upon termination of the plan; an explanation of the differences, if any, between the information contained in the separate financial statements and the assets, liabilities, income, expenses and changes in net assets as required to be reported on the Form 5500; and any other matters necessary to fully and fairly present the financial condition of the plan. (Amended on March 1, 1989 by 54 FR 8624.)
(4) In the case of a group insurance arrangement some or all of the assets of which are held in a pooled separate account maintained by an insurance carrier, or a common or collective trust maintained by a bank, a copy of the annual statement of assets and liabilities of such separate account or trust for the fiscal year of the account or trust which ends with or within the plan year for which the annual report is made, as required under Section 2520.103-3 or Section 2520.103-4. See also Section 2520.103-9 for direct filing with the Secretary of Labor of such statements by banks or insurance compares.
(5) A report of an independent qualified public accountant.
(i) Technical requirements. The accountant's report where issued; and
(6) Shall identify without detailed enumeration the financial statements and schedules covered by the report.
(i) Representations as to the audit. The accountant's report
(A) Shall be dated;
(B) Shall be signed manually;
(C) Shall indicate the city and State;
(D) Shall state whether the audit was made in accordance with generally accepted auditing standards; and
(E) Shall designate any auditing procedures deemed necessary by the accountant under the circumstances of the particular case, which have been omitted, and the reasons for their omission. Authority for the omission of certain procedures which independent accountants might ordinarily employ in the course of an audit made for the purpose of expressing the opinions required by paragraph (b)(5)(iii) of this Section is contained in Section 2520.103-8.
(iii) Opinion to be expressed. The accountant's report shall state clearly:
(A) The opinion of the accountant in respect of the financial statements and schedules covered by the report and the accounting principles and practices reflected therein; and
(B) The opinion of the accountant as to the consistency of the application of the accounting principles with the application of such principles in the preceding year, or as to any changes in such principles which have a material effect on the financial statements.
(iv) Exceptions. Any matters to which the accountant takes exception shall be clearly identified, the exception thereto specifically and clearly stated, and, to the extent practicable, the effect of the matters to which the accountant takes exception on the related financial statements given. The matters to which the accountant takes exception shall be further identified as to (a) those that are the result of DOL regulations and (b) all others. (Added March 9, 1978, by 43 F.R. 10130.)
Section 2520.103-3 Exemption from certain annual reporting requirements for assets held in a common or collective trust.
(a) General. Under the authority of Section 103(b)(3)(G) of the Act, a plan whose assets are held in whole or in part in a common or collective trust maintained by a bank, trust company, or similar institution which meets the requirements of paragraph (b) of this Section shall include as part of the annual report required to be filed under Section 2520.104a-5 or Section 2520.104a-6 the annual statement of assets and liabilities of the common or collective trust for the fiscal year of the trust ending with or within the plan year for which the annual report is made and other information as described in paragraph (c) of this Section. Such plan is not required to include in the annual report any information concerning the individual transactions of the common or collective trust. This exemption has no application to assets not held in such trusts.
(b) Application. This provision applies only to a plan some or all of the assets of which are held in a common or collective trust maintained by a bank, trust company, or similar institution regulated and supervised and subject to periodic examination by a State or Federal agency. For purposes of this Section, (1) a common or collective trust is a trust which consists of the assets of two or more participating entities and is maintained for the collective investment and reinvestment of assets contributed thereto, and (2) plans maintained by a single employer or by the members of a controlled group of corporations, as defined in Section 1563(a) of the Internal turnover Code of 1954, shall be deemed to be a single participating entity.
(c) Contents.
(1) A plan which meets the requirements of paragraph (b) of this Section shall include in the Annual Return/Report and in the separate statements and schedules of the annual report, information regarding the value of the units of participation in the common or collective trust held by the plan and transactions involving the acquisition and disposition by the plan of units of participation in the common or collective trust. However, the annual report is not required to include any information regarding the individual transactions of the common or collective trust.
(2) The annual report of such plan shall also include the annual statement by the bank, trust company, or similar institution of the assets and liabilities of the common or collective trust for the fiscal year of the trust ending with or within the plan year for which the annual report is made.
(3) The statement of assets and liabilities of the common or collective trust is not required to be attached to the annual report filed by the administrator pursuant to Section 2520.104a-5 or Section 2520.104a-6 if the administrator meets the requirements of Section 2520.103-9 regarding direct filing of the statement of assets and liabilities of the common or collective trust by the bank, trust company or similar institution. (Added March 9, 1978, by 43 FR 10130.)
Section 2520.103-4 Exemption from certain annual reporting requirements for assets held in an insurance company pooled separate account. -
(a) General. Under the authority of Section 103(b)(3)(G) of the Act, a plan whose assets are held in whole or in part in a pooled separate account of an insurance carrier which meets the requirements of paragraph (b) of this Section shall include as a part of the annual report required to be filed under Section 2520.104a-5 or Section 2520.104a-6 the annual statement of assets and liabilities of the pooled separate account for the fiscal year of the account ending with or within the plan year for which the annual report is made, and other information as described in paragraph (c) of this Section. Such plan is not required to include in the annual report any information concerning the individual transactions of the pooled separate account. This exemption has no application to assets not held in such a pooled separate account.
(b) Application. This provision applies only to a plan some or all of the assets of which are held in a pooled separate account of an insurance carrier regulated and supervised and subject to periodic examination by a State agency. For purposes of this Section, (1) a pooled separate account is an account which consists of the assets of two or more participating entities and is maintained for the collective investment and reinvestment of assets contributed thereto, and (2) plans maintained by a single employer or by members of a controlled group of corporations, as defined in Section 1563(a) of the Internal turnover Code of 1954, shall be deemed to be a single participating entity.
(c) Contents.
(1) A plan which meets the requirements of paragraph (b) of this Section shall include in the Annual Return/Report and in the separate statements and schedules of the annual report, prescribed information regarding the value of the units of participation in the pooled separate account held by the plan and transactions involving the acquisition and disposition by the plan of units of participation in the pooled separate account. However, the annual report is not required to include any information regarding the individual transactions of the pooled separate account.
(2) The annual report of such plan shall also include the annual statement by the insurance carrier of the assets and liabilities of the pooled separate account for the fiscal year of the separate account ending with or within the plan year for which the annual report is made.
(3) The statement of assets and liabilities of the pooled separate account is not required to be attached to the annual report filed by the administrator pursuant to Section 2520.104a-5 or Section 2520.104a-6 if the administrator meets the requirements of Section 2520.103-9 regarding direct filing of the statement of assets and liabilities of the pooled separate account by an insurance carrier. (Added March 9, 1978, by 43 FR 10130).
Section 2520.103-5 Transmittal and certification of information to plan administrator for annual reporting purposes. -
(a) General. In accordance with Section 103(a)(2) of the Act, an insurance carrier or other organization which provides benefits under the plan or holds plan assets, a bank or similar institution which holds plan assets, or a plan sponsor shall transmit and certify such information as needed by the administrator to file the annual report under Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6:
(1) Within 9 months after the close of the plan year which begins in 1975 or September 30, 1976, whichever is later, and
(2) Within 120 days after the close of any plan year which begins after December 31, 1975.
(b) Application. This requirement applies with respect to
(1) An insurance carrier or other organization which:
(i) Provides from its general asset account funds for the payment of benefits under a plan, or
(ii) Holds assets of a plan in a separate account;
(2) A bank, trust company, or similar institution which holds assets of a plan in a common or collective trust, separate trust, or custodial account; and
(3) A plan sponsor as defined in Section 3(16)(B) of the Act.
(c) Contents. The information required to be provided to the administrator shall include
(1) In the case of an insurance carrier or other organization which:
(i) Provides funds from its general asset account for the payment of benefits under a plan upon request of the plan administrator, such information as is contained within the ordinary business records of the insurance carrier or other organization and is needed by the plan administrator to comply with the requirements of Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6;
(ii) Holds assets of a plan in a pooled separate account which is exempted from certain reporting requirements under Section 2520.103-4, a copy of the annual statement of assets and liabilities of the separate account for the fiscal year of such account that ends with or within the plan year for which the annual report is made, and a statement of the value of the plan's units of participation in the separate account;
(iii) Holds assets of a plan in a separate account which is not exempted from certain reporting requirements under Section 2520.103-4, a listing of all transactions of the separate account and, upon request of the plan administrator, such information as is contained within the ordinary business records of the insurance carrier and is needed by the plan administrator to comply with
(A) Shall state whether the audit was made in accordance with generally accepted auditing standards; and
(B) Shall designate any auditing procedures deemed necessary by the accountant under the circumstances of the particular case, which have been omitted, and the reasons for their omission. Authority for the omission of certain procedures which independent accountants might ordinarily employ in the course of an audit made for the purpose of expressing the opinions required by paragraph (b)(5)(iii) of this Section is contained in Section 2520.103-8.
(iii) Opinion to be expressed. The accountant's report shall state clearly:
(A) The opinion of the accountant in respect of the financial statements and schedules covered by the report and the accounting principles and practices reflected therein; and
(B) The opinion of the accountant as to the consistency of the application of the accounting principles with the application of such principles in the preceding year, or as to any changes in such principles which have a material effect on the financial statements.
(iv) Exceptions. Any matters to which the accountant takes exception shall be clearly identified, the exception thereto specifically and clearly stated, and, to the extent practicable, the effect of the matters to which the accountant takes exception on the related financial statements given. The matters to which the accountant takes exception shall be further identified as to (a) those that are the result of DOL regulations and (b) all others. (Added March 9, 1978, by 43 F.R. 10130.)
Section 2520.103-3 Exemption from certain annual reporting requirements for assets held in a common or collective trust.
(a) General. Under the authority of Section 103(b)(3)(G) of the Act, a plan whose assets are held in whole or in part in a common or collective trust maintained by a bank, trust company, or similar institution which meets the requirements of paragraph (b) of this Section shall include as part of the annual report required to be filed under Section 2520.104a-5 or Section 2520.104a-6 the annual statement of assets and liabilities of the common or collective trust for the fiscal year of the trust ending with or within the plan year for which the annual report is made and other information as described in paragraph (c) of this Section. Such plan is not required to include in the annual report any information concerning the individual transactions of the common or collective trust. This exemption has no application to assets not held in such trusts.
(b) Application. This provision applies only to a plan some or all of the assets of which are held in a common or collective trust maintained by a bank, trust company, or similar institution regulated and supervised and subject to periodic examination by a State or Federal agency. For purposes of this Section, (1) a common or collective trust is a trust which consists of the assets of two or more participating entities and is maintained for the collective investment and reinvestment of assets contributed thereto, and (2) plans maintained by a single employer or by the members of a controlled group of corporations, as defined in Section 1563(a) of the Internal turnover Code of 1954, shall be deemed to be a single participating entity.
(c) Contents.
(1) A plan which meets the requirements of paragraph (b) of this Section shall include in the Annual Return/Report and in the separate statements and schedules of the annual report, information regarding the value of the units of participation in the common or collective trust held by the plan and transactions involving the acquisition and disposition by the plan of units of participation in the common or collective trust. However, the annual report is not required to include any information regarding the individual transactions of the common or collective trust.
(2) The annual report of such plan shall also include the annual statement by the bank, trust company, or similar institution of the assets and liabilities of the common or collective trust for the fiscal year of the trust ending with or within the plan year for which the annual report is made.
(3) The statement of assets and liabilities of the common or collective trust is not required to be attached to the annual report filed by the administrator pursuant to Section 2520.104a-5 or Section 2520.104a-6 if the administrator meets the requirements of Section 2520.103-9 regarding direct filing of the statement of assets and liabilities of the common or collective trust by the bank, trust company or similar institution. (Added March 9, 1978, by 43 FR 10130.)
Section 2520.103-4 Exemption from certain annual reporting requirements for assets held in an insurance company pooled separate account. -
(a) General. Under the authority of Section 103(b)(3)(G) of the Act; a plan whose assets are held in whole or in part in a pooled separate account of an insurance carrier which meets the requirements of paragraph (b) of this Section shall include as a part of the annual report required to be filed under Section 2520.104a-5 or Section 2520.104a-6 the annual statement of assets and liabilities of the pooled separate account for the fiscal year of the account ending with or within a carrier or other organization which provides benefits under the plan or holds plan assets, a bank or the plan year for which the annual report is made, and other information as described in paragraph (c ) of this Section. Such plan is not required to include in the annual report any information concerning the individual transactions of the pooled separate account. This exemption has no application to assets not held in such a pooled separate account.
(b) Application. This provision applies only to a plan some or all of the assets of which are held I a pooled separate account of an insurance carrier regulated and supervised and subject to periodic examination by a State agency. For purposes of this Section, (1) a pooled separate account is an account which consists of the assets of two or more participating entities and is maintained for the collective investment and reinvestment of assets contributed thereto, and (2) plans maintained by a single employer or by members of a controlled group of corporations, as defined in Section 1563(a) of the Internal turnover Code of 1954, shall be deemed to be a single participating entity.
(c) Contents.
(1) A plan which meets the requirements of paragraph (b) of this Section shall include in the Annual Return/Report and in the separate statements and schedules of the annual report, prescribed information regarding the value of the units of participation in the pooled separate account held by the plan and transactions involving the acquisition and disposition by the plan units of participation in the pooled separate account. However, the annual report is not required to include any information regarding the individual transactions of the pooled separate account.
(2) The annual report of such plan shall also include the annual statement by the insurance carrier of the assets and liabilities of the pooled separate account for the fiscal year of the separate account ending with or within the plan year for which the annual report is made.
(3) The statement of assets and liabilities of the pooled separate account is not required to be attached to the annual report filed by the administrator pursuant to Section 2520.104a-5 or Section 2520.104a-6 if the administrator meets the requirements of Section 2520.103-9 regarding direct filing of the statement of assets and liabilities of the pooled separate account by an insurance carrier.
Section 2520.103-5 Transmittal and certification of information to plan administrator for annual reporting purposes. -
(a) General. In accordance with Section 103(a)(2) of the Act, an insurance carrier of other organization which provides benefits under the plan or holds plan assets, or a plan sponsor shall transmit and certify such information as needed by the administrator to file the annual report under Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6:
(1) Within 9 months after the close of the plan year which begins in 1975 or September 30, 1976, whichever is later, and
(2) Within 120 days after the close of the plan year which begins after December 31, 1975.
(b) Application. This requirement applies with respect to
(1) An insurance carrier or other organization which:
(i) Provides from its general asset account funds for the payment of benefits under a plan, or
(ii) Holds assets of a plan in a separate account;
(2) A bank, trust company, or similar institution which holds assets of a plan in common or collective trust, separate trust, or custodial account; and
(3) A plan sponsor as defined in Section 3(16)(B) of the Act.
(c ) Contents. The information required to be provided to the administrator shall include
(1) In the case of an insurance carrier or other organization which:
(i) Provides funds from its general asset account for the payment of benefits under a plan, upon request of the plan administrator, such information as is contained within the ordinary business records of the insurance carrier of other organization and is needed by the plan administrator to comply with the requirements of Section 104(a)(1)(A) of the Act and Section 2520.204a-5 or Section 2520.204a.
(ii) Holds assets of a plan in a pooled separate account which is exempted from certain reporting requirements under Section 2520.103-4, a copy of the annual statement of assets and liabilities of the separate account for the fiscal year of such account that ends with or within the plan year for which the annual report is made, and a statement of the value of the plan's units of participation in the separate account;
(iii) Holds assets of a plan separate account which is not exempted from certain reporting requirements under Section 2520.103-4, a listing of all transactions of the separate account and, upon request of the plan administrator, such information as is contained within the ordinary business records of the insurance carrier and is needed by the plan administrator to comply with the requirements of 104(a)(1)(A) of the Act and Section 2520.104a-6.
(2) In the case of a bank, trust company, or similar institution holding assets of a plan
(i) In a common or collective trust which is exempted from certain reporting requirements under Section 2520.103-3, a copy of the annual statement of assets and liabilities of the common or collective trust for the fiscal year of such trust that ends with or within the plan year for which the annual report is made, and a statement of the value of the plan's units of participation in the common or collective trust.
(ii) In a trust which is not exempted from certain reporting requirements under Section 2520.103-3, a listing of all transactions of the separate trust and, upon request of the plan administrator, such information as is contained within the ordinary business records of the bank, trust company, or similar institution and is needed by the plan administrator to comply with the requirements of Section 104(a)(1)(A) of the Act and Section 2520.104a-5.
(iii) In a custodial account, upon request of the plan administrator, such information as is contained within the ordinary business records of the bank, trust company, or similar institution and is needed by the plan administrator to comply with the requirements of Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6.
(3) In the case of a plan sponsor, a listing of all transactions directly or indirectly involving plan assets engaged in by the plan sponsor and such information as is needed by the plan administrator to comply with the requirements of Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6.
(d) Certification.
(1) An insurance carrier or other organization, a bank, trust company, or similar institution, or plan sponsor, as described in paragraph (b) of this Section, shall certify to the accuracy and completeness of the information described in paragraph (c) of this Section by a written declaration which is signed by a person authorized to represent the insurance carrier, bank, or plan sponsor. Such certification will serve as a written assurance of the truth of the facts stated therein.
(2) Example of Certification. The XYZ Bank (Insurance Carrier) hereby certifies that the foregoing statement furnished pursuant to 29 CFR 2520.103-5(c) is complete and accurate. (Added March 9, 1978, by 43 FR 10130.)
Section 2520.103-6 Definition of reportable transaction for Annual Return/Report. -
(a) General. For purposes of preparing the schedule of reportable transactions described in Section 2520.103-l0(b)(6), and subject to the exceptions provided in Section 2520.103-3 and 2520.103-4 with respect to transactions by a common or collective trust or pooled separate account, a reportable transaction includes any transaction or series of transactions described in paragraph (c) of this Section. (Corrected April 4, 1978, by 43 FR 14009.)
(b) Definitions.
(l) (i) Except as provided in paragraph (b)(l)(ii) and in paragraphs (c)(2) and (d)(l)(vi) (relating to assets acquired or disposed of during the plan year), "current value" shall mean the current value, as defined in Section 3(26) of the Act, of plan assets as of the beginning of the plan year, or the end of the previous plan year.
(ii) With respect to schedules of reportable transactions for plan years beginning in 1985, the current value of plan assets for the beginning of the plan year, or the end of the previous plan year, shall be the amount shown on line 13(h) of Form 5500 Annual Return/Report.
(2) (i) A "transaction with respect to securities" is any purchase, sale, or exchange of securities. A transaction with respect to securities for purposes of this Section occurs on either the trade date or settlement date of a purchase, sale, or exchange of securities; either the trade date or settlement date must be used consistently during the plan year for the purposes of this Section. For the purposes of this Section, except as provided in paragraph (b)(2)(ii) of this Section, "securities" includes a unit of participation in a common or collective trust or a pooled separate account.
(ii) Solely for purposes of paragraph (c)(l)(iv) of this Section, the term "securities", as it applies to any transaction involving a bank or insurance company regulated by a Federal or State agency, an investment company registered under the Investment Company Act of 1940, or a broker-dealer registered under the Securities Exchange Act of 1934, shall not include:
(A) Debt obligations of the United States or any United States agency with a maturity of not more than one year;
(B) Debt obligations of the United States or any United States agency with a maturity of more than one year if purchased or sold, under a repurchase agreement having a term of less than 91 days;
(C) Interests issued by a company registered under the Investment Company Act of 1940;
(D) Bank certificates of deposit with a maturity of not more than one year;
(E) Commercial paper with a maturity of not more than nine months if it is ranked in the highest rating category for commercial paper by at least two nationally recognized statistical rating services and is issued by a company required to file reports under Section 13 of the Securities Exchange Act of 1934;
(F) Participations in a bank common or collective trust;
(G) Participations in an insurance company pooled separate account;
(3) (i) Except as provided by paragraph (b)(3)(ii) of this Section, a transaction is "with or in conjunction with a person" for purposes of this Section if that person benefits from, executes, facilitates, participates, promotes, or solicits a transaction or part of a transaction involving plan assets.
(ii) Solely for the purposes of paragraph (c)(l)(iv) of this Section, a transaction shall not be considered "with or in conjunction with a person" if:
(A) That person is a broker-dealer registered under the Securities Exchange Act of 1934;
(B) The transaction involves the purchase or sale of securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or quoted on NASDAQ; and
(C) The broker-dealer does not purchase or sell securities involved in the transaction for its own account or the account of an affiliated person.
(c) Application.
(1) Except as provided in paragraph (c)(4) of this Section, this provision applies to
(i) A transaction within the plan year, with respect to any plan asset, involving an amount in excess of 3 percent of the current value of plan assets;
(ii) Any series of transactions (other than transactions with respect to securities) within the plan year with or in conjunction with the same person which, when aggregated, regardless of the category of asset and the gain or loss on any transaction, involves an amount in excess of 3 percent of the current value of plan assets;
(iii) Any transaction within the plan year involving securities of the same issue if within the plan year any series of transactions with respect to such securities, when aggregated, involves an amount in excess of 3 percent of the current value of plan assets; and
(iv) Any transaction within the plan year with respect to securities with or in conjunction with a person if any prior or subsequent single transaction within the plan year with such person with respect to securities exceeds 3 percent of the current value of plan assets.
(2) For purposes of determining whether any 3 percent transactions occur, the "current value" of an asset acquired or disposed of during the plan year is the current value, as defined in Section 3(26) of the Act, at the time of acquisition or disposition of such asset.
(3) Plans whose assets are held in whole or in part in a common or collective trust or a pooled separate account, as provided in Sections 2520.103-3 and 2520.103-4, and which satisfy the requirements of those sections, are not required to prepare schedules of reportable transactions with respect to the individual transactions of the common or collective trust or pooled separate account.
(4) For plan years beginning on or after January 1, 1988, 5 percent shall be substituted for 3 percent in paragraphs (c)(1) and (2) of this Section for purposes of determining whether a transaction or series of transactions constitutes a reportable transaction under this Section. (Amended on March 1, 1989 by 54 FR 8624.)
(d) Contents.
(1) The schedule of transactions shall include the following information as to each transaction or series of transactions:
(i) The name of each party, except that in the case of a transaction or series of transactions involving a purchase or sale of a security on the market, the schedule need not include the person from whom it was purchased or to whom it was sold. A purchase or sale on the market is a purchase or sale of a security through a registered broker-dealer acting as a broker under the Securities Exchange Act of 1934;
(ii) A brief description of each asset;
(iii) The purchase or selling price in the case of a purchase or sale, the rental in the case of a lease, and the amount of principal, interest rate, payment schedule (e.g., fully amortized, partly amortized with balloon) and maturity date in the case of a loan;
(iv) Expenses incurred, including, but not limited to, any fees or commissions;
(v) The cost of any asset;
(vi) The current value of any asset acquired or disposed of at the time of acquisition or disposition; and
(vii) The net gain or loss.
(2) The schedule of transactions with respect to a series of transactions described in subparagraph (c)(l)(iii) may include the following information for each issue in lieu of the information prescribed in paragraphs (d)(l)(i) (vii):
(i) The total number of purchases of such securities made by the plan within the plan year;
(ii) The total number of sales of such securities made by the plan within the plan year;
(iii) The total dollar value of such;
(iv) The total dollar value of such sales;
(v) The net gain or loss as a result of them.
(e) Examples. These examples are effective for reporting for plan years beginning on or after January 1, 1988.
(1) At the beginning of the plan year, XYZ plan has 10 percent of the current value of its plan assets invested in ABC common stock. Halfway through the plan year, XYZ purchases ABC common stock in a single transaction in an amount equal to 6 percent of the current value of plan assets. At about this time, XYZ plan also purchases a commercial development property in an amount equal to 8 percent of the current value of plan assets. Under paragraph (c)(l)(i) of this Section, the 6 percent stock transaction is a reportable transaction for the plan year because it exceeds 5 percent of the current value of plan assets. The 8 percent land transaction is also reportable under paragraph (c)(l)(i) of this Section because it exceeds 5 percent of the current value of plan assets.
(2) During the plan year, AAA plan purchases a commercial lot from ZZZ corporation at a cost equal to 2 percent of the current value of the plan assets. Two months later, MA plan loans ZZZ corporation an amount of money equal to 3.5 percent of the current value of plan assets. Under the provisions of paragraph (c)(l)(ii) of this Section, the plan has engaged in a reportable series of transactions with or in conjunction with the same person, ZZZ corporation, which when aggregated involves 5.5 percent of plan assets.
(3) During the plan year NMN plan sells to OPO corporation a commercial property that represents 3.5 percent of the current value of plan assets. OPO simultaneously executes a note and mortgage on the purchased property to NMN which represents 3 percent of the current value of plan assets. Under the provisions of paragraph (c)(l)(ii) of this Section, NMN has engaged in a reportable series of transactions with or in conjunction with the same person, OPO corporation, consisting of a simultaneous sale of property and a loan, which, when aggregated, involves 6.5 percent of the current value of plan assets.
(4) At the beginning of the plan year, ABC plan has 10 percent of the current value of plan assets invested equally in a combination of XYZ Corporation common stock and XYZ preferred stock. One month into the plan year, ABC sells some of its XYZ common stock in an amount equal to 2 percent of the current value of plan assets.
(i) Six weeks later the plan sells XYZ preferred stock in an amount equal to 4 percent of the current value of plan assets. A reportable series of transactions has not occurred because only transactions involving securities of the same issue are to be aggregated under paragraph (c)(l)(iii) of this Section.
(ii) Two weeks later when the ABC plan purchases XYZ common stock in an amount equal to 3.5 percent of the current value of plan assets, a reportable series of transactions under paragraph (c)(l)(iii) of this Section has occurred. The sale of XYZ common stock worth 2 percent of plan assets and the purchase of XYZ common stock worth 3.5 percent of plan assets aggregate to exceed 5 percent of the total value of plan assets.
(5) At the beginning of the plan year, Plan X purchases through broker-dealer Y common stock of Able Industries in an amount equal to 6 percent of plan assets. The common stock of Able Industries is not listed on any national securities exchange or quoted on NASDAQ. This purchase is a reportable transaction under paragraph (c)(l)(i) of this Section. Three months later, Plan X purchases short term debt obligations of Charley Company through broker-dealer Y in the amount of 0.2 percent of plan assets. This purchase is also a reportable transaction under the provisions of paragraph (c)(l)(iv) of this Section.
(6) At the beginning of the plan year, Plan X purchases from Bank B certificates of deposit having a 180 day maturity in an amount equal to 6 percent of plan assets. Bank B is a national bank regulated by the Comptroller of the Currency. This purchase is a reportable transaction under paragraph (c)(l)(i) of this Section. Three months later, Plan X purchases through Bank B 91-day Treasury bills in the amount of 0.2 percent of plan assets. This purchase is not a reportable transaction under paragraph (c)(l)(iv) of this Section because the purchase of the Treasury bills as well as the purchase of the certificates of deposit are not considered to involve a security under the definition of "securities" in paragraph (b)(2)(ii) of this Section. (Corrected April 4, 1978, by 43 FR 14009; amended on March 1, 1989 by 54 FR 8624.)
(7) At the beginning of the plan year, Plan X purchases through broker-dealer Y common stock of Able Industries, a New York Stock Exchange listed security, in an amount equal to 6 percent of plan assets. This purchase is a reportable transaction under paragraph (c)(l)(i) of this Section. Three months later, Plan X purchases through broker-dealer Y acting as agent, common stock of Baker Corporation, also a New York Stock Exchange listed security, in an amount equal to 0.2 percent of plan assets. This latter purchase is not a reportable transaction under paragraph (c)(l)(iv) of this Section because it is not a transaction "with or in conjunction with a person" pursuant to paragraph (b)(3)(ii) of this Section. (Added March 9,1978 by 43 FR 10130; amended on March 1, 1989 by 54 FR 8624.)
Section 2520.103-7 Special accounting rules for plans filing the initial (1975) annual report.
(a) General.
(1) The administrator of an employee benefit plan which meets the requirements described in paragraph(b)(1) and elects to file an annual report containing the items prescribed in Section 2520.103-l(b) or Section 2520.103-2(b) is not required to comply with the accounting requirements described in paragraph (c)(1) of this Section.
(2) Under the authority of sections 110 and 104(a)(3) of the Act, the administrator of any employee benefit plan which meets the requirements described in paragraph (b)(2) is not required to comply with the accounting requirements described in paragraph (c)(2) of this Section.
(b) Application. With respect to the annual report described in Section 2520.103-1 or Section 2520.103-2, filed in accordance with Section 2520.104a-5 or Section 2520.104a-6 for the plan year beginning in 1975,
(1) The administrator of a plan which covers 100 or more participants as of the beginning of the plan year or the trust or other entity which files an annual report in accordance with Section 2520.104-43 is not required to comply with the accounting requirements described in paragraph (c)(1) of this Section; and
(2) The administrator of a plan which covers fewer than 100 participants as of the beginning of the plan year is not required to comply with the accounting requirements described in paragraph (c)(2) of this Section.
(c) Excepted requirements.
(1) In the case of a plan which covers 100 or more participants as of the beginning of the plan year,
(i) To display at current value the statement of the assets and liabilities of the plan, as of the end of the previous plan year;
(ii) To engage an independent qualified public accountant to conduct an examination of the plan's financial statements for the plan year immediately preceding the plan year or trust year covered by the initial annual report, and
(iii) To include within the initial annual report the opinion of an independent qualified public accountant as to whether the financial statements for the close of the initial plan year are presented on a basis consistent with that of the preceding year.
(2) In the case of a plan which covers fewer than 100 participants at the beginning of the plan year, to display at current value the statement of the assets and liabilities of the plan displayed in Item 13 of the 1975 Form 5500-C or Item 12 of the 1975 Form 5500-K as of the end of the previous plan year or as of the beginning of the plan year subject to the initial annual report. (Added March 9, 1978, by 43 F.R. 10130.)
Section 2520.103-8 Limitation on scope of accountant's examination. -
(a) General. Under the authority of Section 103(a)(3)(C) of the Act, the examination and report of an independent qualified public accountant need not extend to any statement or information prepared and certified by a bank or similar institution or insurance carrier. A plan, trust or other entity which meets the requirements of paragraph (b) of this Section is not required to have covered by the accountant's examination or report any of the information described in paragraph (c) of this Section.
(b) Application. This Section applies to any plan, trust or other entity some or all of the assets of which are held by a bank or similar institution or insurance carrier which is regulated and supervised and subject to periodic examination by a State or Federal agency.
(c) Excluded information. Any statements or information certified to by a bank or similar institution or insurance carrier described in paragraph (b) of this Section, provided that the statements or information regarding assets so held are prepared and certified to by the bank or insurance carrier in accordance with Section 2520.103-5. (Added March 9, 1978 by 43 FR 10130.)
Section 2520.103-9 Direct filing for bank or insurance carrier trusts and accounts. -
(a) General. Under the authority of Section 103(b)(4) of the Act, the Secretary may relieve any employee benefit plan whose assets are held in whole or in part in a common or collective trust or a pooled separate account described in Section 103(b)(3)(G) of the Act and Sections 2520.103-3 and 2520.1034 from including in the annual report the statement of assets and liabilities of the common or collective trust or pooled separate account if the bank or insurance carrier which maintains such trust or account files such statement of assets and liabilities directly with the Secretary. An employee benefit plan which meets the requirements of paragraph (b)(l) of this Section is relieved from including a statement of assets and liabilities of the common or collective trust or pooled separate account, provided that the bank or insurance carrier which holds the plan's assets meets the requirements of paragraph (b)(3) of this Section. (Corrected April 4, 1978, by 43 FR 14009 and amended July 29, 1980 by 45 FR 51446.)
(b) Application. A plan required to include a statement of assets and liabilities of a common or collective trust or pooled separate account in the annual report in accordance with Section 103(b)(3)(G) of the Act and Sections 2520.103-3 and Section 2520.103-4 is relieved from including such statement in the annual report if the plan administrator files with the annual report the information described in paragraph (b)(1) and provides the bank or insurance carrier the information described in paragraph (b)(2) and the bank or insurance carrier files the information described in paragraph (b)(3) in the manner described therein.
(1) The plan administrator shall include in the annual report:
(i) A certification that the plan has received from the bank or insurance carrier a copy of the annual statement of assets and liabilities of any common or collective trust or pooled separate account in which any plan assets are held for the fiscal year of such trust or account ending with or within the plan year for which the annual report is made; and
(ii) The Employer Identification Number (EIN) of such common or collective trust or pooled separate account and any additional identification number assigned to the trust or account for purposes of this Section pursuant to paragraph (b)(3)(i)(C) of this Section.
(2) The administrator of a plan, assets of which are held in common or collective trust or pooled separate account, shall provide the bank or insurance carrier which maintains the common or collective trust or pooled separate account with the plan number as indicated on the Annual Return/Report Form and the name and EIN of the plan sponsor. Such information shall be provided on or before the end of the plan year.
(3) The bank or insurance carrier which maintains the common or collective trust or pooled separate account in which assets of the plan are held
(i) Shall file the following information with the Secretary:
(A) The annual statement of the assets and liabilities of the common or collective trust or pooled separate account in which assets of the plan are held for the fiscal year of such trust or account ending with or within the plan year for which the annual report is made.
(B) A list of all plans, assets of which are held in the common or collective trust or pooled separate account identified by the plan number as on the Annual Return/Report Form, name and EIN of the plan sponsor, and
(C) The EIN of the common or collective trust or pooled separate account; if the same EIN designates more than one trust or account, the bank or insurance carrier shall sequentially number the trusts or accounts for purposes of this Section and report the sequential numbers together with the EIN; and
(ii) Shall furnish the following items to the plan administrator:
(A) The annual statement of assets and liabilities of the common or collective trust or pooled separate account in which the plan is a participant for the fiscal year of such trust or account ending with or within the plan year for which the annual report is made (See Section 2520.103-5);
(B) The EIN of the common or collective trust or pooled separate account and any other identification number assigned to the trust or account for purposes of this Section; and
(C) A certification that a copy of the annual statement of assets and liabilities of the trust or account for the fiscal year of such trust or account ending with or within the plan year for which the annual report is made has been filed with the Secretary on or before the date upon which the annual report of the plan is required to be filed in accordance with Section 2520.104a-5 or Section 2520.104a-6.
(c) Filing address. The bank or insurance carrier shall file the information required by paragraph (b)(3)(i) of this Section in accordance with the "Where to file" instructions of the Return/ Report Form. (Added March 9, 1978, by 43 FR 10130; corrected April 4, 1978, by 43 FR 14009; amended July 29, 1980 by 45 FR 51446.)
Section 2520.103-10 Annual Report Financial Schedules. -
(a) General. The administrator of a plan filing an annual report pursuant to 29 CFR 2520.103-l(a)(2) or the report for a group insurance arrangement pursuant to 29 CFR 2520.103-2, shall, as provided in the instructions to the Form 5500 "Annual Return/Report of Employee Benefit Plan (with 100 or more participants)", include as part of the annual report the separate financial schedules described in paragraph (b) of this Section.
(b) Schedules.
(l) Assets held for investment. A schedule of all assets held for investment purposes at the end of the plan year (see 29 CFR 2520.103-11).
(2) Assets acquired and disposed (of) within the plan year. A schedule of all assets acquired and disposed of within the plan year (see 29 CFR 2520.103-11).
(3) Party in interest transactions. (i) Except as provided in paragraph (b)(3)(ii) of this Section, a schedule of each transaction involving a person known to be a party in interest.
(ii) Do not include
(A) A transaction to which a statutory exemption under part 4 of Title I applies;
(B) A transaction to which an administrative exemption under Section 408(a) of the Act applies; or
(C) A transaction to which the exemptions of Section 4975(c) or 4975(d) of the Internal turnover Code of 1954, as amended, apply).
(4) Obligations in default. A schedule of all loans or fixed income obligations which were in default as of the end of the plan year or were classified during the year as uncollectible.
(5) Leases in default. A schedule of all leases which were in default or were classified during the year as uncollectible.
(6) Reportable transactions. A schedule of all reportable transactions as defined in Section 2520.103. (Amended on March 1, 1989 by 54 FR 8624.)
Section 2520.103-11 Assets held for investment purposes. -
(a) General. For purposes of preparing the schedule of assets held for investment purposes required by Section 103(b)(3)(C) of the Act and described in Section 2520.103-10(b)(1) and (2), assets held for investment purposes include those assets described in paragraph (b) of this Section.
(b) Definitions.
(1) Assets held for investment purposes shall include:
(i) Any investment asset held by the plan on the last day of the plan year; and
(ii) Any investment asset which was purchased at any time during the plan year and was sold at any time before the last day of the plan year, except as provided by paragraphs (b)(2) and (b)(3) of this Section.
(2) Assets held for investment purposes shall not include any investment which was not held by the plan on the last day of the plan year for which the annual report is filed if that investment falls within any of the following categories:
(i) Debt obligations of the United States or any agency of the United States;
(ii) Interests issued by a company registered under the Investment Company Act of 1940;
(iii) Bank certificates of deposit with a maturity of not more than one year;
(iv) Commercial paper with a maturity of not more than nine months if it is ranked in the highest rating category by at least two nationally recognized statistical rating services and is issued by a company required to file reports with the Securities and Exchange Commission under Section 13 of the Securities Exchange Act of 1934;
(v) Participations in a bank common or collective trust;
(vi) Participations in an insurance company pooled separate account;
(vii) Securities purchased from a person registered as a broker-dealer under the Securities Exchange Act of 1934 and listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or quoted on NASDAQ;
(3) Assets held for investment purposes shall not include any investment which was not held by the plan on the last day of the plan year for which the annual report is filed if that investment is reported on the annual report of that same plan in any of the following:
(i) The schedule of each transaction involving a person known to be a party in interest required by Section 103(b)(3)(D) of the Act and Section 2520.103-10(b)(3);
(ii) The schedule of loans or fixed income obligations in default required by Section 103(b)(3)(E) of the Act and Section 2520.103-10(b)(4);
(iii) The schedule of leases in default or classified as uncollectible required by Section 103(b)(3)(F) of the Act and Section 2520.103-10(b)(5);
(iv) The schedule of reportable transactions required by Section 103(b)(3)(H) of the Act and Section 2520.103-10(b)(6).
(c) Examples.
(1) On February 1, 1977, plan N purchases an interest in registered investment company F (fund F). Fund F is not a party in interest with respect to plan N. On November 1, 1977, plan N sells this interest in fund F and purchases 1,000 shares of stock S. which the plan holds for the rest of the plan year. Plan N must include in its schedule of assets held for investment purposes the 1,000 shares of stock S under paragraph (b)(l) of this Section, but need not include the interest in fund F because of Paragraph (b)(2)(ii) of this Section.
(2) On February 1, 1977, plan N purchases a parcel of real estate from Mr. M, who is not a party in interest with respect to plan N. On November 1, 1977, plan N sells the parcel of real estate for cash to Mr. X, who is not a party in interest with respect to plan N. Plan N uses the cash from this transaction to purchase a l-year certificate of deposit in bank B. which it holds until maturity in 1978. Plan N must include in its schedule of assets held for investment purposes the l-year certificate of deposit in bank B under paragraph (b)(l)(i) of this Section, and must also include the parcel of real estate under paragraph (b)(l)(ii) of this Section.
Section 2520.103-12 Limited exemption and alternative method of compliance for annual reporting of investments in certain entities.
(a) This Section prescribes an exemption from and alternative method of compliance with the annual reporting requirements of Part I of Title I of ERISA for employee benefit plans whose assets are invested in certain entities described in paragraph (c). A plan utilizing this method of reporting shall include as part of its annual report the current value of its investment or units of participation in the entity in the manner prescribed by the Return/Report Form and the instructions thereto. The plan is not required to include in its annual report any information regarding the underlying assets or individual transactions of the entity, provided the information described in paragraph (b) regarding the entity is reported directly to the Department on behalf of the plan administrator no later than the date on which the plan's annual report is due. The information described in paragraph (b), however, shall be considered as part of the annual report for purposes of the requirements of Section 104(a)(1)(A) of the Act and Section Section 2520.104a-5 and 2520.104a-6.
(b) The following information regarding the entity must be reported for the fiscal year of the entity ending with or within the plan year for which the plan's annual report is made:
(1) Name, Address and EIN of the entity;
(2) A list of all plans investing in the entity identified by plan name, plan number, and name and EIN of the plan sponsor as they appear on the annual return/report;
(3) Annual statement of assets and liabilities of the entity;
(4) Statement of income and expenses of the entity;
(5) Assets held for investment (including acquisitions and dispositions), leases and obligations in default, and compensation paid by the entity for services - in the manner required by the instructions to the Annual Return/Report Form 5500;
(6) Report of an independent qualified public accountant regarding the statements and schedules described in paragraphs (b)(2)-(5) of this Section which meets the requirements of Section 2520.103-l(b)(S).
(c) This method of reporting is available to any employee benefit plan which has invested in an entity the assets of which are deemed to include plan assets under Section 2510.3-101, provided the entity holds the assets of two or more plans which are not members of a "related group" of employee benefit plans as that term is defined in paragraph (e) of this Section. The method of reporting is not available for investments in an insurance company pooled separate account or a common or collective trust maintained by a bank, trust company, or similar institution.
(d) The examination and report of an independent qualified public accountant required by Section 2520.103-1 for a plan utilizing the method of reporting described in this Section need not extend to any information concerning an entity which is reported directly to the Department under paragraph (b) of this Section.
(e) A "related group" of employee benefit plans consists of every group of two or more employee benefit plans
(1) Each of which receives 10 percent or more of its aggregate contributions from the same employer or from members of the same controlled group of corporations (as determined under Section 1563(a) of the Internal turnover Code, without regard to Section 1563(a)(4) thereof); or
(2) Each of which is either maintained by, or maintained pursuant to a collective bargaining agreement negotiated by, the same employee organization or affiliated employee organizations. For purposes of this paragraph, an "affiliate" of an employee organization means any person controlling, controlled by, or under common control with such organization, and includes any organization chartered by the same parent body, or governed by the same constitution and bylaws, or having the relation of parent and subordinate. (Added by 51 FR 41285 on November 13, 19861
11114,232 14,234b Reserved. Temporary and proposed Reg. Section Section 2520.104-41 - 2520.104 - 46 2520.104a - 5, 2520.104a, 2520.104b-10 - 2520.104b-12 formerly appeared at the above paragraphs. Sections 2520.104b-10 - 2520.104b-12 are at para. 14,2491 - 14,249K. Final regulations for the other sections have been adopted and are at para. 14,247U - 14,247Z, 14,248D, and 14,248E.)
FILING WITH SECRETARY AND FURNISHING INFORMATION TO
PARTICIPANTS
Act Section 104.
(a) (1) The administrator of any employee benefit plan subject to this part shall file with the Secretary
(A) the annual report for a plan year within 210 days after the close of such year (or within such time as may be required by regulations promulgated by the Secretary in order to reduce duplicative filing);
(B) the plan description within 120 days after such plan becomes subject to this part and an updated plan description, no more frequently than once every 5 years, as the Secretary may require;
(C) a copy of the summary plan description at the time such summary plan description is required to be furnished to participants and beneficiaries pursuant to Subsection (b)(l)(B) of this Section; and
(D) modifications and changes referred to in Section 102(a)(2) within 60 days after such modification or change is adopted or occurs, as the case may be.
The Secretary shall make copies of such plan descriptions, summary plan descriptions, and annual reports available for inspection in the public document room of the Department of Labor. The administrator shall also furnish to the Secretary, upon request, any documents relating to the employee benefit plan, including but not limited to the bargaining agreement, trust agreement, contract, or other instrument under which the plan is established or operated.
(2) (A) With respect to annual reports required to be filed with the Secretary under this part, he may by regulation prescribe simplified annual reports for any pension plan which covers less than 100 participants.
(B) Nothing contained in this paragraph shall preclude the Secretary from requiring any information or data from any such plan to which this part applies where he finds such data or information is necessary to carry out the purposes of this Title nor shall the Secretary be precluded from revoking provisions for simplified reports for any such plan if he finds it necessary to do so in order to carry out the objectives of this Title.
(3) The Secretary may by regulation exempt any welfare benefit plan from all or part of the reporting and disclosure requirements of this Title, or may provide for simplified reporting and disclosure if he finds that such requirements are inappropriate as applied to welfare benefit plans.
(4) The Secretary may reject any filing under this Section
(A) if he determines that such filing is incomplete for purposes of this part; or
(B) if he determines that there is any material qualification by an accountant or actuary contained in an opinion submitted pursuant to Section 103(a)(3)(A) or Section 103(a)(4)(B).
(5) If the Secretary rejects a filing of a report under paragraph (4) and if a revised filing satisfactory to the Secretary is not submitted within 45 days after the Secretary makes his determination under paragraph (4) to reject the filing, and if the Secretary deems it in the best interest of the participants, he may take any one or more of the following actions
(A) retain an independent qualified public accountant (as defined in Section 103(a)(3)(D)) on behalf of the participants to perform an audit,
(B) retain an enrolled actuary (as defined in Section 103(a)(4)(C) of this Act) on behalf of the plan participants, to prepare an actuarial statement,
(C) bring a civil action for such legal or equitable relief as may be appropriate to enforce the provisions of this part, or
(D) take any other action authorized by this Title.
The administrator shall permit such accountant or actuary to inspect whatever books and records of the plan are necessary for such audit. The plan shall be liable to the Secretary for the expenses for such audit or report, and the Secretary may bring an action against the plan in any court of competent jurisdiction to recover such expenses.
(b) Publication of the summary plan descriptions and annual reports shall be made to participants and beneficiaries of the particular plan as follows:
(1) The administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, a copy of the summary, plan description, and all modifications and changes referred to in Section 102(a)(1) -
(A) within 90 days after he becomes a participant, or (in the case of a beneficiary) within 90 days after he first receives benefits, or
(B) if later, within 120 days after the plan becomes subject to this part.
The administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, every fifth year after the plan becomes subject to this part an updated summary plan description described in Section 102 which integrates all plan amendments made within such five-year period, except that in a case where no amendments have been made to a plan during such five-year period this sentence shall not apply. Notwithstanding the foregoing, the administrator shall furnish to each participant, and to each beneficiary receiving benefits under the plan, the summary plan description described in Section 102 every tenth year after the plan becomes subject to this part. If there is a modification or change described in Section 102(a)(1), a summary description of such modification or change shall be furnished not later than 210 days after the end of the plan year in which the change is adopted to each participant, and to each beneficiary who is receiving benefits under the plan.
(2) The administrator shall make copies of the plan description and the latest annual report and the bargaining agreement, trust agreement, contract, or other instruments under which the plan was established or is operated available for examination by any plan participant or beneficiary in the principal office of the administrator and in such other places as may be necessary to make available all pertinent information to all participants (including such places as the Secretary may prescribe by regulations).
(3) Within 210 days after the close of the fiscal year of the plan, the administrator shall furnish to each participant, and to each beneficiary receiving benefits under the plan, a copy of the statements and schedules, for such fiscal year, described in subparagraphs (A) and (B) of Section 103(b)(3) and such other material (including the percentage determined under Section 103(d)(11)) as is necessary to fairly summarize the latest annual report.
(4) The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. The administrator may make a reasonable charge to cover the cost of furnishing such complete copies. The Secretary may by regulation prescribe the maximum amount which will constitute a reasonable charge under the preceding sentence.
(c) The Secretary may by regulation require that the administrator of any employee benefit plan furnish to each participant and to each beneficiary receiving benefits under the plan a statement of the rights of participants and beneficiaries under this Title.
(d) Cross Reference. For regulations respecting coordination of reports to the Secretaries of Labor and the Treasury, see Section 3004.
AMENDMENTS
P.L. 101-239, Section 7894(b)(3):
Amended ERISA Section 104(a)(5)(B) by striking the period
and inserting a comma, effective September 2,1974.
P.L. 101-239, -7894(b)(4):
Amended ERISA Section 104(b)(l) by striking the comma after "summary" effective September 2, 1974.
P.L. 10~203, Section 9342(a)(2):
Amended ERISA Section 104(b)(3) by striking out "such other material" and inserting "such other material (including the percentage determined under Section 103(d)(11)" instead, effective December 17, 1987 for reports required to be filed after December 31, 1987.
P.L. 99-272, Section 11016(b)(2):
Amended ERISA Section 104(a)(2)(A) by striking out the second sentence, effective on April 7, 1986.
Prior to amendment, the second sentence read:
In addition, and without limiting the foregoing sentence, the Secretary may waive or modify the requirements of Section 103(d)(6) in such cases or categories of cases as to which he finds that (i) the interests of the plan participants are not harmed thereby and (ii) the expense of compliance with the specific requirements of Section 103(d)(6) is not justified by the needs of the participants, the Pension Benefit Guaranty Corporation, and the Department of Labor for some portion or all of the information otherwise required under Section 103(d)(6).
For the committee report on P.L. 100-203, relating to reporting requirements for under-funded plans, see 14,230.09.
.10 Conference Committee Explanation (P.L. 934D6). Disclosure to participants. Each administrator of an employee benefit plan is to furnish to each participant and to each beneficiary a summary plan description written in a manner calculated to be understood by the average plan participant or beneficiary. The summary is to include important plan provisions, names and addresses of persons responsible for plan investment or management, a description of benefits, the circumstances that may result in disqualification or ineligibility and the procedures to be followed in presenting claims for benefits under the plan.
Summary plan descriptions are to be furnished to participants within the later of 120 days after the plan is established or 90 days after an individual becomes a participant. Updated plan descriptions are also to be provided to participants every five years thereafter where there have been plan amendments in the interim; in any case, a new description is to be provided every ten years. Also, participants are to receive descriptions of material changes in a plan within 210 days after the end of any plan year in which a material change occurs. Also, the annual report and plan documents are to be available for examination by participants or beneficiaries at the principal office of the plan administrator and such other places as is necessary to provide reasonable access to these reports and documents. Thus, if the participants covered under the plan are employed in more than one geographic area, each geographic area is to have available for examination the required documents. Each participant is also to be furnished a copy within 210 days after the close of the plan year of the schedule of plan assets and liabilities and receipts and disbursements as submitted with the annual report, including any other material which is necessary to thoroughly summarize the latest annual report. Upon a written request, a plan administrator is to furnish a participant or beneficiary a complete copy of the comprehensive plan description, the latest annual report and other instruments under which the plan is established and operated. The plan administrator may charge a reasonable amount for fulfilling such a request.
Upon the request of a plan participant or beneficiary, a plan administrator is to furnish on the basis of the latest available information the total benefits accrued and the non-forfeitable pension benefit rights, if any, which have accrued. No more than one request may be made by any participant or beneficiary for this information during any one 12-month period.
A copy of the statement of the deferred vested benefits in the plan for individuals who have terminated employment during a plan year which is furnished to the Social Security Administration also is to be furnished to the individual participant.
Regulations
Reg. Section 2520.104-3 was adopted by FR Doc. 75-11656 under "Title 29 - Labor; Chapter XXV{Office of Employee Benefits Security; Part 2520 - Rules and Regulations for Reporting and Disclosure." The regulation was filed with the Federal Register on April 30, 1975, and published in the Federal Register on May 5, 1975. Reg. Section 2520.104-3 was amended and Reg. Sections 2520.104-2, and 2520.104-20 - 2520.104-25 were adopted by FR Doc. 75-21470, effective August 15, 1975, and published in the Federal Register on August 15, 1975. Reg. Sections 2520.104-1, 2520.104-5, 2520.104-6, 2520.104a-1, 2520.104a-2, 2520.104a-4, 2520.104b-1, 2520.104b-5 and 2520.104b-30 were adopted by FR Doc. 76-11859 (41 FR 16957) filed with the Federal Register on April 22, 1976, published in the Federal Register of April 23, 1976, and effective April 23, 1976. Reg. Sections 2520.104-4, 2520.104-26, 2520.104-27, 2520.104a-3, 2520.104b-2, 2520.104b-3, and 2520.104b-4 were adopted by FR Doc. 77-7637, filed with the Federal Register on March 11, 1977 and published in the Federal Register and effective on March 15, 1977 (42 FR 14266). Reg. Section Section 2520.104-26, 2520.104-27, 2520.104b(2)(d)(2), 2520.104b-2(e)(2), and 2520.104b-2(f) are interim as well as proposed regulations. Reg. Section Section 2520.104-5 and 2520.104-6 were amended by FR Doc. 77-7464 (42 FR 14280), published in the Federal Register of March 15, 1977, and effective March 15, 1977. The following sections or portions of sections, previously published as interim rules on March 15, 1977, were made final by FR Doc. 20810 (42 FR 37178), effective July 19, 1977: Section 2520.104-26, 2520.104-27, and 2520.104b-2. At the same time, the following sections were adopted as interim rules: Section Section 2520.104-5, 2520.104-6, 2520.104-28, 2520.104a-5, 2520.104b-2(a)(3), and 2520.104b-4. Reg. Section Section 2520.104-41 - 2520.104-46, 2520.104a-5, and 2520.104a-6, were adopted by 41 FR 10130, effective generally for plan years beginning 1977 and thereafter. Reg. Section Section 2520.104-20, 2520.104-21, and 2520.104a-4 were amended at the same time. Reg. Section 2520.104b-10 was adopted by 44 FR 19400, published on April 3, 1979. The following interim rules were made final by FR Doc. 80-6528 (45 FR 14029), effective April 3, 1980; Reg. Section 2520.104-5, 2520.104-6, 2520.104-28, 2520.104a-7, 2520.104b-2(a)(3), and 2520.104b-4. Reg. Section 2520.104-48 was adopted by 45 FR 24866 and published on April 11, 1980. Reg. Section 2520.104-49 was adopted by 46 FR 1261 and published in the Federal Register on January 6, 1981. Reg. Section 2520.104-50 was adopted by 46 FR 1265 and published in the Federal Register on January 6, 1981. Reg. Section Section 2520.104-23(b)(2)(ii) and 2520.104-44(b)(1)(ii) were amended by 46 FR 5882 and published in the Federal Register on January 21, 1981.
Subpart D Provisions Applicable to Both
Reporting and Disclosure Requirements
Section 2520.104-1 General. The administrator of an employee benefit plan covered by Part I of Title I of the Act must file reports and additional information with the Secretary of Labor, and disclose reports, statements, and documents to plan participants and to beneficiaries receiving benefits from the plan. The regulations contained in this Subpart are applicable to both the reporting and disclosure requirements of Part I of Title I of the Act. Regulations concerning only a plan administrator's duty of reporting to the Secretary of Labor are set forth in Subpart E of this part, and those applicable only to the duty of disclosure to participants and beneficiaries are set forth in Subpart F of this part. (Added by 41 FR 16957, effective April 23, 1976.)
Section 2520.104-2 Postponing effective date of annual reporting requirements and extending WPPDA reporting requirements. -
(a) Postponing reports under the Act. The January 1, 1975, effective date for the annual financial reporting and related disclosure requirements of Section 103 of the Act is postponed for any employee benefit plan having a plan year other than a calendar year. These requirements shall become effective as to such plans on the first day of the first plan year beginning after January 1, 1975. Specifically, the administrator of a non-calendar year plan (1) is not required to file an annual financial report with the Secretary under sections 103(a)(1)(A) and 104(a)(1)(A) of the Act until the required time (210 days or such other time as the Secretary of Labor sets by regulation) after the end of the first plan year which begins after January 1, 1975, and (2) is not required to furnish participants covered under the plan and beneficiaries receiving benefits under the plan with statements of the plan's assets, liabilities, receipts, disbursements, and a summary of the latest annual report, as required by sections 103(a)(1)(A) and 104(b)(3) of the Act, until the required time after the end of the first year which begins after January 1, 1975. The requirement of Section 104(b)(2) of the Act to make copies of the latest annual report available for inspection, and the requirement of Section 104(b)(4) of the Act to furnish, upon written request of a participant or beneficiary, a copy of the latest annual report, do not take effect until the required time after the end of the first plan year which begins after January 1, 1975.
Example. A plan with a plan year beginning on April 1, 1975, files an annual report with the Secretary within the required time after March 31, 1976. The plan also furnishes participants covered under the plan and beneficiaries receiving benefits under the plan with statements of the plan's assets and liabilities and receipts and disbursements, and a summary of the latest annual report, by the same date. The following disclosure requirements are also complied with by the same date: A copy of the annual report is made available for inspection by any plan participant or beneficiary in the principal office of the administrator and in such other places as may be necessary to make available all pertinent information to all participants; and the plan administrator supplies a copy of the annual report to any participant or beneficiary who requests it in writing.
(b) Extending WPPDA reporting. The repeal of the annual reporting requirements of Section 7 and the requirements for disclosure to participants and beneficiaries relating to annual reports of Section 8(a)(2) of the Welfare and Pension Plans Disclosure Act (29 U.S.C. 306) are postponed from January 1, 1975 for any employee benefit plan having a plan year other than a calendar year. For non-calendar year plans subject to the WPPDA, the reporting and disclosure provisions of the WPPDA shall remain in force and effect through the last day of any plan year beginning before January 1, 1975, and ending after December 31, 1974.
(c) Effect on other provisions. This postponement does not delay the effective date of any other provisions of Part I of Title I of the Act.
Section 2520.104-3 Deferral of certain initial reporting and disclosure requirements. -
(a) Under the authority of Section 104(a)(3) of the Act, certain reporting and disclosure requirements of employee welfare benefit plans are deferred. This deferral is set forth in paragraph (c) of this Section and applies to welfare plans subject to Part I of Title I of the Act on or before January 31, 1976. Welfare plans which become subject to Part I on or after February 1, 1976 shall meet the general reporting and disclosure provisions set forth in that part and regulations issued thereunder.
(b) Under the authority of Section 110 of the Act, an alternative method of compliance is provided for employee pension benefit plans subject to Part I of Title I of the Act on or before January 31, 1976. This alternative, set forth in paragraph (c) of this Section, permits an administrator of a pension plan to defer compliance with certain reporting and disclosure requirements. Pension plans which become subject to Part I of Title I of the Act on or after February 1, 1976 shall meet the general reporting and disclosure provisions set forth in that part and regulations issued thereunder.
(c) The administrator of a welfare plan described in paragraph (a) of this Section or of a pension plan using the alternative specified in paragraph (b) of this Section:
(1) Shall file a short form plan description consisting of the first two pages of Department of Labor Form EBS-I (not including schedules A, B and C) and the signature page (item 38 only), on or before the later of
(i) August 31, 1975, or
(ii) The 120th day after the plan becomes subject to Part I;
(2) May defer compliance with the following provisions of Part I of Title I of the Act until May 30, 1976
(i) Subsection (a)(l)(C) and (b)(l) of Section 104 of the Act, to the extent that they require plan administrators to file with the Secretary, and furnish to plan participants and beneficiaries copies of a summary plan description,
(ii) Section 104(a)(1)(B) of the Act, which requires plan administrators to file a plan description with the Secretary.
(iii) Section 104(b)(2) of the Act to the extent that it requires plan administrators to make copies of the plan description available for examination by any plan participant and beneficiary of certain places, and
(3) Shall not be required to comply with the provisions of sections 104(a)(1)(D) and 104(b)(1) of the Act, to the extent that they require plan administrators to file with the Secretary of Labor, and to furnish to plan participants and beneficiaries summaries of, material modifications to the plan and changes in information required to be included in the plan description or summary plan description, as the case may be, which
(i) Are adopted or occurred prior to May 30, 1976,
(ii) Are effective on May 30, 1976, and
(iii) Are incorporated in the initial plan description and summary plan description. (Amended August 15, 1975, by F.R. Doc. 75-21470.)
Section 2520.104-4 Alternative method of compliance for certain successor pension plans. -
(a) General. Under the authority of Section 110 of the Act, this Section sets forth an alternative method of compliance for certain successor pension plans in which some participants and beneficiaries not only have their rights set out in the plan, but also retain eligibility for certain benefits under the terms of a former plan which has been merged into the successor. This Section is applicable only to plan mergers which occur after the issuance by the successor plan of the initial summary plan description under the Act. Under the alternative method, the plan administrator of the successor plan is not required to describe relevant provisions of merged plans in summary plan descriptions of the successor plan furnished after the merger to that class of participants and beneficiaries still affected by the terms of the merged plans. Also, the plan administrator of the successor plan is not required to file with the Secretary of Labor a copy of the summary plan description of any merged plan. (Amended by 42 F.R. 37178, effective July 19, 1977.)
(b) Scope and application. This alternative method of compliance is available only if:
(1) The plan administrator of the successor plan furnishes to the participants covered under the merged plan and beneficiaries receiving pension benefits under the merged plan within 90 days after the effective date of the merger
(i) A copy of the most recent summary plan description of the successor plan;
(ii) A copy of any summaries of material modifications to the successor plan not incorporated in the most recent summary plan description; and
(iii) A separate statement containing a brief description of the merger; a description of the provisions of, and benefits provided by, the merged and successor plans which are applicable to the participants and beneficiaries of the merged plan; and a notice that copies of the merged and successor plan documents (including the portions of any corporate merger documents which describe or control the plan merger), are available for inspection and that copies may be obtained upon written request for a duplication charge (pursuant to Section 2520.104b-30); and
(iv) Section 104(b)(4) of the Act to the extent that it requires plan administrators to furnish a copy of the latest summary plan description and plan description to any participants or beneficiary upon written request; and
(2) After the merger, the plan administrator, in all subsequent summary plan descriptions furnished pursuant to Section 2520.104b-2(a)
(i) Clearly and conspicuously identifies the class of participants and beneficiaries affected by the provisions of the merged plan, and
(ii) States that the documents described in paragraph (b)(l) of this Section are available for inspection and that copies may be obtained upon written request for a duplication charge (pursuant to Section 2520.104(b)-30). (Added by 42 F.R. 14266, effective March 15, 1977, and amended by 42 FR 37178, effective July 19, 1977.)
Section 2520.104-5 Deferral of certain reporting and disclosure requirements relating to the summary plan description for welfare plans.
(a) General Rule. Under the authority of Section 104(a)(3) of the Act, employee welfare benefit plans described in and meeting the conditions of paragraph (b) may defer certain reporting and disclosure requirements that apply on and after July 15, 1977. These requirements may be deferred until dates that are no earlier than November 16, 1977, as provided in paragraph (c). The requirements that may be deferred include filing a copy of a summary plan description with the Secretary, furnishing a copy of a summary plan description to participants of a plan, filing material modifications to the plan and changes in the information required to be included in the summary plan description with the Secretary, furnishing a summary description of such modifications or changes to participants of a plan, and furnishing a copy of the latest summary plan description to participants and beneficiaries upon written request.
(b) Application.
(l) in the case of a welfare plan which became subject to the provisions of Part 1, Title I of the Act on or before March 2, 1976, the plan administrator may defer until the time specified in paragraph (c) compliance with the requirements set forth in paragraph (a), if the administrator:
(i) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 on or before May 30, 1976 to each participant covered under the plan as of March 2, 1976,
(ii) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 to each person who became a participant covered under the plan after March 2, 1976 and before December 2, 1976, within 90 days after that person became a participant covered under the plan and
(iii) Furnished a copy of the ERISA Notice, without charge, upon request to any participant covered under the plan or beneficiary to whom no copy of the Notice had been previously furnished.
(2) In the case of a welfare plan which became subject to the provisions of Part 1, Title I of the Act after March 2, 1976 but before December 2, 1976, the plan administrator may defer until the time specified in paragraph (c) compliance with the requirements set forth in paragraph (a) if the administrator:
(i) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 within 90 days after the date the plan became subject to the provision of Part 1, Title I, to each person who was a participant covered under the plan on the date the plan became subject to the provisions of Part 1, Title I;
(ii) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 to each person who became a participant covered under the plan after the date on which the plan became subject to the provisions of Part 1, Title I and before December 2, 1976, within 90 days after that person became a participant covered under the plan; and
(iii) Furnished a copy of the ERISA Notice, without charge, upon request to any participant covered under the plan or beneficiary to whom no copy of the Notice had been previously furnished.
(3) In the case of a welfare plan which became subject to the provisions of Part 1, Title I of the Act on or after December 2, 1976, but before the date of publication of these regulations, the administrator may defer compliance with the requirements set forth in paragraph (a) until the time set in paragraph (c).
(c) The administrator of a welfare plan described in paragraph (b) who elected to defer compliance with the requirements described in paragraph (a) shall comply with such requirements by November 16, 1977. (Added by 41 FR 16967, effective April 23, 1976; amended by 41 FR 55510, filed with the Federal Register on December 20, 1977, by 42 FR 14280, effective March 15, 1977, and by 42 FR 37178, effective July 19, 1977; finalized by 45 FR 14029, effective April 3, 1980.
Section 2520.104~ Deferral of certain reporting and disclosure requirements relating to the summary plan description for pension plans.
(a) General Rule. Under the authority of Section 110 of the Act, an alternative method of compliance which defers certain reporting and disclosure requirements that apply on and after May 30, 1976 is provided for employee pension benefit plans described in and meeting the conditions of paragraph (b). The alternative method of compliance permits pension plans to defer these requirements until the times set forth in paragraphs (c) or (d). The requirements which may be deferred include filing a copy of the summary plan description with the Secretary, furnishing a copy of the summary plan description to participants and beneficiaries of a plan, filing material modifications and changes in the information required to be included in the summary plan description with the Secretary, furnishing a summary description of such modifications or changes to participants and beneficiaries of a plan, and furnishing a copy of the latest summary plan description upon written request.
(b) Application.
(1) In the case of a pension plan which became subject to the provisions of Part 1, Title I of the Act on or before March 2, 1976, the plan administrator may defer until the times specified in paragraph (c)(l) compliance with the requirements set forth in paragraph (a), if the administrator:
(i) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 on or before May 30, 1976 to each participant covered under the plan and beneficiary receiving benefits as of March 2, 1976.
(ii) Furnished an ERISA Notice to each person who became a participant covered under the plan or a beneficiary receiving benefits after March 2, 1976 but more than 120 days before the date prescribed in paragraph (c)(l), within 90 days after that person became a participant covered under the plan or beneficiary receiving benefits, and
(iii) Furnished a copy of the ERISA Notice, without charge, upon request to any participant covered under the plan or beneficiary receiving benefits to whom no copy of the Notice had been previously furnished.
(2) In the case of a pension plan which became subject to the provisions of Part I, Title I of the Act after March 2, 1976 but before December 2, 1976, the plan administrator may defer until the times specified by paragraph (c)(l) compliance with the requirements set forth in paragraph (a) if the administrator:
(i) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 within 90 days after the date the plan became subject to the provisions of Part 1, Title I to each person who was a participant covered under the plan or beneficiary receiving benefits on the date the plan became subject to the provisions of Part 1, Title I;
(ii) Furnished an ERISA Notice which met the requirements of Section 2520.104b-5 to each person who became a participant covered under the plan or a beneficiary receiving benefits after the date on which the plan became subject to the provisions of Part I Title I but more than 120 days before the date prescribed in paragraph (c)(l), within 90 days after that person became a participant covered under the plan or a beneficiary receiving benefits; and
(iii) Furnished a copy of the ERISA Notice, without charge, upon request to any participant covered under the plan or beneficiary receiving benefits to whom no copy of the Notice had been previously furnished.
(3) In the case of a pension plan which became subject to the provisions of Part I, Title I of the Act on or after December 2, 1976 but before March 17, 1977, the administrator may defer compliance with the requirements set forth in paragraph (a) until the times specified in paragraph (c)(l).
(4) In the case of a pension plan, other than a pension plan described in subparagraph (5), which became subject to the provisions of Part 1, Title I of the Act on or after March 17,1977 and before July 19, 1977, the administrator may defer compliance with the requirements set forth in paragraph (a) until the time specified in paragraph (c)(2).
(5) In the case of a master, prototype, or practitioner pattern plan which became subject to the provisions of Part I, Title I of the Act on or after March 17, 1977, the administrator may defer compliance with the requirements set forth in paragraphs (a) until the times specified in paragraph (d).
(c) (l) The administrator of a pension plan described in paragraph (b)(l), (b)(2), or (b)(3) who elected to defer compliance with the requirements described in paragraph (a)
(A) And who files a request for a determination letter within the period prescribed in Section 401(b) of the Internal turnover Code of 1954 and the regulations issued pursuant thereto, shall have complied with the requirements described in paragraph (a) by the later of November 16, 1977 or 90 days after the date on which notice of the final determination with respect to the request for a determination letter is issued by the Internal turnover Service, the request is with drawn or the request is otherwise finally disposed of.
(B) For the purpose of computing the periods of time described in subparagraph (A) above, a notice of determination, opinion letter or notification letter from the Internal turnover Service will be deemed to be issued on the later of the date of such document or the date of postmark thereon. The date of withdrawal of a request for a determination letter, opinion letter or notification letter will be deemed to be the later of the date on the document withdrawing the request or the postmark thereon. The date of "other disposition" will be the later of the date on the document notifying of such other disposition or the postmark on such document.
(C) And who does not file a request for a determination letter within the period prescribed in Section 401(b) of the Internal turnover Code and the regulations issued pursuant thereto, shall have complied with the requirements described in paragraph (a) by the later of November 16, 1977 or the close of the period prescribed in Section 401(b) of the Internal turnover Code of 1054 and the regulations issued pursuant thereto.
(2) The administrator of a pension plan described in paragraph (b)(4) who defers compliance with the requirements described in paragraph (a) shall have complied with such requirements by November 16, 1977.
(d) Special rule for plans adopting master, prototype or practitioner pattern plans after March 17, 1977 The administrator of a pension plan which adopts a master, prototype, or practitioner pattern plan on or after March 17, 1977 may defer compliance with the statutory requirements described in paragraph (a) until the later of
(1) The end of the applicable remedial amendment period described in 26 CFR Section 1.401b-l(d)(l) or (2) of regulations issued by the Internal turnover Service under Section 401(b) of the Internal turnover Code of 1954, or
(2) November 16, 1977. (Added by 41 FR 16957, effective April 23, 1976; amended by 42 FR 14280, effective March 15, 1977, and by 42 FR 3178, effective July 19, 1977; amended and finalized by 45 FR 14029, effective April 3, 1980.)
Section 2520.104-20 Limited exemption for certain small welfare plans. -
(a) Scope. Under the authority of Section 104(a)(3) of the Act, the administrator of any employee welfare benefit plan which covers fewer than 100 participants at the beginning of the plan year and which meets the requirements of paragraph (b) of this Section is exempted from certain reporting and disclosure plan provisions of the Act. Specifically, the administrator of such plan is not required to file with the Secretary any of the following documents: Plan description, copy of the summary plan description, description of a material modification in the terms of a plan or change in the information required to be included in the plan description, annual report, and terminal report. In addition, the administrator of a plan exempted under this Section
(1) Is not required to furnish participants covered under the plan and beneficiaries receiving benefits under the plan with statements of the plan's assets and liabilities and receipts and disbursements and a summary of the annual report required by Section 104(b)(3) of the Act;
(2) Is not required to furnish upon written request of any participant or beneficiary a copy of the plan description, annual report, and any terminal report, as required by Section 104(b)(4) of the Act; and
(3) Is not required to make copies of the plan description and annual report available for examination by any participant or beneficiary in the principal office of the administrator and such other places as may be necessary, as required by Section 104(b)(2) of the Act.
(b) Application. This exemption applies only to welfare benefit plans
(1) Which have fewer than 100 participants at the beginning of the plan year;
(2) (i) For which benefits are paid as needed solely from the general assets of the employer or employee organization maintaining the plan, or
(ii) The benefits of which are provided exclusively through insurance contracts or policies issued by an insurance company or similar organization which is qualified to do business in any State or through a qualified health maintenance organization as defined in Section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. Section 300e-9(d), the premiums for which are paid directly by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members, Provided, that contributions by participants are forwarded by the employer or employee organization within three months of receipt, or (Amended by 46 FR 5882, originally scheduled to be effective February 20, 1981. However, the effective date was delayed under the President's regulation freeze until March 30, 1981 (46 FR 11253).)
(iii) Both; and
(3) for which. in the case of an insured
(i) Refunds, to which contributing participants are entitled, are returned to them within three months of receipt by the employer or employee organization, and
(ii) Contributing participants are informed upon entry into the plan of the provisions of the plan concerning the allocation of refunds.
(c) Limitations. This exemption does not exempt the administrator of an employee benefit plan from any other requirement of Title I of the Act, including the provisions which require that plan administrators furnish copies of the summary plan description to participants and beneficiaries (Section 104(b)(1)) and furnish certain documents to the Secretary of Labor upon request (Section 104(a)(1)), and which authorize the Secretary of Labor to collect information and data from employee benefit plans for research and analysis (Section 513).
(d) Examples.
(1) A welfare plan has 75 participants at the beginning of the plan year and 105 participants at the end of the plan year. Plan benefits are fully insured and premiums are paid directly to the insurance company by the employer pursuant to an insurance contract purchased with premium payments derived half from the general assets of the employer and half from employee contributions (which the employer forwards within three months of receipt). Refunds to the plan are paid to participating employees within three months of receipt as provided in the plan and as described to each participant upon entering the plan. The plan appoints the employer as its plan administrator. The employer, as plan administrator, provides summary plan descriptions to participants and beneficiaries. He also makes copies of certain plan documents available at the plan's principal office and such other places as necessary to give participants reasonable access to them. The exemption provided by Section 2520.104-20 applies even though the plan has more than 100 participants by the end of the plan year, because it had fewer than 100 participants at the beginning of the plan year and otherwise satisfied the conditions of the exemption.
(2) A welfare plan is established and maintained in the same way as the plan described in example (1), except that a trade association which sponsors the plan is the holder of the insurance contract. Since the plan still sends the premium payments directly to the insurance company, the exemption applies, as in example (1). (Amended March 9, 1978, by 43 F.R. 10130.)
Section 2520.104-21 Limited exemption for certain group insurance arrangements. -
(a) Scope. Under the authority of Section 104(a)(3) of the Act, the administrator of any employee welfare benefit plan which covers fewer than 100 participants at the beginning of the plan year and which meets the requirements of paragraph (b) of this Section is exempted from certain reporting and disclosure provisions of the Act. Specifically, the administrator of such plan is not required to file with the Secretary any of the following documents: Plan description, copy of the summary plan description, description of a material modification in the terms of a plan or change in the information required to be included in the plan description, and terminal report. In addition, the administrator of a plan exempted under this Section:
(1) Is not required to furnish upon written request of any participant or beneficiary a copy of the plan description and any terminal report, as required by Section 104(b)(4) of the Act;
(2) Is not required to make copies of the plan description available for examination by any participant or beneficiary in the principal office of the administrator and such other places as may be necessary, as required by Section 104(b)(2) of the Act.
(b) Application. This exemption applies only to welfare plans, each of which has fewer than 100 participants at the beginning of the plan year and which are part of a group insurance arrangement if such arrangement:
(1) Provides benefits to the employees of two or more unaffiliated employers, but not in connection with a multi-employer plan as defined in Section 3(37) of the Act and any regulations prescribed under the Act concerning Section 3(37);
(2) Fully insures one or more welfare plans of each participating employer through insurance contracts purchased solely by the employers or purchased partly by the employers and partly by their participating employees, with all benefit payments made by the insurance company: Provided, that
(i) Contributions by participating employees are forwarded by the employers within three months of receipt,
(ii) Refunds, to which contributing participants are entitled, are returned to them within three months of receipt, and
(iii) Contributing participants are informed upon entry into the plan of the provisions of the plan concerning the allocation of refunds; and
(3) Uses a trust (or other entity such as a trade association) as the holder of the insurance contracts and the conduit for payment of premiums to the insurance company.
(c) Limitations. This exemption does not exempt the administrator of an employee benefit plan from any other requirement of Title I of the Act, including the provisions which require that plan administrators furnish copies of the summary plan description to participants and beneficiaries (Section 104(b)(1)), file an annual report with the Secretary of Labor (Section 104(a)(1)(A)) and furnish certain documents to the Secretary of Labor upon request (Section 104(a)(1)), and authorize the Secretary of Labor to collect information and data from employee benefit plans for research and analysis (Section 513).
(d) Examples.
(1) A welfare plan has 25 participants at the beginning of the plan year. It is part of a group insurance arrangement which provides benefits to employees of two or more unaffiliated employers, but not in connection with a multi-employer plan as defined under the Act. Plan benefits are fully insured pursuant to insurance contracts purchased with premium payments derived half from employee contributions (which the employer forwards within three months of receipt) and half from the general assets of participating employers. Refunds to the plan are paid to participating employees within three months of receipt as provided in the plan and as described to each participant upon entering the plan. A trade association is the holder of the insurance contract and acts as a conduit for payments, receiving premium payments from participating employers and paying the insurance company. The plan appoints the trade association as its plan administrator. The association, as plan administrator, provides summary plan descriptions to participants and beneficiaries, enlisting the help of the participating employer in carrying out this distribution. The plan administrator also makes copies of certain plan documents available to the plan's principal office and such other places as necessary to give participants reasonable access to them. The plan administrator files with the Secretary an annual report covering activities of the plan, as required by the Act and such regulations as the Secretary may issue. The exemption provided by Section 2520, 104-21 applies because the conditions of Section 2520.104-21(c) have been satisfied.
(2) A welfare plan has 75 participants at the beginning of the plan year. It is part of a group insurance arrangement and its benefits and credits are paid in the same manner as in example (1) of Section 2520 104-21. A trade association acts as a conduit for payments, acting through its agent, an independent insurance brokerage firm, and is the holder of the insurance contract. The man appoints an officer of the participating employer as the plan administrator. The officer, as plan administrator, performs the same reporting and disclosure functions as the administrator in example (1) of Section 2520.104-21, enlisting the help of the association in providing summary plan descriptions and necessary information. The exemption provided by Section 2520.104-21 applies.
(3) A welfare plan has 125 participants at the beginning of the plan year. It is part of a group insurance arrangement and its benefits and credits are paid in the same manner as in the previous examples. A trade association acts as a conduit for payments and is the holder of the insurance contract. The plan appoints the association as plan administrator. The association, as plan administrator, performs all the reporting and disclosure requirements of Title I of the Act for the plan. These include filing with the Secretary a plan description, summary plan description, description of any material modifications in the terms of the plan or change in the information required to be included in the plan description, annual report, and certain other documents if required by regulations or request of the Secretary of Labor. The requirements also include disclosure of certain documents to participants and beneficiaries, including among others the summary plan description and summary of the annual report. The plan administrator obtains necessary information not available in its records such as the fact that there are 125 participants from the plan. The exemption provided by Section 2520.104-21 does not apply because the plan had more than 100 participants at the beginning of the plan year although the other conditions of paragraph (c) are satisfied.
(4) A welfare plan has 125 participants. It is part of a group insurance arrangement and its benefits and credits are paid in the same manner as in the previous examples. A trade association acts as a conduit for payments and is the holder of the insurance contract. The plan appoints an officer of the participating employer as plan administrator. The plan administrator performs the same reporting and disclosure functions as the administrator in example (3), enlisting the help of the association in providing summary plan descriptions and necessary information. The exemption provided by Section 2520.104-21 does not apply. (Amended March 9, 1978, by 41 F.R. 10130.)
Section 2520.104-22 Exemption from reporting and disclosure requirements for apprenticeship and training plans.
(a) An employee welfare benefit plan that provides exclusively apprenticeship training benefits or other training benefits or that provides exclusively apprenticeship and training benefits shall not be required to meet any requirement of Part I of the Act, provided that the administrator of such plan: (1) has filed with the Secretary the notice described in paragraph (b) of this Section; (2) takes steps reasonably designed to ensure that the information required to be contained in such notice is disclosed to employees of employers contributing to the plan who may be eligible to enroll in any course of study sponsored or established by the plan; and (3) makes such notice available to such employees upon request.
(b) The notice referred to in paragraph (a) of this Section shall contain accurate information concerning: (1) the name of the plan; (2) the Employer Identification Number (EIN) of the plan sponsor, (3) the name of the plan administrator; (4) the name and location of an office or person from whom an interested individual can obtain: (i) a description of any existing or anticipated future course of study sponsored or established by the plan, including any prerequisites for enrolling in such course; and (ii) a description of the procedure by which to enroll in such course. (Amended March 10, 1980, by 45 FR 15527.)
(c) Filing Address. The notice referred to in paragraph (a) of this Section shall be filed with the Secretary of Labor by mailing it to: Apprenticeship and Training Plan Exemption, Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, or by delivering it during normal working hours to the Division of Reports, Office of Program Services, Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC. (Amended on March 1, 1989 by 54 FR 8624.)
Section 2520.104-23 Alternative method of compliance for pension plans for certain selected employees.
(a) Purpose and scope.
(1) This Section contains an alternative method of compliance with the reporting and disclosure requirements of Part I of Title I of the Employee Retirement Income Security Act of 1974 for unfunded or insured pension plans maintained by an employer for a select group of management or highly compensated employees, pursuant to the authority of the Secretary of Labor under Section 110 of the Act (88 Stat. 851).
(2) Under Section 110 of the Act, the Secretary is authorized to prescribe an alternative method for satisfying any requirement of Part I of Title I of the Act with respect to any pension plans, or class of pension plans, subject to such requirement.
(b) Filing obligation. Under the authority of Section 110 of the Act, an alternative form of compliance with the reporting and disclosure requirements of Part I of the Act is provided for certain pension plans for a select group of management or highly compensated employees. The administrator of a pension plan described in paragraph (d) shall be deemed to satisfy the reporting and disclosure provisions of Part I of Title I of the Act by
(1) Filing a statement with the Secretary of Labor that includes the name and address of the employer, the employer identification number (EIN) assigned by the Internal turnover Service, a declaration that the employer maintains a plan or plans primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, and a statement of the number of such plans and the number of employees in each, and
(2) Providing plan documents, if any, to the Secretary upon request as required by Section 104(a)(1) of the Act. Only one statement need be filed for each employer maintaining one or more of the plans described in paragraph (d) of this Section. For plans in existence on May 4, 1975, the statement shall be filed on or before August 31, 1975. For a plan to which Part I of Title I of the Act becomes applicable after May 4, 1975, the statement shall be filed within 120 days after the plan becomes subject to Part 1.
(c) Filing Address. Statements may be filed with the Secretary of Labor by mailing them addressed to: Top Hat Plan Exemption, Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, or by delivering it during normal working hours to the Division of Reports, Office of Program Services, Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, D.C. (Amended on March 1, 1989 by 54 FR 8624.)
(d) Application. The alternative form of compliance described in paragraph (b) of this Section is available only to employee pension benefit plans
(1) Which are maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, and
(2) For which benefits (i) are paid as needed solely from the general assets of the employer, (ii) are provided exclusively through insurance contracts or policies, the premiums for which are paid directly by the employer from its general assets, issued by an insurance company or similar organization which is qualified to do business in any State, or (iii) both.
Section 2520.104-24 Exemption for welfare plans for certain selected employees. -
(a) Purpose and scope.
(1) This Section, under the authority of Section 104(a)(3) of the Employee Retirement Income Security Act of 1974, exempts unfunded or insured welfare plans maintained by an employer for the purpose of providing benefits for a select group of management or highly compensated employees from the reporting and disclosure provisions of Part I of Title I of the Act, except for the requirement to provide plan documents to the Secretary of Labor upon request under Section 104(a)(1) of the Act.
(2) Under Section 104(a)(3) of the Act, the Secretary is authorized to exempt by regulation any welfare benefit plan from all or part of the reporting and disclosure requirements of Title I of the Act.
(b) Exemption. Under the authority of Section 104(a)(3) of the Act, each employee welfare benefit plan described in paragraph (c) of this Section is exempted from the reporting and disclosure provisions of Part I of Title I of the Act, except for providing plan documents to the Secretary of Labor upon request as required by Section 104(a)(l).
(c) Application. This exemption is available only to employee welfare benefit plans:
(1) Which are maintained by an employer primarily for the purpose of providing benefits for a select group of management or highly compensated employees, and
(2) For which benefits (i) are paid as needed solely from the general assets of the employer, (ii) are provided exclusively through insurance contracts or policies, the premiums for which are paid directly by the employer from its general assets, issued by an insurance company or similar organization which is qualified to do business in any State, or (iii) both.
Section 2520.104-25 Exemption from reporting and disclosure for day care centers. Under the authority of Section 104(a)(3) of the Act, day care centers are exempted from the reporting and disclosure provisions of Part I of Title I of the Act, except for providing plan documents to the Secretary upon request as required under Section 104(a)(1) of the Act.
Section 2520.104-26 Limited exemption for certain dues financed welfare plans maintained by employee organizations.
(a) Scope. Under the authority of Section 104(a)(3) of the Act, a welfare benefit plan that meets the requirements of paragraph (b) of this Section is exempted from the provisions of the Act that require (i) filing with the Secretary a plan description and annual report, and (ii) furnishing a summary annual report to participants and beneficiaries. Such plans may use a simplified method of reporting and disclosure to comply with the requirements (i) to furnish a summary plan description to participants and beneficiaries, and (ii) to file a copy of the summary plan description with the Secretary, as follows:
(1) In lieu of filing a plan description and a summary plan description with the Secretary,
(i) filing is made under the Labor-Management Reporting and Disclosure Act (LMROA) and regulations thereunder, of the Report Form LM-I or LM-IA, together with a copy of the employee organization constitution or by-laws in which the plan is described, and
(ii) filing is made of any document furnished to participants and beneficiaries, in accordance with subparagraph (3).
(2) In lieu of filing an annual report with the Secretary or distributing a summary annual report, a filing is made of Report Form LM-2 or LM-3, pursuant to the LMRDA and regulations thereunder.
(3) (i) The plan meets the requirements for furnishing a summary plan description of Section 2520.104b-2(f), except the requirement of subparagraph (1) of that paragraph to have furnished the summary plan description before the date of publication of these regulations. The employee organization constitution or by-laws may be used as the summary plan description, if they meet the requirements of that paragraph.
(ii) Notwithstanding subparagraph (i), if any provisions of such documents indicate that a certain portion of members' dues or a certain portion of the employee organization's assets will be used only for the payment of benefits, although such portion of dues or assets may legally be used for general employee organization purposes, or may be subject to the claims of general creditors of the employee organization, such documents may nevertheless be used as the summary plan description provided that:
(A) The supplement required by Section 2520.104b-2(f) contains a clear statement that such portion of dues or assets may legally be used for general employee organization purposes or may be subject to the claims of general creditors of the employee organization, and
(B) The employee organization constitution or by-laws are amended as soon as possible following normal procedures (e.g., at the next regularly scheduled employee organization convention, in the case of a constitution or by-laws which provide for amendment in regularly scheduled conventions) to reflect accurately the status of the plan.
(b) Application. This exemption is available only to welfare benefit plans maintained by an employee organization, as that term is defined in Section 3(4) of the Act, paid for out of the employee organization's assets, which are derived wholly or partly from membership dues, and which cover employee organization members and their beneficiaries.
(c) Limitations. This exemption does not exempt the administrator from any other requirement of Part I of Title I of the Act. (Added by 42 FR 37178, effective July 19, 1977.)
Section 2520.104-27 Alternative method of compliance for certain dues financed pension plans maintained by employee organizations.
(a) Scope. Under the authority of Section 110 of the Act, a pension benefit plan that meets the requirements of paragraph (b) of this Section is exempted from the provisions of the Act that require (i) filing with the Secretary a plan description and annual report, and (ii) furnishing a summary annual report to participants and beneficiaries receiving benefits. Such plans may use a simplified method of reporting and disclosure to comply with the requirements (i) to furnish a summary plan description to participants and beneficiaries receiving benefits, and (ii) to file a copy of the summary plan description with the Secretary, as follows:
(1) In lieu of filing a plan description and a summary plan description with the Secretary,
(i) filing is made under the Labor-Management Reporting and Disclosure Act (LMRDA) and regulations thereunder, of the Report Form LM-I on LM-IA, together with a copy of the employee organization constitution or by-laws in which the plan is described, and
(ii) filing is made of any document furnished to participants and beneficiaries, in accordance with subparagraph (3).
(2) In lieu of filing an annual report with the Secretary or distributing a summary annual report, a filing is made of Report Form LM-2 or LM-3, pursuant to the LMRDA and regulations thereunder.
(3) (i) The plan meets the requirements for furnishing the summary plan description of Section 2520.104b-2(f) except the requirement of subparagraph (1) of that paragraph to have furnished the summary plan description before the date of publication of these regulations. The employee organization constitution or by-laws may be used as the summary plan description, if they meet the requirements of that paragraph.
(ii) Notwithstanding subparagraph (i), if any provisions of such documents indicate that a certain portion of members' dues or a certain portion of the employee organization's assets will be used only for the payment of benefits, although such portion of dues or assets may legally be used for general employee organization purposes, or may be subject to the claims of general creditors of the employee organization, such documents may nevertheless be used as the summary plan description provided that:
(A) The supplement required by Section 2520.104b-2(f) contains a clear statement that such portion of dues or assets may legally be used for general employee organization purposes or may be subject to the claims of general creditors of the employee organization, and
(B) The employee organization constitution or by-laws are amended as soon as possible following normal procedures (e.g., at the next regularly scheduled employee organization convention, in the case of a constitution or by-laws which provide for amendment in regularly scheduled conventions) to reflect accurately the status of the plan.
(b) Application. This exemption is available only to pension benefit plans maintained by an employee organization, as that term is defined in Section 3(4) of the Act, paid for out of the employee organization's general assets, which are derived wholly or partly from membership dues, and which cover employee organization members and their beneficiaries.
(c) Limitations. This exemption does not exempt the administrator from any other requirement of Part I of Title I of the Act. (Added by 42 FR 37178, effective July 19, 1977.)
Section 2520.104-28 Extension of time for filing and disclosure of the initial summary plan description. -
(a) General. An employee benefit plan may, for good cause as determined by the plan administrator, extend the date to file and disclose the initial summary plan description or supplement for a period of 60 days from the date provided in Section 2520.104a-3 and Section 2520.104b-2. This extension is available to all employee benefit plans except for those plans described in paragraph (c), which may use the extension procedure provided under that paragraph.
(b) Requirements. In order for an employee benefit plan to extend the date for filing and disclosure of the initial summary plan description or supplement, the plan administrator of a plan must
(1) Determine that there is good cause for the extension. The following are examples of situations for which good cause could be found. This list is not exclusive and other situations may also constitute good cause for extending the date for filing and disclosure:
(i) A plan whose summary plan description or supplement is being prepared by a consulting company, insurance carrier or service, or other person that engages in the preparation of summary plan descriptions or supplements, where the volume of work of such persons exceeds the capacity to finish preparation of these documents before the time to file and disclose them under Section 2520.104a-3 and Section 2520.104b-2.
(ii) A plan of a plan sponsor which has 20 or more classes of participants for which separate summary plan descriptions or supplements will be filed and disclosed.
(2) Furnish with the initial summary plan description or supplement a statement describing the good cause for which the date for filing and disclosure was extended.
(c) Plans involved in collective bargaining negotiations. The plan administrator of a plan which by the terms of a collective bargaining agreement may be the subject of collective bargaining negotiations within a period of 120 days prior to, or after, the date for filing and disclosure of the summary plan description or supplement under Section 2520.104a-3 and Section 2520.104b-2, may extend the requirement to file and disclose the summary plan description or supplement for a period not to exceed 90 days from the date of conclusion of the new collective bargaining agreement. A statement explaining the basis upon which the date was extended must be furnished with the summary plan description or supplement.
(d) Limitation. This extension procedure is available only for an employee benefit plan which is subject to Part I of Title I on or before July 19, 1977. (Added by 42 FR 37178, published July 19, 1977; amended and finalized by 45 FR 14029, effective April 3, 1980.)
Section 2520.104-41 Simplified annual reporting requirements for plans with fewer than 100 participants.
(a) General.
(1) Under the authority of Section 104(a)(2)(A), the Secretary of Labor may prescribe simplified annual reporting for employee pension benefit plans with fewer than 100 participants.
(2) Under the authority of Section 104(a)(3), the Secretary of Labor may provide a limited exemption for any employee welfare benefit plan with respect to certain annual reporting requirements.
(b) Application. The administrator of an employee pension or welfare benefit plan which covers fewer than 100 participants at the beginning of the plan year and is required to file an annual report under Section 104(a)(1)(A) of the Act and Section 2520.104a-5 shall, except as permitted under Section 2520.103-l(d), file the simplified annual report described in paragraph (c) of this Section. (Corrected April 4, 1978, by 43 FR 14010. Amended July 29, 1980 by 45 FR 51446.)
(c) Contents. The administrator of an employee pension or welfare benefit plan which covers fewer than 100 participants shall file a Form 5500-C "Return-Report of Employee Benefit Plan (with fewer than 100 participants)," or, as appropriate, a Form 5500-R "Registration Statement of Employee Benefit Plan (with fewer than 100 participants)," in the manner prescribed in SEction 2520.104a-5. (Amended March 1, 1989 by 54 FR 8624.)
The administrator of an employee pension Keogh plan which covers fewer than 100 participants, at least one of whom is an owner/employee, as defined in Section 401(c)(3) of the Internal turnover Code of 1954, shall file a Form 5500-K "Return/Report of Employee Pension Benefit Plan for Sole Proprietorships and Partnerships (with fewer than 100 participants and at least one owner-employee)," or, as appropriate, a Form 5500-R "Registration Statement of Employee Benefit Plan (with fewer than 100 participants)," in the manner prescribed in Section 2520.104a-5. (Added March 9, 1978, by 43 FR 10130. Amended July 29, 1980 by 45 FR 5144~5.)
Section 2520.104-42 Waiver of certain actuarial information in the annual report. Under the authority of Section 104(a)(2)(A) of ERISA, the requirement of Section 103(d)(6) of ERISA that the annual report include as part of the actuarial statement (Schedule B) the present value of all of the plan's liabilities for non-forfeitable pension benefits allocated by termination priority categories, as set forth in Section 4044 of Title IV of ERISA, and the actuarial assumptions used in these computations, is waived. (Amended January 23, 1979, by 44 FR 5440.)
Section 2520.104-43 Exemption from annual reporting requirement for certain group insurance arrangements.
(a) General. Under the authority of Section 104(a)(3) of the Act, the administrator of an employee welfare benefit plan which meets the requirements of paragraph (b) of this Section is not required to file an annual report with the Secretary of Labor as required by Section 104(a)(1)(A) of the Act.
(b) Application.
(1) This exemption applies only to a welfare plan for a plan year in which (i) such plan meets the requirements of Section 2520.104-21, except the requirement that the plan cover fewer than 100 participants at the beginning of the plan year, and (ii) an annual report containing the items set forth in Section 2520.103-2 has been filed with the Secretary of Labor in accordance with Section 2520.104a by the trust or other entity which is the holder of the group insurance contracts by which plan benefits are provided and the conduit for payment of premiums for such policies.
(2) For purposes of this Section, the term "trust or other entity" shall be used in place of the term "plan" or "plan administrator" as applicable, in Sections 2520.103-3, 2520.103-4, 2520103, 2520.103-7(b)(1), 2520.103-8, 2520.103-9, 2520.103-10, and 2520.10445.
(c) Limitation. This provision does not exempt the administrator of an employee benefit plan which meets the requirements of paragraph (b) from furnishing a copy of a summary annual report to participants and beneficiaries of the plan, as required by Section 104(b)(3) of the Act. (Added March 9,1978, by 43 F.R. 10130.)
Section 2520.104-44 Limited exemption and alternative method of compliance for annual reporting by unfunded plans and by certain insured plans.
(a) General.
(1) Under the authority of Section 104(a)(3) of the Act, the Secretary of Labor may exempt an employee welfare benefit plan from any or all of the reporting and disclosure requirements of Title I. An employee welfare benefit plan which meets the requirements of paragraph (b)(l) of this Section is not required to comply with the annual reporting requirements described in paragraph (c) of this Section. (Amended July 29, 1980 by 45 FR 51446.)
(2) Under the authority of Section 110 of the Act, an alternative method of compliance is prescribed for certain employee pension benefit plans subject to Part 1, Title I of the Act. An employee pension benefit plan which meets the requirements of paragraph (b)(2) of this Section is not required to comply with the annual reporting requirements described in paragraph (c) of this Section.
(b) Application. This Section applies only to:
(1) An employee welfare benefit plan under the terms of which benefits are to be paid
(i) Solely from the general assets of the employer or employee organization maintaining the plan;
(ii) The benefits of which are provided exclusively through insurance contracts or policies issued by an insurance company or similar organization which is qualified to do business in any State or through a qualified health maintenance organization as defined in Section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. Section 300e-9(d), the premiums for which are paid directly by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members, provided that any plan assets held by such an insurance company are held solely in the general account of such company or organization, contributions by participants are forwarded by the employer or employee organization within three months of receipt and, in the case of a plan that provides for the return of refunds to contributing participants, such refunds are returned to them within three months of receipt by the employer or employee organization, or (Amended by 46 FR 5882, originally scheduled to be effective February 20, 1981. However the effective date was delayed under the President's regulation freeze until March 30, 1981 (46 FR 11253).)
(iii) Partly in the manner specified in paragraph (b)(l)(i) of this Section and partly in the manner specified in paragraph (b)(l)(ii) of this Section; and
(2) A pension benefit plan the benefits of which are provided exclusively through allocated insurance contracts or policies which are issued by, and pursuant to the specific terms of such contracts or policies benefit payments are fully guaranteed by an insurance company or similar organization which is qualified to do business in any State, and the premiums for which are paid directly by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members: Provided, that contributions by participants are forwarded by the employer or employee organization to the insurance company or organization within three months of receipt and, in the case of a plan that provides for the return of refunds to contributing within three months of receipt by the employer or employee organization.
(c) Contents. An employee benefit plan described in paragraph (b) of this Section is exempt from complying with the following annual reporting requirements:
(1) Completing certain items of the appropriate Return/Report form relating to financial information and transactions entered into by the plan. See the instructions on the forms for "Insured Plans" (Amended July 29, 1980 by 45 FR 51446.)
(2) Engaging an independent qualified public accountant pursuant to Section 103(a)(3)(A) of the Act and Section 2520.103-l(b) to conduct an examination of the financial statements and schedules of the plan; and
(3) Including in the annual report a report of an independent qualified public accountant concerning the financial statements and schedules required to be a part of the annual report pursuant to Section 103(b) of the Act and Section 2520.103-l(b).
(d) Limitation. This Section does not exempt any plan from filing an annual report form with the Secretary in accordance with Section 104(a)(1)(A) of the Act and Section 2520.104a-5.
(e) Example. A welfare plan which is funded entirely with insurance contracts and which meets all the requirements of exemption under Section 2520.104-20 except that it covers 100 or more participants at the beginning of the plan year is not exempt from the annual reporting requirements under Section 2520.104-20, but is exempt from certain reporting requirements under Section 2520.104~44. Under the latter Section, such a welfare plan should file Form 5500, including Schedule A "Insurance Information." However, the plan is not required to engage an independent qualified public accountant and need not complete certain items on Form 5500. (Added March 9 1978, by 43 FR 10130 and amended by 45 FR 51446 on July 29, 1980.)
Section 2520.104-45 Temporary exemption from reporting insurance fees and commissions for insured plans with fewer than 100 participants.
(a) General.
(1) Under the authority of Section 104(a)(3) of the Act, the Secretary of Labor may exempt an employee welfare benefit plan from any or all of the reporting and disclosure requirements of Title I. The administrator of an employee welfare benefit plan which meets the requirements of paragraph (b) of this Section is exempt from complying with the annual reporting requirements described in paragraph (c) of this Section.
(2) Under the authority of Section 110 of the Act, the Secretary of Labor may prescribe an alternative method of compliance for employee pension benefit plans subject to Part I, Title I, of the Act. The administrator of an employee pension benefit plan which meets the requirements of paragraph (b) of this Section is not required to comply with the annual reporting requirements described in paragraph (c) of this Section
.
(b) Application. (1) The provisions of this Section apply only to welfare and pension plans which cover fewer than 100 participants at the beginning of the plan year and which provide benefits in whole or in part through insurance contracts or policies issued by an insurance company or similar organization which is qualified to do business in any State.
(c) Contents. A plan which meets the requirements of paragraph (b) is not required to include in the annual report filed in accordance with Section 104(a)(1)(A) of the Act and Section 2520.104a-5 or Section 2520.104a-6 the following information described under sections 103(c) and (e) of the Act:
(1) The name and address of any insurance agent, broker or other person to whom insurance commissions, salaries or fees are paid;
(2) The amount paid to each; and
(3) The purpose for which such payment is made.
(d) Limitation. The provisions of this Section apply only to the annual report required to be filed for the plan years beginning in 1975 and 1976. (Added March 9, 1978, by 43 FR 10130.)
Section 2520.104-46 Waiver of examination and report of an independent qualified public accountant for employee benefit plans with fewer than 100 participants.
(a) General.
(1) Under the authority of Section 103(a)(3)(A) of the Act, the Secretary may waive the requirements of Section 103(a)(3)(A) in the case of a plan for which simplified annual reporting has been prescribed in accordance with Section 104(a)(2) of the Act.
(2) Under the authority of Section 104(a)(3) of the Act the Secretary may exempt any employee welfare benefit plan from certain annual reporting requirements.
(b) Application.
(1) The administrator of an employee pension plan for which simplified annual reporting has been prescribed in accordance with Section 104(a)(2)(A) of the Act and Section 2520.104-41 is not required to comply with the annual reporting requirements described in paragraph (c) of this Section.
(2) The administrator of an employee welfare benefit plan that covers fewer than 100 participants at the beginning of the plan year is not required to comply with annual reporting requirements described in paragraph (c) of this Section. (Added March 9, 1978, by 43 FR 10130.)
(c) Waiver. The administrator of a plan described in paragraph (b)(l) or (2) of this Section is not required to:
(1) Engage an independent qualified public accountant to conduct an examination of the financial statements of the plan;
(2) Include within the annual report the financial statements and schedules prescribed in Section 103(b) of the Act and Sections 2520.103-2520.103-2, and 2520.103-10; and
(3) Include within the annual report a report of an independent qualified public accountant as prescribed in Section 103(a)(3)(A) of the Act and Section 2520.103-1.
(d) Limitations.
(1) The waiver described in this Section does not affect the obligation of a plan described in paragraph (b)(l) or (2) of this Section does not affect the obligation of a plan described in paragraph (b)(1) or (2) or this Section to file a Form 5500-C or, as appropriate, Form 5500-R and all schedules called for therein. See Section 2520.104-41.
(2) This Section does not apply to a plan which elects to file an Annual Return/Report Form 5500 pursuant to Section 2520.103-l(d). (Corrected April 4, 1978 by 43 FR 14010; amended July 29, 1980 by 45 FR 51446; amended March 1, 1989 by 54FR8624.)
Section 2520.104-47 Limited exemption and alternative method of compliance for filing of insurance company financial reports. An administrator of an employee benefit plan, which Section 103(e)(2) of the Act applies shall be deemed in compliance with the requirement to include with its annual report a copy of the financial report of the insurance company, insurance service or similar organization, provided that the administrator files a copy of such report within 45 days of receipt of a written request for such report by the Secretary of Labor. (Added by 45 FR 14034, effective March 4, 1980.)
Section 2520.104-48 Alternative Method of Compliance for Model Simplified Employee Pensions - IRS Form 5305-SEP. Under the authority of Section 110 of the Act the provisions of this Section are prescribed as an alternative method of compliance with the reporting and disclosure requirements set forth in Part I of Title I of the Employee Retirement Income Security Act of 1974 in the case of a simplified employee pension (SEP) described in Section 408(k) of the Internal turnover Code of 1954 as amended (the Code) that is created by use without modification of Internal turnover Service (IRS) Form 5305-SEP.
(a) At the time an employee becomes eligible to participate in the SEP (whether et the creation of the SEP or thereafter), the administrator of the SEP (generally the employer establishing and maintaining the SEP) shall furnish the employee with a copy of the completed and unmodified IRS Form 5305-SEP used to create the SEP, including
(1) the completed Contribution Agreement
(2) the General Information and Guidelines, and
(3) the Questions and Answers.
(b) Following the end of each calendar year the administrator of the SEP shall notify each participant in the SEP in writing of any employer contributions made under the Contribution Agreement to the participant's individual retirement account or individual retirement annuity (IRA) for that year.
(c) If the employer establishing and maintaining the SEP selects, recommends, or in any other way influences employees to choose a particular IRA or type of IRA into which contributions under the SEP will be made, and if that IRA is subject to restrictions on a participant's ability to withdraw funds (other than restrictions imposed by the Code that apply to all IRAs), the administrator of the SEP shall give to each employee, in writing, within 90 days of the adoption of this regulation or at the time such employee becomes eligible to participate in the SEP, whichever is later, a clear explanation of those restrictions and a statement to the effect that other IRAs, into which rollovers or employee contributions may be may not be subject to such restrictions. (Added by 45 FR 24866, adopted and effective April 8, 1980)
Section 2520.104-49 Alternative method of compliance for certain simplified employee pensions. Under the authority of Section 110 of the Act, the provisions of this Section are prescribed as an alternative method of compliance with the reporting and disclosure requirements set forth in Part I of Title I of the Act for a simplified employee pension (SEP) described in Section 408(k) of the Internal turnover Code of 1954 as amended, except for (1) a SEP that is created by proper use of Internal turnover Service Form 5305-SEP, or (2) a SEP in connection with which the employer who establishes or maintains the SEP selects, recommends or influences its employees to choose the IRAs into which employer contributions will be made and those IRAs are subject to provisions that prohibit withdrawal of funds by SEP-IRA, or retirement bond, and how such a participants for any period of time.
(a) At the time an employee becomes eligible to participate in the SEP (whether at the creation of the SEP or thereafter) or up to 90 days after the effective date of this regulation, whichever is later, the administrator of the SEP (generally the employer establishing or maintaining the SEP) shall furnish the employee in writing with:
(1) Specific information concerning the SEP, including:
(i) The requirements for employee participation in the SEP,
(ii) The formula to be used to allocate employer contributions made under the SEP to each participant's individual retirement account or annuity (IRA).
(iii) The name or Title of the individual who is designated by the employer to provide additional information to participants concerning the SEP, and
(iv) If the employer who establishes or maintains the SEP selects, recommends or substantially influences its employees to choose the IRAs into which employer contributions under the SEP will be made, a clear explanation of the terms of those IRAs, such as the rate(s) of return and any restrictions on a participant's ability to roll over or withdraw funds from the IRAs, including restrictions that allow rollovers or withdrawals but reduce earnings of the IRAs or impose other penalties.
(2) General information concerning SEPs and IRAs, including a clear explanation of:
(i) What a SEP is and how it operates,
(ii) The statutory provisions prohibiting discrimination in favor of highly compensated employees.
(iii) A participant's right to receive contributions under a SEP-and the allowable sources of contributions to a SEP-related IRA (SEP-IRA),
(iv) The statutory limits on contributions to SEP-IRAs,
(v) The consequences of excess contributions to a SEP-IRA and how to avoid excess contributions,
(vi) A participant's rights with respect to contributions made under a SEP to his or her IRA(s),
(vii) How a participant must treat contributions to a SEP-IRA for tax purposes,
(viii) The statutory provisions concerning withdrawal of funds from a SEP-IRA and the consequences of a premature withdrawal, and
(ix) A participant's ability to roll over or transfer funds from a SEP-IRA to another IRA, rollover or transfer may be effected without causing adverse tax consequences.
(3) A statement to the effect that:
(i) IRAs other than the IRA(s) into which employer contributions will be made under the SEP may provide different rates of return and may have different terms concerning, among other things, transfers and withdrawals of funds from the IRA(s),
(ii) In the event a participant is entitled to make a contribution or rollover to an IRA, such contribution or rollover can be made to an IRA other than the one into which employer contributions under the SEP are to be made, and
(iii) Depending on the terms of the IRA into which employer contributions are made, a participant may be able to make rollovers or transfers of funds from that IRA to another IRA.
(4) A description of the disclosure required by the Internal turnover Service to be made to individuals for whose benefit an IRA is established by the financial institution or other person who sponsors the IRA(s) into which contributions will be made under the SEP.
(5) A statement that, in addition to the information provided to an employee at the time he or she becomes eligible to participate in a SEP, the administrator of the SEP must furnish each participant:
(i) Within 30 days of the effective date of any amendment to the terms of the SEP, a copy of the amendment and a clear written explanation of its effects, and
(ii) No later than the later of:
(A) January 31 of the year following the or year for which a contribution is made,
(B) 30 days after a contribution is made,
(C) 30 days after the effective date of this regulation written notification of any employer contributions made under the SEP to that participant's IRA(s).
(6) In the case of a SEP that provides for integration with Social Security.
(i) A statement that Social Security taxes paid by the employer on account of a participant will be considered as an employer contribution under the SEP to a participant's SEP-IRA for purposes of determining the amount contributed to the SEP-IRA(s) of a participant by the employer pursuant to the allocation formula,
(ii) A description of the effect that integration with Social Security would have on employer contributions under a SEP, and
(iii) The integration formula, which may constitute part of the allocation formula required by paragraph (a)(l)(ii) of this Section.
(b) (l) The requirements of paragraphs (a)(l)(i), (a)(l)(ii), (a)(l)(iii) and (a)(6)(i) of this regulation may be met by furnishing the SEP agreement to participants, provided that the SEP agreement is written in a manner reasonably calculated to be understood by the average plan participant.
(2) The requirements of paragraph (a)(l)(iv) of this regulation may be met through disclosure materials furnished by the financial institution in which the participant's IRA is maintained, provided the materials contain the information specified in such paragraph.
(c) No later than the later of:
(1) January 31 of the year following the year for which, a contribution is made,
(2) 30 days after a contribution is made, or
(3) 30 days after the effective date of this regulation the administrator of the SEP shall notify a participant in the SEP in writing of any employer contributions made under the SEP to the participant's IRA(s).
(d) Within 30 days of the effective date of any amendment to the terms of the SEP, the administrator shall furnish each participant a copy of the amendment and a clear explanation in writing of its effect. (Adopted by 46 FR 1261, originally scheduled to be effective February 6, 1981. However, the effective date was delayed under the President's regulation freeze at least until March 30, 1981 (46 FR 10465).)
Section 2520.104-50 Short plan years, deferral of accountant's examination and report.
(a) Definition of "short plan year." For purposes of this Section, a short plan year is a plan year, as defined in Section 3(39) of the Act, of seven or fewer months' duration, which occurs in the event that
(1) a plan is established or commences operations;
(2) a plan is merged or consolidated with another plan or plans;
(3) a plan is terminated; or
(4) the annual date on which the plan year begins is changed.
(b) Deferral of accountant's report. A plan administrator is not required to include the report of an independent qualified public accountant in the annual report for the first of two consecutive plan years, one of which is a short plan year, provided that the following conditions are satisfied:
(1) The annual report for the first of the two consecutive plan years shall include:
(i) Financial statements and accompanying schedules prepared in conformity with the requirements of Section 103(b) of the Act and regulations promulgated thereunder;
(ii) An explanation why one of the two plan years is of seven or fewer months' duration; and
(iii) A statement that the annual report for the immediately following plan year will include a report of an independent qualified public accountant with respect to the financial statements and accompanying schedules for both of the two plan years.
(2) The annual report for the second of the two consecutive plan years shall include:
(i) Financial statements and accompanying schedules prepared in conformity with Section 103(b) of the Act and regulations promulgated thereunder with respect to both plan years;
(ii) A report of an independent qualified public accountant with respect to the financial statements and accompanying schedules for both plan years; and
(iii) A statement identifying any material differences between the unaudited financial information relating to, and contained in the annual report for, the first of the two consecutive plan years and the audited financial information relating to that plan year contained in the annual report for the immediately following plan year.
(c) Accountant's examination and report. The examination by the accountant which serves as the basis for the portion of his report relating to the first of the two consecutive plan years may be conducted at the same time as the examination which serves as the basis for the portion of his report relating to the immediately following plan year. The report of the accountant shall be prepared in conformity with Section 103(a)(3)(A) of the Act and regulations thereunder. (Adopted December 30, 1980 by 46 FR 1265, effective December 29, 1980.)
Subpart E - Reporting Requirements
Section 2520.104a-1 Filing with the Secretary of Labor.
(a) General reporting requirements. Part I of Title I of the Act requires that the administrator of an employee benefit plan subject to the provisions of Part I file with the Secretary of Labor certain reports and additional documents. Each report filed shall accurately and comprehensively detail the information required. Where a form is prescribed, the reports shall be filed on that form. The Secretary may reject any incomplete filing. Reports and documents shall be filed as specified in this part.
(b) Exemption for certain welfare plans. See Sections 2520.104-20, 2520.104-21, 2520.104-22, 2520.104-24, and 2520.104-25.
(c) Alternative method of compliance for pension plans for certain selected employees. See Section 2520.104-23. (Added by 41 FR 16957, effective April 23, 1976.)
Section 2520.104a-2 Plan description reporting requirements.
(a) General obligation to file. Under Section 104(a)(1)(B) of the Act, the administrator of an employee benefit plan subject to the provisions of Part I of Title 1 of the Act shall file with the Secretary a plan description within 120 days after the plan becomes subject to Part I, and an updated plan description, which the Secretary shall not require more frequently than once every five years.
(b) (l) Fulfilling the filing obligation. The administrator of an employee benefit plan other than a plan described in paragraph (b)(2) of this Section shall satisfy the requirements of Section 104(a)(1)(B) of the Act and paragraph (a) of this Section by filing with the Secretary a summary plan description and an updated summary plan description in accordance with Section 104(a)(1)(C) of the Act and regulations issued thereunder.
(2) The administrator of an apprenticeship plan exempted under Section 2520.104-22 from certain reporting and disclosure requirements shall satisfy the requirements of Section 104(a)(1)(B) of the Act and paragraph (a) of this Section by filing with the Secretary a Department of Labor Form EBS-I "Plan Description" as described in Section 2520.102-l(b).
(c ) Special rules for plans subject to deferred initial reporting requirements. See Section 2520.104-3, Section 2520.104-5, and Section 2520.104-6. (Amended by 44 FR 31640, effective June 1, 1979).
Section 2520.104a-3 Summary plan description.
(a) Filing obligation. The administrator of a plan subject to the provisions of Part I of Title I of the Act shall file with the Secretary of Labor a copy of the summary plan description, including any supplement which is required to be furnished to participants covered under the plan and pension plan beneficiaries receiving benefits under the plan, as well as a copy of the statement of ERISA rights. The copy of the summary plan description shall be filed on or before the last date on which a summary plan description may be furnished to such plan participants and beneficiaries under Section 104(b)(1)(B) of the Act and Section 2520.104b-2. (Amended by 42 FR 37178, effective July 19, 1977.)
(b) Filing of multiple summary plan descriptions. In the case of a plan for which the plan administrator has chosen under Section 2520.102-4 to prepare more than one summary plan description, the plan administrator shall file with the Secretary a copy of each such summary plan description and a list identifying each such summary plan description. The name of the plan sponsor and the employer identification number (EIN) assigned to the plan sponsor by the Internal turnover Service shall appear on the cover page of each summary plan description filed and also on the list of such summary plan descriptions.
(c) Terminated plans.
(1) If on or before the date by which a plan is required to file a summary plan description or updated summary plan description under this Section, the plan has terminated within the meaning of subparagraph (2), such plan is not required to file a summary plan description with the Secretary.
(2) For purposes of this Section, a plan shall be considered terminated if:
(i) In the case of an employee pension benefit plan, all distributions to participants and beneficiaries have been completed; and
(ii) In the case of an employee welfare benefit plan, no claims can be incurred which will result in a liability of the plan to pay benefits. A claim is incurred upon the occurrence of the event or condition from which the claim arises (whether or not discovered).
(d) Filing address. The summary plan description shall be filed with the Secretary of Labor by mailing it to SPD, Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210, or by delivering it during normal working hours to Room N-5644, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC. (Amended on March 1, 1989 by 54 FR 8624.)
(e) Alternative requirements for plans subject to the alternative ERISA Notice requirements. See Section 2520.104b-2, and Section 2520.104-5 or Section 2520.104-6. See Section 2510.3-3(d). (Added by 42 FR 14266, effective March 15, 1977.)
Section 2520.104a-4 Material modifications to the plan and changes in plan description information.
(a) General obligation to file. The administrator of an employee benefit plan subject to the provisions of Part I of Title I of the Act shall file with the Secretary, as required by Section 104(a)(1)(D) of the Act, any material modifications in the terms of the plan or any changes in the information required by Section 102(b) of the Act.
(b) Fulfilling the filing obligation.
(1) The administrator of an employee benefit plan shall satisfy the requirements of Section 104(a)(1)(D) of the Act and Section 2520.104a-4(a) by filing with the Secretary a summary of material modifications or changes in information which is required by Section 2520.104b-3. The summary description of such material modifications or changes shall be filed, in accordance with Section 2520.104a-7, no later than the date on which the summary description is required to be disclosed to participants.
(2) The administrator of an employee benefit plan is not required to file a summary of any material modifications or changes in information required to be included in the summary description if such modifications or changes are.
(i) Incorporated in a summary plan description or supplement filed with the Secretary of Labor pursuant to Section 2520.104a-3;
(ii) Incorporated in the plan description filed with the Secretary within 120 days after the plan becomes subject to Part I of Title I of the Act and pursuant to Section 2520.104a-2.
(iii) Incorporated in an updated plan description filed with the Secretary pursuant to Section 104(a)(1)(B) of the Act.
(d) Effect. This Section is effective April 10, 1978, and supersedes prior Section 2520.104a-4 published on April 23, 1976 (41 FR 16964). (Corrected April 4, 1978, by 43 FR 14010.)
Section 2520.104a-5 Annual reporting filing requirements.
(a) Filing obligation. Except as provided in Section 2520.104a-6, the administrator of an employee benefit plan required to file an annual report pursuant to Section 104(a)(1)(A) of the Act shall file an annual report containing the items prescribed in Section 2520.103-1 within:
(1) Eleven and one half months after the close of the plan year which begins in 1975, or December 15, 1977, whichever is later; and
(2) Seven months after the close of any plan year which begins after December 31, 1975, unless extended. See "When to file" instructions of the appropriate annual Return/Report Form. (Corrected April 4, 1978, by 43 FR 14010.)
(b) Where to file. The annual report described in Section 2520.103-1 shall be filed in accordance with and at the address provided in the instructions to the Annual Return/Report Form. (Added March 9, 1978, by 43 FR 10130.)
Section 2520.104a-6 Annual reporting for plans which are part of a group insurance arrangement.-
(a) General. A trust or other entity described in Section 2520.104-43(b) that files an annual report in accordance with the terms of subsections (b) and (c ) shall be deemed to have filed such report in accordance with Section 2520.104a-6 for purposes of Section 2520.104-43.
(b) Date of Filing. The annual report shall be filed within:
(1) Eleven and one-half months after the close of the fiscal year of the trust or other entity described in Section 2520.104-43 with begins in 1975 or December 31, 1977, whichever is later; and
(2) Seven months after the close of the fiscal year of the trust or other entity which begins after December 31, 1975, unless extended. See "When to file" instructions of the appropriate Annual Return/Report Form (Corrected April 4, 1978, by 43 FR 14010).
(c ) Where to file. The annual report prescribed in Section 2520.103-2 shall be filed in accordance with and at the address provided in the instructions to the Annual Return/Report Form. (Added March 9, 1978. By FR 10130).
Section 2520.104a-7 Summary of material modifications. The administrator of an employee benefit plan subject to the provisions of Part 1 of Title I of the Act, and not otherwise exempt from the requirement to file and distribute a summary plan description, shall file a summary description of modifications or changes described in Section 102(a)(1) of the Act with the Secretary no later than the date on which the summary description is required to be disclosed to participants and beneficiaries by Section 2520.104b-3.
(Added by 42 FR 37178, effective July 19, 1977, renumbered by 42 FR 60898, effective November 29, 1977; amended and finalized by 45 FR 14029, effective April 3, 1980.)
Subpart F Disclosure Requirements
Section 2520.104b-1 Disclosure. -
(a) General disclosure requirements. The administrator of an employee benefit plan covered by Part I of Title I of the Act must disclose certain material, including reports, statements, and documents, to participants and beneficiaries. Disclosure under Part I takes three forms.
(1) First, the plan administrator must, by direct operation of law, furnish certain material to all participants covered under the plan and beneficiaries receiving benefits under the plan (other than beneficiaries under a welfare plan) at stated times or if certain events occur. Second, the plan administrator must furnish certain material to individual participants and beneficiaries upon their request. Third, the plan administrator must make certain material available to participants and beneficiaries for inspection at reasonable times and places.distribution list for the periodical is comprehensive and up-to-date and a prominent notice on the front page of the periodical advises readers that the issue contains an insert with important information about rights under the plan and the Act which should be read and retained for future reference. If some participants and beneficiaries are not on the mailing list, a periodical must be used in conjunction with other methods of distribution such that the methods taken together are reasonably calculated to ensure actual receipt.
Material distributed through the mail may be sent by first, second, or third-class mail. However, distribution by second or third-class mail is acceptable only if return and forwarding postage is guaranteed and address correction is requested. Any material sent by second or third-class mail which is returned with an address correction shall be sent again by first-class mail or personally delivered to the participant at his or her work site.
(2) For purposes of Section 104(b)(4) of the Act, materials furnished upon written request shall be mailed to an address provided by the requesting participant or beneficiary or personally delivered to the participant or beneficiary.
(3) For purposes of Section 104(b)(2) of the Act, where certain documents are required to be made available for examination by participants and beneficiaries in the principal office of the plan administrator and in such other places as may be necessary to make available all pertinent information to all participants and beneficiaries, disclosure shall be made pursuant to the provisions of this paragraph.
Such documents must be current, readily accessible, and clearly identified, and copies must be available in sufficient number to accommodate
(b) Fulfilling the disclosure obligation
(1) Where certain material including reports, statements, and documents, is required under Part 1 of the Act and this part to be furnished either by direct operation of law or an individual request, the plan administrator shall use measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries. Material which is required to be furnished to all participants covered under the plan and beneficiaries receiving benefits under the plan (other than beneficiaries under a welfare plan) must be sent by a method or methods of delivery likely to result in full distribution. For example in-hand delivery to an employee at his or her work site is acceptable. However, in no case is it acceptable merely to place copies of the material in a location frequented by participants. It is also acceptable to furnish such material as a special insert in a periodical distributed to employees such as a union newspaper or a company publication if the distribution list for the periodical is comprehensive and up-to-date and a prominent notice on the front page of the periodical advises readers that the issue contains an insert with important information about rights under the plan and the Act which should be read and retained for future reference. If some participants and beneficiaries are not on the mailing list, a periodical must be used in conjunction with other methods taken together are reasonably calculated to ensure actual receipt.
Material distributed through the mail may be sent by first, second or third-class mail. However, distribution of second or third-class mail is acceptable only if return and forwarding postage is guaranteed and address correction is requested. Any material sent by second or third-class mail which is returned with an address correction shall be sent again by first-class mail or personally delivered to the participant at his or her work site.
(2) For purposes of Section 104(b)(4) of the Act, materials furnished upon written request shall be mailed to an address provided by the requesting participant or beneficiary or personally delivered to the participant or beneficiary.
(3) For purposes of Section 104(b)(2) of the Act, where certain documents are required to be made available for examination by participants and beneficiaries in the principal office of the plan administrator and in such other places as may be necessary to make available all pertinent information to all participants and beneficiaries, disclosure shall be made pursuant to the provisions of this paragraph.
Such documents must be current, readily accessible, and clearly identified, and copies must be available in sufficient number to accommodate the expected volume of inquires. Plan administrator shall make copies of the plan description, latest annual report, and the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated available at all times in their principal offices. They are not required to maintain these plan documents at all times at each employer establishment or union hall or office as described in paragraphs (B)(3)( i), (ii), and (iii) of this Section, but the documents must be made available at any such location within ten calendar days following the day on which a request for disclosure at that location is made.
Plan administrators shall make plan documents available at the appropriate employer establishment or union meeting hall or office within the required ten day period when a request is made directly to the plan administrator or through a procedure establishing reasonable rules governing the making of requests for examination of plan documents. If a plan administrator prescribes such a procedure and communicates it to plan participants and beneficiaries, a plan administrator will not be required to comply with a request made in a manner which does not conform to the established procedure. In order to comply with the requirements of this Section, a procedure for making requests to examine plan documents must permit requests to be made in a reasonably convenient manner both directly to the plan administrator and at each employer establishment, or union meeting hall or office where documents must be made available in accordance with this paragraph. If no such reasonable procedure is established, a good faith effort by a participant or beneficiary to request examination of plan documents will be deemed a request to the plan administrator for purposes of this paragraph.
(i) In the case of a plan not maintained according to a collective bargaining agreement, including a plan maintained by a single employer with more than one establishment, a multiple employer plan, and a plan maintained by a controlled group of corporations (within the meaning of Section 1563(a) of the Internal turnover Code of 1954 (the Code), determined without regard to Section 1563(a)(4) and (e)(3)(C) of the Code), documents shall be made available for examination in the principal office of the employer and at each employer establishment in which at least 50 participants covered under a plan are customarily working. "Establishment" means a single physical location where business is conducted or where services or industrial operations are performed. Where employees are engaged in activities which are physically dispersed, such as agriculture, construction, transportation, and communications, the "establishment" shall be the place to which employees report each day. When employees do not usually work at, or report to, a single establishment - for example, traveling salesmen, technicians, and engineers - the establishment shall be the location from which the employees customarily carry out their activities - for example the field office of an engineering firm servicing at least 50 participants covered under the plan.
(ii) In the case of a plan maintained solely by an employee organization, the plan administrator shall take measures to ensure that documents are available for examination at the meeting hall or office of each union local in which there are at least 50 participants covered under the plan. Such measures shall include distributing copies of the documents to each union local in which there are at least 50 participants covered under the plan.
(iii) In the case of a plan maintained according to a collective bargaining agreement, including a collectively bargained single employer plan with more than one establishment, a collectively bargained multiple employer plan, and a multi-employer plan which meets the definition of Section 3(37) of the Act, Section 2510.3-37 of this chapter, and Section 414(b) of the Internal turnover Code of 1954 and 26 CFR Section 1.414(f) (40 CFR 43034), documents shall be made available for examination in the principal office of the employee organization and at each employer establishment in which at least 50 participants covered under the plan are customarily working. In employment situations where employees do not usually work at, or report to, a single establishment, the plan administrator shall take measures to ensure that plan documents are available for examination at the meeting hall or office of each union local in which there are at least 50 participants covered under the plan.
(c) Participant and beneficiary status for purposes of Sections 101(a) and 104(b)(1) of the Act and Subpart F of this part. See Section 2510.3-3(d)(1), 2510.3-3(d)(2), and 2520.3-3(d)(3) of this chapter. (Added by 41 FR 16957, effective April 23, 1976.)
Section 2520.104b-2 Summary plan description.
(a) Obligation to furnish. Under the authority of sections 104(b)(1) and 104(c) of the Act, the plan administrator of an employee benefit plan subject to the provisions of Part I of Title I shall furnish a copy of the summary plan description and a statement of ERISA rights as provided in Section 2520.102-3(t), to each participant covered under the plan (as defined in Section 2510.3-(d)), and each beneficiary receiving benefits under a pension plan on or before the later of:
(1) The date which is 90 days after the employee becomes a participant, or (in the case of a beneficiary receiving benefits under a pension plan) within 90 days after he or she first receives benefits, except as provided in Section 2520.104b-4(a), or,
(2) Within 120 days after the plan becomes subject to Part I of Title I.
(3) (i) A plan becomes subject to Part I of Title I on the first day on which an employee is credited with an hour of service under Section 2530.200b-2 or Section 2530.200b-3. Where a plan is made prospectively effective to take effect after a certain date or after a condition is satisfied, the day upon which the plan becomes subject to Part I of Title I is the day after such date or condition is satisfied. Where a plan is adopted with a retroactive effective date, the 120 day period begins on the day after the plan is adopted. Where a plan is made retroactively effective dependent on a condition, the day on which the plan becomes subject to Part I of Title I is the day after the day on which the contingency occurs.
(ii) Examples: Company A is negotiating the purchase of Company B. On September 1, 1978, as part of the negotiations, Company A adopts a pension plan covering the employees of Company B. The plan provides that it shall take effect on the first day of the calendar year in which the purchase is concluded. On February 1, 1979, the negotiations conclude with Company A's purchase of Company B. The plan therefore becomes effective on February 1, 1979, retroactive to January 1, 1979. The Summary Plan Description must be filed and disclosed no later than 120 days after February 1, 1979 (Amended by 42 FR 37178, effective July 19, 1977; amended and finalized by 45 FR 14029, effective April 3, 1980.)
(b) Periods for furnishing updated summary plan description.
(1) For purposes of the requirement to furnish the updated summary plan description to each participant and each beneficiary receiving benefits under the plan (other than beneficiaries receiving benefits under a welfare plan) required by Section 104(b)(1) of the Act, the administrator of an employee benefit plan shall furnish such updated summary plan description no later than 210 days following the end of the plan year within which occurs the later of
(i) November 16, 1983, or
(ii) Five years after the last date a change to the information required to be disclosed by Section 102 or 29 CFR 2520.102-3 would have been reflected in the most recently distributed summary plan description (or updated summary plan description), as described in Section 102 of this Act.
(2) In the case of a plan to which no amendments have been made between the end of the time period covered by the last distributed summary plan description (or updated summary plan description, described in Section 102 of the Act, and the next occurring applicable date described in paragraph (b)(1)( i) or (ii) of this Section, for purposes of the requirement to furnish the updated summary plan description to each participant, and to each beneficiary receiving benefits under the plan (other than beneficiaries receiving benefits under a welfare plan), required by Section 104(b)(1) of the Act, the administrator of an employee benefit plan shall furnish such updated summary plan description no later than 210 days following the end of the plan year within which occurs the later of
(i) November 16, 1987, or
(ii) Ten years after the last date a change to the information required to be disclosed by Section 102 or 29 CFR 2520.102-3 would have been reflected in the most recently distributed summary plan description (or updated summary plan description), as described in Section 102 of this Act. (paragraph (b) was added on January 14, 1983, by FR Doc. 83-1002 (48 FR 1712).)
( c) Alternative ERISA Notice requirements. A plan which elected to comply with the alternative ERISA Notice procedure provided in Section 2520.104-5 or Section 2520.104-6 is not required to furnish a copy of the summary plan description to participants and beneficiaries until the time described in the applicable Section, and will be deemed to have satisfied the requirements of Section (104(b)(1)(B) of the Act until such time. Thereafter, the requirements of Section 104(b)(1)(B) of the Act and this Section must be met in full.
(d) Use of form EBS-1 as summary plan description.
(1) The plan administrator of an employee benefit plan shall be deemed to have satisfied the requirements of Section 104(b)(1)(B) of the Act and this Section for the initial disclosure of the summary plan description if the plan administrator filed a summary plan description pursuant to proposed Section 2520.104a-3(d) of the June 9, 1975, proposed regulations (40 FR 24642); Section 2520.104 -3 as issued on April 30, 1975 (40 FR 19469, se also 40 FR 20628, May 12, 1975); proposed Sections 2522.40 and 2523.30 as published on December 4, 1974, (39 FR 42241), and the instructions on old form EBS-1 (bearing print date 4-74), and if the plan administrator furnished copies of a complete Form EBS-1 bearing print date 4-75 to participants covered under the plan.
(2) Under the authority of Section 104 ( c) of the Act, a plan described in sub-paragraph (1) shall furnish to participants covered under the plan and beneficiaries receiving benefits under the plan a statement of ERISA rights which complies with Section 2520.102-3(t) by November 16, 1977.
(e) Disclosure obligation for plans which filed and disclosed by May 30, 1976 in reliance upon regulations of the Department.
(1) The plan administrator of an employee benefit plan shall be deemed to have satisfied the requirements of Section 104(b)(1)(B) of the Act and this Section for the initial disclosure of the summary plan description if the plan administrator filed a summary plan description based upon the final regulations published in the Federal Register on August 15, 1975 (40 FR 34526) and on specific sections of the proposed regulations in the Federal Register on June 8, 1975 (40 FR 24642) in reliance upon the preamble to the final regulations published in the Federal Register on April 23, 1976 (41 FR 16957) and announced in Departmental press release USDL 76-706, published April 21, 1976, and if the plan administrator furnished to participants covered under the plan and pension plan beneficiaries receiving benefits under the plan copies of such summary plan description.
(2) Under the authority of Section 104(c) of the Act, a plan described in subparagraph (1) shall furnish to participants covered under the plan and beneficiaries receiving benefits under the plan a statement of ERISA rights which complies with Section 2520.102-3(t) by November 16, 1977.
(f) Disclosure obligation for other plans which previously disclosed the summary plan description.
(l) This Section applies to those employee benefit plans which have disclosed to participants covered under the plan and beneficiaries receiving benefits under a pension plan, a summary plan description on or after September 2, 1974, and before March 15, 1977, and which are not described in paragraph (4) or (e) of this Section.
(2) The plan administrator of an employee benefit plan described in subparagraph (1) shall be deemed to have satisfied the requirements of Section 104(b)(1)(B) of the Act of this Section for the initial disclosure of the summary plan description and the disclosure of the first updated summary plan description if the plan administrator.
(i) Furnishes to participants covered under the plan and pension plan beneficiaries receiving benefits under the plan by November 16, 1977, a copy of a supplement to the summary plan description which includes any items of information required by Section 2520.102-3 which were not included in the earlier document and which, taken together with the earlier document, meets the style and format requirements of Section 2520.102-2. The requirement of Section 2520.102-2(b) that benefit restrictions be described or cross-referenced adjacent to the description of benefits will be deemed satisfied if the supplement contains a statement which references participants to the descriptions of benefits and benefit restrictions in the summary plan description and describes their relationship;
(ii) Files with the Secretary, by November 16, 1977, a copy of the summary plan description described in paragraph (f)(l) and a copy of the supplement described in paragraph (f)(2)(i); and
(iii) Furnishes to participants and beneficiaries a summary plan description which meets the requirements of Sections 2520.102-2 and 2520.102-3 within five years (or ten years) of the date of disclosure described in subparagraph (i).
(g) Terminated plans.
(1) If, on or before the date by which a plan is required to furnish a summary plan description or updated summary plan description to participants and pension plan beneficiaries under this Section, the plan has terminated within the meaning of subparagraph (2), the administrator of such plan is not required to file with the Secretary or to furnish to participants covered under the plan or to beneficiaries receiving benefits under the plan a summary plan description.
(2) For purposes of this Section, a plan shall be considered terminated if:
(i) in the case of an employee pension benefit plan, all distributions to participants and beneficiaries have been completed; and
(ii) in the case of an employee welfare benefit plan, no claims can be incurred which will result in a liability of the plan to pay benefits. A claim is incurred upon the occurrence of the event or condition from which the claim arises (whether or not discovered).
(h) Alternative requirements for plans subject to the alternative ERISA Notice requirements. See Section 2520.104-5 or Section 2520.104-6. See Section 2510.3-3(d).
(i) Style and format of the summary plan description. See Section 2520.102-2.
(j) Contents of the summary plan description. See Section 2520.102-3.
(k) Option for different summary plan descriptions. See Section 2520.102-4, Section2520.104-26, and Section 2520.104-27.
(1) Employee benefit plan - participant covered under a plan. See Section 2510.3-3(d). (Added by 42 FR 14266, effective March 15, 1977; and amended by 42 FR 37178, effective July 19, 1977.)
Section 2520.104b-3 Summary of material modifications to the plan and changes in the information required to be included in the summary plan description.
(a) The administrator of an employee benefit plan subject to the provisions of Part I of Title I of the Act shall, in accordance with Section 2520.104b-l(b), furnish a summary description of any material modification to the plan and any change in the information required by Section 102(b) of the Act and Section 2520.102-3 of these regulations to be included in the summary plan description to each participant covered under the plan and each beneficiary receiving benefits under the plan. The plan administrator shall furnish this summary, written in a manner calculated to be understood by the average plan participant, not later than 210 days after the close of the plan year in which the modification or change was adopted. This disclose sure date is not affected by retroactive application to a prior plan year of an amendment which makes a material modification to the plan, a modification does not occur before it is adopted. For example, a calendar year plan adopts a modification in April 1978. The modification, by its terms, applies retroactively to the 1977 plan year. A summary description of the material modification is furnished on or before July 29, 1979. A plan which adopts an amendment which makes a material modification to the plan which takes effect on a date in the future must disclose a summary of that modification within 210 days after the close of the plan year in which the modification or change is adopted. Under the authority of sections 104(a)(3) and 110 of the Act, a summary description of a material modification or change is not required to be disclosed if it is rescinded or otherwise does not take effect. For example, a calendar year plan adopts a modification in June 1978. The modification, by its terms, becomes effective beginning in plan year 1979. Before the beginning of plan year 1979, the prospective modification is withdrawn. No summary of the material modification is required to be disclosed.
(b) The summary of material modifications to the plan or changes in information required to be included in the summary plan description need not be furnished separately if the changes or modifications are described in a timely summary plan description. For example, a calendar year plan adopts a material modification on June 3, 1976. The modification is incorporated in a summary plan description furnished on July 15, 1977. No separate summary of the material modification is furnished. The plan adopts another material modification September 15, 1977. A separate summary of the modification is furnished on or before July 29, 1978.
(c) The copy of the summary plan description furnished in accordance with Section 2520.104b-2(a)(1)(i) and 2520.104b-4 shall be accompanied by all summaries of material modifications or changes in information required to be included in the summary plan description which have not been incorporated into that summary plan description.
(d) Alternative requirements for plans subject to alternative ERISA Notice requirements. See Section 2520.104a-3, Section 2520.104b-2 and Section 2520.104-5 or 2520.104-6.
(e) Filing obligation for all other plans which previously filed and disclosed the summary plan description. See Section 2520.104a-3. (Added by 42 FR 14266, effective March 15, 1977.)
Section 2520.104b-4 Alternative methods of compliance for furnishing the summary plan description and summaries of material modifications of a pension plan to a retired participant, a separated participant with vested benefits, and a beneficiary receiving benefits. Under the authority of Section 110 of the Act, in the case of an employee pension benefit plan
(a) Summary plan descriptions. A plan administrator will be deemed to satisfy the requirements of Section 104(b)(1) of the Act and Section 2520.104b-2(a) to furnish a copy of the initial summary plan description to a retired participant, a beneficiary receiving benefits, or a separated participant with vested benefits ("vested separated participant") if, no earlier than the date stated in subparagraph (4) of this paragraph.
(1) In the case of a retired participant or a beneficiary receiving benefits, a document is furnished which
(i) Meets the requirements of Sections 2520.102-2 and 2520.102-3 except paragraphs (b)(3), (b)(4), ( i), (k), (1), (n), (o), and (p);
(ii) Contains a statement that the benefit payment presently being received by the retired participant or beneficiary receiving benefits will continue in the same amount and for the period provided in the mode of settlement selected at retirement, and will not be changed except as described in subparagraph (iii); and
(iii) Contains a statement describing any plan provision under which the present benefit payment may be reduced, changed, terminated, forfeited, or suspended;
(2) In the case of a vested separated participant, a document is furnished which
(i) Meets the requirements of Sections 2520.102-2 and 2520.102-3 except paragraphs (b)(3), (b)(4), (j), (1), (n), (o), (p), and (r3;
(ii) (A) If at or after separation, a separated vested participant was furnished a statement of the dollar amount of the vested benefit or the method of computation of the benefit, includes a statement that the dollar amount of the vested benefit was previously furnished and that a copy of the previously furnished statement of the dollar amount of such vested benefit or method of computation of the benefit may be obtained from the plan upon request;
(B) If the vested separate participant was not furnished a statement of the dollar amount of the vested benefit or the method of computation of the benefit, the plan furnishes either a statement of the dollar amount of the vested benefit, or a statement of the formula used to determine the dollar amount of the vested benefit;
(iii) Includes a statement of the form in which the benefits will be paid and duration of the payment period or a description of the optional modes of payment available under the plan; and
(iv) Includes a statement describing any plan provision under which a benefit may be reduced, changed, terminated, forfeited, or suspended; or
(3) (i) Such retired participant, vested separated participant, or beneficiary receiving benefits was furnished with a copy of a document which
(A) Satisfies the requirements of Section 102(a)(1) of the Act and Section 2520.102-2 (relating to the style and format of the summary plan description) and Section 2520.102-3 (relating to the content of the summary plan description);
(B) Describes the rights and obligations under the plan of such retired participant, vested separated participant, or beneficiary receiving benefits as of the date stated in subparagraph (4);
(ii) In the case of a person who retired, became a beneficiary, or separated with vested benefits before November 16, 1977, a document will be deemed to comply with the requirements of subparagraph (i) if the document omitted only information described in one or more of the provisions of Section 2520.102-3 listed below, provided that a supplement containing such information, which meets the requirements of Section 2520.102-2, is furnished to the retired participant, vested separated participant, or beneficiary receiving benefits by November 16, 1977.
(A) Employer identification number (EIN), as required by Section 2520.102-3(c);
(B) Type of administration, as required by Section 2520.102-3(e):
(C) Name of agent for service of legal process, as required by Section 2520.102-3(g);
(D) Names and addresses of trustees, as required by Section 2520.102-3(h);
(E) Statement regarding plan termination insurance as required by Section 2520.102-3(m);
(F) Date of the end of the fiscal year, as required by Section 2520.102-3(r); or
(G) Statement of ERISA rights, as required by Section 2520.102-3(t).
(4) For purposes of this paragraph the dates are: for a vested separated participant, the date of separation; for a beneficiary, the Date on which payment of benefits commences; and for a retired participant, the date of retirement.
(b) Updated summary plan descriptions. A copy of an updated summary plan description need not be furnished as prescribed in Section 104(b)(1) of the Act and Section 2520.104b-2(b) to a retired participant, vested separated participant, or a beneficiary receiving benefits if
(l) (i) On or after the date stated in subparagraph (ii), the retired participant, vested separated participant, or beneficiary is furnished with a copy of the most recent summary plan description and a copy of any summaries of material modifications not incorporated in such summary plan description;
(ii) For purposes of subparagraph (i) the dates are: for a retired participant, the date of retirement, for a vested separated participant, the date of separation; and for a beneficiary, the date on which payment of benefits commences;
(2) No later than the date on which an updated summary plan description is furnished to participants and beneficiaries as prescribed by Section 104(b)(1) of the Act and Section 2520.104b-2(b), a retired participant, vested separated participant, or beneficiary receiving benefits is furnished a notice containing the following:
(i) A statement that the benefit rights of such retired participant, vested separated participant, or beneficiary receiving benefits are set forth in the earlier summary plan description and any subsequently furnished summaries of material modifications (see paragraph (c)), and
(ii) A statement that such retired participant, vested separated participant, or beneficiary receiving benefits may obtain a copy of the earlier summary plan description and summaries of material modifications described in subparagraph (i), and the updated summary plan description, without charge, upon request, from the plan administrator; and
(3) The plan administrator furnishes a copy of the documents described in subparagraph (2)(ii) to such retired participant, vested separated participant or beneficiary, without charge, upon request.
(c) Summary of material modifications or changes. A summary description of a material modification to the plan or a change in the information required to be included in the summary plan description need not be furnished to a retired participant, a vested separated participant or a beneficiary receiving benefits under the plan, within the time prescribed in Section 104(b)(1) of the Act and Section 2520.104b-3 for furnishing summary descriptions of such modifications and changes, if the material modification or change in no way affects such retired participant's, vested separated participant's, or beneficiary's rights under the plan. For example, a change in trustees is information which such a person may need to know in order to make inquiries about his or her rights expeditiously, and hence must be furnished. On the other hand, a modification in benefits under the plan to which such retired participant, vested separated participant, or beneficiary had not at any time been entitled (and would not in the future be entitled) would not affect his or her rights and hence need not be furnished. If such retired participant, vested separated participant or beneficiary requests a copy of a summary description of a material modification or a change which was not furnished, the plan administrator shall furnish the copy, without charge.
(d) Special rule for a plan which has previously furnished a summary plan description. A plan described in Section 2520.104b-2(e) or (f) which did not specify and identify those items of information in the summary plan description pertinent to a class of participants or beneficiaries as required by Section 2520.102-2 must furnish, by November 16 1977, a supplement to the class which
(1) Identifies the information not relevant to the class, and
(2) Provides the information required to be furnished to the class under Section 2520.102-3, or under an alternative provided by this Section. (Added by 42 FR 14266, effective March 15 1977; amended by 42 FR 37178, effective July 19 1977; amended and finalized by 45 FR 14029, effective April 3, 1980.)
Section 2520.104b-5 ERISA Notice. -
(a) Obligation to furnish. The administrator of an employee benefit plan who elects the deferral provided by Section 2520.104-5 or 104-6 must furnish a copy of an ERISA Notice to participants and beneficiaries as described in those sections.
(b) Content, style and format.
The ERISA Notice shall include:
(1) the name of the plan,
(2) the name, business address, business telephone number and Employer Identification Number of the plan administrator,
(3) a statement describing certain reporting and disclosure provisions of the Act, including the requirements to:
(i) file with the Secretary of Labor a plan description, in accordance with sections 104(a)(1)(B) of the Act,
(ii) file with the Secretary an annual financial statement, in accordance with Section 104(a)(1)(A) of the Act,
(iii) furnish to participants and beneficiaries a summary of the annual financial report in accordance with Section 104(b)(3) of the Act,
(iv) furnish plan documents and information at a reasonable charge upon written request of a participant or beneficiary, in accordance with Section 104(b)(4) of the Act, and
(v) make plan documents available for examination at the plan administrator's office and certain other locations, in accordance with Section 104(b)(2) of the Act,
(4) a statement that fiduciaries have obligations imposed by the Act to act prudently and solely in the interest of participants and beneficiaries of the plan,
(5) in the case of pension plans,
(i) a statement that the plan must meet certain new standards for participation, vesting and accrual of benefits and a brief statement of them, and
(ii) a general explanation of the plan amendment process that the plan has followed or will follow to comply with ERISA, including the dates of the first plan year to which amendments must apply, and the impact of any retroactive amendment.
The ERISA Notice may contain explanatory and descriptive provisions in addition to those prescribed herein. However, the style and format of the ERISA notice shall not have the effect of misleading, misinforming or failing to inform participants and beneficiaries of a plan. Any additional explanatory information shall be written in a manner calculated to be understood by the average plan participant, taking into account factors such as the level of comprehension and education of typical participants in the plan and the complexity of the items required under this Section to be included in the ERISA Notice. Inaccurate or misleading explanatory material will fail to meet the requirements of this Section.
(c) Model ERISA Notice.
A plan administrator who uses the sample language of paragraph (1) or (2) will be deemed to meet the requirements of this Section unless he has reason to know that the use of such language would be seriously misleading or incomplete as applied to the plan.
(1) Model ERISA Notice for pension plans.
On Labor Day of 1974 a new law was enacted to protect the interests of workers in pension and welfare benefits connected with their jobs. Its Title is "Employee Retirement Income Security Act of 1974", but it is often referred to by its initials - ERISA.
ERISA requires plan administrators, the people who run plans, to tell you the most important facts you need to know, in writing and free of charge. They must also let you look at plan documents, and buy copies of them at reasonable cost if you ask. ERISA says that pension plans must give you certain minimum rights. For example, ERISA controls when you can join the plan. Also, a great many people have control over employee benefit plans. ERISA says that these people called "fiduciaries" must act solely in your interest and must be prudent in carrying out their plan duties. ERISA also has other special rules that limit what a fiduciary is allowed to do. Fiduciaries who violate ERISA may be removed, and may have to make good losses they cause to the plan. Because ERISA contains many provisions which may affect your retirement benefits, you should contact (name of plan administrator, business address, business telephone and Employer Identification Number) before making decisions about your future or retirement plans.
ERISA requires (name of administrator), the administrator of (name of plan), to file certain information about the plan with the U.S. Department of Labor. A description of the plan's provisions must be filed with the Department of Labor by May 30, 1976. (Name of Administrator) must also file an annual report with the Department of Labor by (date). The annual report gives detailed financial information about the plan. (Name of plan administrator) is also required to send a summary of the annual financial report to you, at no charge.
In addition, plan documents and other plan information must be provided to you by (name of plan administrator) if you request this information in writing. (Name of Plan Administrator) may make a reasonable charge for these documents. You may wish to find out how much the charge will be before making a written request. However, all plan documents must be made available for your examination at (office address of plan administrator) and certain other locations, such as work sites and union halls, at no charge.
ERISA also requires the (name of plan) to meet certain new standards for pension plans. These minimum standards determine when an employee must become eligible to participate in a plan, when he or she has a vested right (one which cannot be taken away, except in limited circumstances) to certain benefits, and the rate at which benefits must accrue in the participant's behalf.
(Choose the appropriate one of the following two paragraphs.)
Optional Paragraph 1.
The (name of plan) has NOT been amended to meet these standards yet. ERISA requires that (name of plan) apply the new standards to the plan year starting on (start of 1976 plan year). But ERISA does not require the plan to make amendments by (start of 1976 plan year). The amendments may come later. When they are made, they must be applied back to (start of 1976 plan year). For example, if you were not eligible to join the plan under the rule in force (start of 1976 plan year), but the amendment would make you eligible, the plan must count you as a member starting with (start of 1976 plan year).
Optional Paragraph 2.
The (name of plan) already has been amended. However, further plan amendments may have to be made to comply with ERISA standards. (Name of plan administrator) will provide information regarding these amendments.
As a result of the modifications which will be made, your right to a pension and the form and amount of your pension may be affected. Regardless of your age, if you are thinking about changing jobs or retiring you should contact (administrator, personnel office) about your pension situation before making any decisions.
If you have any questions about this Notice or your rights, contact (name of plan administrator). Also, the nearest Area Office of the Labor Department has people who will be able to assist you or provide you with additional information.
(2) Model ERISA Notice for welfare plans.
On Labor Day of 1974 a new law was enacted to protect the interests of workers in pension and welfare benefits connected with their jobs. Its Title is "Employee Retirement Income Security Act of 1974" but it is often referred to by its initials, ERISA. ERISA requires plan administrators the people who run plans to tell you the most important facts you need to know, in writing and free of charge. They must also let you look at plan documents, and buy copies of them at reasonable cost if you ask. Also, a great many people have control over employee benefit plans. ERISA says that these people called "fiduciaries" must act solely in your interest and be prudent in carrying out their plan duties. ERISA also has other special rules that limit what a fiduciary is allowed to do. Fiduciaries who violate ERISA may be removed, and have to make good losses they cause to the plan.
ERISA requires (name of administrator), the administrator of (name of plan), to file certain information about the plan with the U.S. Department of Labor. A description of the plan's provisions must be filed with the Department of Labor by May 30, 1976. (Name of Administrator) must also file an annual report with the Department of Labor by (date). The annual report gives detailed financial information about the plan. (Name of plan administrator) is also required to send a summary of the annual financial report to you, at no charge.
In addition, plan documents and other plan information must be provided to you by (name of plan administrator) if you request this information in writing. (Name of Plan Administrator) may make a reasonable charge for these documents. You may wish to find out how much the charge will be before making a written request. However, all plan documents must be made available for your examination at (office address of plan administrator) and certain other locations, such as work site and union halls, at no charge.
Certain amendments in the (name of plan) may have been made or may be made to meet the requirements of ERISA. (Name of plan administrator) will provide information regarding these amendments.
If you have any questions about this Notice of your rights, contact (name of plan administrator). Also, the nearest Area Office of the Labor Department has people who will be able to assist you or provide you with additional information.
(d) Obligation to furnish for certain multi-employer plans. In the case of a multi-employer plan which was in existence on January 1, 1974, and which does not, as of May 30, 1976, maintain complete records of participants covered under the plan, the Secretary will consider that the plan administrator has used methods reasonably calculated to ensure timely receipt of the ERISA Notice by participants covered under the plan and beneficiaries receiving benefits under a pension plan if the plan administrator takes the following measures for compliance:
(1) No later than May 30, 1976, the plan administrator shall furnish a copy of the ERISA Notice to all participants and beneficiaries of a pension plan who, as of March 2, 1976, are receiving benefits under the plan.
(2) No later than May 30, 1976, the plan administrator shall take measures to distribute copies of the ERISA Notice to substantially all individuals who, as of March 2, 1976, are participants covered under the plan and who can be identified. These measures may include the following:
(i) The plan administrator may deliver copies of the ERISA Notice to employers whose employees are participants covered under the plan, or employee organizations whose members are participants covered under the plan, or to both, in sufficient quantity and sufficiently in advance of May 30, 1976, to enable such employers or employee organizations to furnish them to employees or members who are participants covered under the plan by that date.
(ii) The administrator may publish the ERISA Notice before May 30, 1976, in a periodical or periodicals, the circulation of which includes participants covered under the plan.
(3) The plan administrator shall take measures to ensure that all individuals who become participants covered under the plan after March 2, 1976 (see Section 2520.104-5 and .104-6) receive copies of the ERISA Notice within 90 days after becoming such participants. These measures may include the following:
(i) The plan administrator may deliver copies of the ERISA Notice to employers whose employees are participants covered under the plan, to employee organizations whose members are participants covered under the plan, or to both, in sufficient quantity and with sufficient frequency to enable such employers or employee organizations to furnish them to participants within 90 days after they become participants covered under the plan.
(ii) The plan administrator may publish the ERISA Notice or a statement that the Notice may be secured on request free of charge and how it may be secured, in a periodical or periodicals, the circulation of which includes participants covered under the plan, at regular intervals after May 30, 1976.
(4) In instances where the plan administrator relies on employers or employee organizations to perform duties relating to the distribution of the ERISA Notice to participants covered under the plan, the plan administrator should take whatever steps are necessary and feasible under the circumstances to ensure that employers or employee organizations actually perform those duties. For example, after a prompt meeting of the Board of Trustees of a multi-employer plan, a plan administrator secures written commitments from appropriate employers and employee organizations that they will distribute copies of the ERISA Notice to identifiable participants covered under the plan who are in their workforce or membership. (Added by 41 FR 16957, effective April 23, 1976).
Section 2520.104b-10 Summary Annual Report.
(a) Obligation to furnish. Except as otherwise provided in paragraphs (b) and (g) of this Section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this Section. Such furnishing of the summary annual report shall take place in accordance with the requirements of Section 2520.104b-1 of this part.
(Amended on July 20, 1982, by 47 FR 31871.)
(b) Plans filing Form 5500C/R.. In the case of an employee benefit plan subject to Section 2520.10441 (concerning simplified annual reporting for plans with fewer than 100 participants), the administrator, in lieu of furnishing a summary annual report for the year in which a Form 5500-R is filed, shall, in Section 2520.104b-1, a copy of the Form 5500-R filed on behalf of the plan and the notice described in paragraph (b)(3). Such furnishing shall take place within thirty accordance with Section 2520.104b-1, furnish each participant of such plan and each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) either
(1) A copy of the Form 5500-R filed on behalf of the plan, and the notice described in paragraph (b)(3); or
(2) (i) A written notice stating that in lieu of a summary annual report a copy of the Form 5500-R filed on behalf of the plan will be furnished free of charge upon receipt of a written request. The notice shall contain the name and address of the plan administrator to whom such requests may be directed. The administrator, upon receipt of such a written request from a participant or beneficiary, shall furnish, free of charge and in accordance with days following receipt of a request.
(ii) The administrator of an employee benefit plan will be deemed to have furnished, in accordance with Section 2520.104b-1, the written notice described in paragraph (b)(2)(i) of this Section to participants, if the administrator posts the notice for a minimum of thirty days at work site locations, and in a manner reasonably calculated to ensure disclosure to plan participants. Participants who have retired or separated from service with vested benefits under a pension plan, beneficiaries receiving benefits under a pension plan, and other participants who could not reasonably be expected to visit such work site locations during the period when the notice is posted must be furnished the notice pursuant to paragraph (b)(2)(i) of this Section.
(iii) Nothing in paragraph (b)(2)(ii) of this Section shall preclude an administrator from posting a copy of the Form 5500-R filed on behalf of the plan with the required notice; however, such a posting shall not relieve an administrator from the requirement to furnish a copy of the Form free of charge upon receipt of a written request from any participant or beneficiary.
(3) Any Form 5500-R furnished in accordance with paragraphs (b)(l) or (b)(2)(i), of this Section, shall include the following notice:
Disclosure of Plan Information Under
ERISA
Attached is a copy of the most recent Registration Statement (Form 5500-R) for the employee benefit plan of which you are a participant or beneficiary (see item 4(a) on Form 5500-R). The Registration Statement contains information about the plan and has been filed with the Internal turnover Service under the Employee Retirement Income Security Act of 1974 (ERISA).
This copy of Form 5500-R is being furnished to you in compliance with Department of Labor regulations which require it to be furnished to you free of charge either automatically or upon written request in lieu of the summary annual report for plan years for which Form 5500-R has been filed.
You also have the right to receive from the plan administrator (see item l(a) or 2(a) on Form 5500-R), on request, a copy of Schedule A (Insurance Information) and Schedule B (Actuarial Information), which were filed with the attached Form 5500-R. The charge to cover copying costs will be ($ ) for this/these Schedule(s), or ($ ) per page for any part thereof. You also have the legally protected right to examine these documents at the main office of the plan (address, if different from Form 5500-R, item l(a) or 2(a)), (at any other location where these documents are available for examination), and at the U.S. Department of Labor in Washington, D.C., or to obtain a copy from the U.S. Department of Labor upon payment of copying costs. Requests to the Department should be addressed to: Public Disclosure Room, N-4677, Pension and Welfare Benefit Programs, Frances Perkins Department of Labor Building, 200 Constitution Avenue, N.W., Washington, D.C. 20216 (Public Disclosure Room, N5507, Pension and Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210).
Note. Inapplicable portions of this notice may be omitted.
(Amended on July 20, 1982, by 47 FR 31871.)
(c) When to furnish. Except as otherwise provided in this paragraph (c) of this Section, the summary annual report required by subparagraph (a) of this Section, and Form 5500 R or the notice of its availability on request required under paragraph (b) of this Section, shall be furnished in accordance with the respective requirements of those subparagraphs within nine months after the close of the plan year.
(1) In the case of a welfare plan described in Section 2520.10443 of this part, such furnishing shall take place within 9 months after the close of the fiscal year of the trust or other entity which files the annual report under Section 2520.104a of this part.
(2) When an extension of time in which to file an annual report has been granted by the Internal turnover Service, such furnishing shall take place within 2 months after the close of the period for which the extension was granted.
(Amended on July 20, 1982, by 47 FR 31871.)
(d) Contents, style and format. Except as otherwise provided in this paragraph (d), the summary annual report furnished to participants and beneficiaries of an employee pension benefit plan pursuant to this Section shall consist of a completed copy of the form prescribed in subparagraph (3) of this paragraph (d), and the summary annual report furnished to participants and beneficiaries of an employee welfare benefit plan pursuant to this Section shall consist of a completed copy of the form prescribed in subparagraph (4) of this paragraph (d). The information used to complete the form shall be based upon information contained in the most recent annual report of the plan which is required to be filed in accordance with Section 104(a)(1) of the Act.
(1) Any portion of the forms set forth in this paragraph (d) which is not applicable to the plan to which the summary annual report relates, or which would require information which is not required to be reported on the annual report of that plan, may be omitted.
(2) Where the plan administrator determines that additional explanation of any information furnished pursuant to this paragraph (d) is necessary to fairly summarize the annual report, such explanation shall be set forth following the completed form required by this paragraph (d) and shall be headed, "Additional Explanation."
(3) Form for Summary Annual Report Relating to Pension Plans.
Summary Annual Report for (name of plan)
This is a summary of the annual report for (name of plan and EIN) for (period covered by this report). The annual report has been filed with the Internal turnover Service, as required under the Employee Retirement Income Security Act of 1974 (ERISA).
Basic Financial Statement
Benefits under the plan are provided by (indicate funding arrangements). Plan expenses were ($ ). These expenses included ($ ) in administrative expenses and ($ ) in benefits paid to participants and beneficiaries, and ($ ) in other expenses. A total of ( ) persons were participants in or beneficiaries of the plan at the end of the plan year, although not all of these persons had yet earned the right to receive benefits.
(If the plan is funded other than solely by allocated insurance contracts:)
The value of plan assets, after subtracting liabilities of the plan, was ($ ) as of (the end of the plan year), compared to ($ ) as of (the beginning of the plan year). During the plan year the plan experienced an (increase) (decrease) in its net assets of ($ ). This (increase) (decrease) includes unrealized appreciation or depreciation in the value of plan assets; that is, the difference between the value of the plan's assets at the end of the year and the value of the assets at the beginning of the year or the cost of assets acquired during the year. The plan had total income of ($ ), including employer contributions of ($ ), employee contributions of ($ ), (gains) (losses) of ($ ), from the sale of assets, and earnings from investments of ($ ). (For plans filing form 5500K, omit separate entries for employer contributions and employee contributions and insert instead "contributions by the employer and employees of ($)").
(If any funds are used to purchase allocated insurance contracts:)
The plan has (a) contract(s) with (name of insurance carrier(s)) which allocate(s) funds toward (state whether individual policies, group deferred annuities or other). The total premiums paid for the plan year ending (date) were ($ ).
(Officially corrected May 31, 1979, and published in the Federal Register of June 1, 1979 (44 FR 31640).)
Minimum Funding Standards
(If the plan is a defined benefit plan:)
An actuary's statement shows that (enough money was contributed to the plan to keep it funded in accordance with the minimum funding standards of ERISA) (not enough money was contributed to the plan to keep it funded in accordance with the minimum funding standards of ERISA. The amount of the deficit was $ ).
(If the plan is a defined contribution plan covered by funding requirements:)
(Enough money was contributed to the plan to keep it funded in accordance with the minimum funding standards of ERISA) (Not enough money was contributed to the plan to keep it funded in accordance with the minimum funding standards of ERISA. The amount of the deficit was $ ).
Your Rights to Additional Information
You have the right to receive a copy of the full annual report, or any part thereof, on request. The items listed below are included in that report: (Note: list only those items which are actually included in the latest annual report)
1. an accountant's report;
2. assets held for investment;
3. fiduciary information, including transactions between the plan and parties-in-interest (that is, persons who have certain relationships with the plan);
4. loans or other obligations in default;
5. leases in default;
6. transactions in excess of 3 (5) percent of plan assets;
7. insurance information including sales commissions paid by insurance carriers; and
8. actuarial information regarding the funding of the plan.
To obtain a copy of the full annual report, or any part thereof, write or call the office of (name), who is (state Title: e.g., the plan administrator), (business address and telephone number). The charge to cover copying costs will be ($ ) for the full annual report, or ($ ) per page for any part thereof.
You also have the right to receive from the plan administrator, on request and at no charge, a statement of the assets and liabilities of the plan and accompanying notes, or a statement of income and expenses of the plan and accompanying notes, or both. If you request a copy of the full annual report from the plan administrator, these two statements and accompanying notes will be included as part of that report. The charge to cover copying costs given above does not include a charge for the copying of these portions of the report because these portions are furnished without charge.
You also have the legally protected right to examine the annual report at the main office of the plan (address ), (at any other location where the report is available for examination), and at the U.S. Department of Labor in Washington, D.C., or to obtain a copy from the U.S. Department of Labor upon payment of copying costs. Requests to the Department should be addressed to: Public Disclosure Room, N4677 Pension and Welfare Benefit Programs, Department of Labor, 200 Constitution Avenue, N.W. Washington, D.C. 20216 (Public Disclosure Room, N5507, Pension and Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210).
(4) Form for Summary Annual Report Relating to Welfare Plans
Summary Annual Report for (name of plan)
This is a summary of the annual report of the (name of plan, EIN and type of welfare plan) for (period covered by this report). The annual report has been filed with the Internal turnover Service, as required under the Employee Retirement Income Security Act of 1974 (ERISA).
(If any benefits under the plan are provided on an uninsured basis:)
(Name of sponsor) has committed itself to pay (all, certain) (state type of) claims incurred under the terms of the plan.
(If any of the funds are used to purchase insurance contracts:)
Insurance Information
The plan has (a) contract(s) with (name of insurance carrier(s) to pay (all, certain) (state type of) claims incurred under the terms of the plan. The total premiums paid for the plan year ending ( date ) were ($ ).
(If applicable add:)
Because (it is a) (they are) so called "experience-rated" contract(s), the premium costs are affected by, among other things, the number and size of claims. Of the total insurance premiums paid for the plan year ending (date), the premiums paid under such "experience-rated" contract(s) were ($ ) and the total of all benefit claims paid under the(se) experience-rated contract(s) during the plan year was ($ ).
(If any funds of the plan are held in trust or in a separately maintained fund:)
Basic Financial Statement
The value of plan assets, after subtracting liabilities of the plan, was ($ ) as of (the end of plan year), compared to ($ ) as of (the beginning of the plan year). During the plan year the plan experienced an (increase) (decrease) in its net assets of ($ ). This (increase) (decrease) includes unrealized appreciation or depreciation in the value of plan assets; that is, the difference between the value of the plan's assets at the end of the year and the value of the assets at the beginning of the year or the cost of assets acquired during the year. During the plan year, the plan had total income of ($ ) including employer contributions of ($ ), employee contributions of ($ ), realized (gains) (losses) of ($ ) from the sale of assets, and earnings from investments of ($ ).
Plan expenses were ($ ). These expenses included ($ ) in administrative expenses, ($ ) in benefits paid to participants and beneficiaries,-and ($ ) in other expenses.
(Officially corrected on May 31, 1979, and published in the Federal Register of June 1, 1979 (44 FR 31640).)
Your Rights to Additional Information
You have the right to receive a copy of the full annual report, or any part thereof, on request. The items listed below are included in that report: (Note: list only those items which are actually included in the latest annual report)
1. An accountant's report;
2. Assets held for investment;
3. Fiduciary information, including transactions between the plan and parties-in-interest (that is, persons who have certain relationships with the plan);
4. Loans or other obligations in default;
5. Leases in default;
6. Transactions in excess of 3 (5) percent of plan assets; and
7. Insurance information including sales commissions paid by insurance carriers.
To obtain a copy of the full annual report, or any part thereof, write or call the office of (name), who is (state Title: e.g., the plan administrator), (business address and telephone number). The charge to cover copying costs will be ($ ) for the full annual report, or ($ ) per page for any part thereof.
You also have the right to receive from the plan administrator, on request and at no charge, a statement of the assets and liabilities of the plan and accompanying notes, or a statement of income and expenses of the plan and accompanying notes, or both. If you request a copy of the full annual report from the plan administrator, these two statements and accompanying notes will be included as part of that report. The charge to cover copying costs given above does not include a charge for the copying of these portions of the report because these portions are furnished without charge.
You also have the legally protected right to examine the annual report at the main office of the plan (address), (at any other location where the report is available for examination), and at the U.S. Department of Labor in Washington, D.C. or to obtain a copy from the U.S. Department of Labor upon payment of copying costs. Requests to the Department should be addressed to Public Disclosure Room, N4677, Pension and Welfare Benefit Programs, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20216 (Public Disclosure Room, N5507, Pension and Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210).
(e) Foreign languages. In the case of either
(1) A plan which covers fewer than 100 participants at the beginning of a plan year in which 25 percent or more of all plan participants are literate only in the same non-English language; or
(2) A plan which covers 100 or more participants in which 500 or more participants or 10 percent or more of all plan participants, whichever is less, are literate only in the same non-English language.
The plan administrator for such plan shall provide these participants with an English-language summary annual report which prominently displays a notice, in the non-English language common to these participants, offering them assistance. The assistance provided need not involve written materials, but shall be given in the non-English language common to these participants. The notice offering assistance shall clearly set forth any procedures participants must follow to obtain such assistance. Plans furnishing an explanatory notice accompanying Form 5500-R pursuant to subparagraph (b)(l) of this Section or the notice of the availability of the Form 5500 R pursuant to subparagraph (b)(2) of this Section shall also provide a notice in such non-English language offering such assistance.
(Amended on July 20, 1982, by 47 FR 31871.)
(f) Furnishing of additional documents to participants and beneficiaries. A plan administrator shall promptly comply with any request by a participant or beneficiary for additional documents made in accordance with the procedures or rights described in paragraphs (b)(3) and (d) of this Section. Communications from plan participants or beneficiaries which might reasonably be construed as requests for information which is required to be supplied without charge shall be so construed. Any charges assessed to cover the cost of furnishing copies of the full annual report, or any part thereof, shall be determined in accordance with 20 CFR 2520.104b-30. Such charges shall not include the cost of furnishing, either separately or as part of the full annual report, copies of statements of assets and liabilities and of income and expenses, and accompanying notes.
(Amended on July 20,1982, by 47 FR 31871.)
(g) Exemptions. Notwithstanding the provisions of this Section, a summary annual report is not required to be furnished with respect to the following:
(1) A totally unfunded welfare plan described in 29 CFR 2520.104-44(b)(1)(i);
(2) a welfare plan which meets the requirements of 29 CFR 2520.104-20(b);
(3) an apprenticeship or other training plan which meets the requirements of 29 CFR 2520.104-22;
(4) a pension plan for selected employees which meets the requirements of 29 CFR 2520.104-23;
(5) a welfare plan for selected employees which meets the requirements of 29 CFR 2520.104-24,
(6) a day care center referred to in 29 CFR 2520.104-25;
(7) a dues financed welfare plan which meets the requirements of 29 CFR 2520.104-26; and
(8) a dues financed pension plan which meets the requirements of 29 CFR 2520.104-27.
(Added by 44 FR 19400, effective June 5, 1979.)
APPENDIX THE SUMMARY ANNUAL REPORT (SAR) UNDER ERISA
(A Cross-Reference to the Annual Report)
A. Pension Plans
Form 5500 Form 5500 C
SAR item line items line items
1. Funding arrangement 11 & 12 11 & 12.
2. Total plan expenses 35h 31j.
3. Administrative expenses 35g colt b 31h.
4. Benefits paid 35e(iii) colt b 31g(ii) colt b.
5. Other expenses 35f 31i.
6. Total participants 7(f) 7(a)(ii).
7. Value of plan assets (net):
a. End of plan year 351 30k colt b.
b. Beginning of plan year 35k 30k colt a.
8. Change in net assets 351 minus 35k 30k colt b minus col a.
9. Total income 35d 31f.
a. Employer contributions 35a(i)(A) & 35a(i)) if 31a(j) & 31(b) if
applicable applicable.
b. Employee contributions 35a(i)(B) & 35a(i)) if 31a(i)) & 31b if
applicable applicable.
c. Gains (losses) from sale of assets 35b(iv) colt b 31d.
d. Earnings from investments 35b(i)G colt b, 35b(ii)B 31c.
colt b, 35b(iii), 35b(v),
& 35b(vi)
10. Total insurance premiums 35e(ii) or total of Schs. A Total of Schs. A, Part II
Part II, item 5(b) Item 5(b).
11. Funding deficiency:
a. Defined benefit plans............... Sch. B, item 9m or 10h Sch. B, item 9m or 10h
b. Defined contribution plans .......... 15b(iii) 15b (iii)
B. Welfare Plans
Form 5500 Form 5500-C
SAR item line items line items
1. Name of insurance carrier................. All Schs. A. Part I. Item All Schs. A Part I. item
2a 2a.
2. Total insurance premiums All Schs. A, Part III, All Schs. A, Part III,
total of item 8c total of item 8c.
3. Experience-rate premiums All Schs. A, Part III, All Schs. A part III
item 9a(iv) item 9a(iv).
4. Experience-rate claims All Schs. A, Part III, All Schs. A part III
item 9b(iv) item 9b(iv).
5. Value of plan assets (net):
a. End of plan year 351 30k colt b.
b. Beginning of plan year 35k 30k colt a.
6. Change in net assets 351 minus 35k 30k colt b minus colt a.
7. Total income 35d 31f.
a. Employer contributions 35a(i)(A) & 35a(i)) if 31a(i) & 31b if
applicable applicable.
b. Employee contributions 35a(i)(B) & 35a(i)) if 31a(i)) & 31b if
applicable applicable.
c. Gains (losses) from sale of assets 35b(iv) colt b 31d.
d. Earnings from investments 35b(i)G colt b, 35b(ii)(B) 31c.
colt b, 35b(iii), 35b(v),
& 35b(vi)
8. Total plan expenses 35h 31j.
9. Administrative expenses 35gcol.b 31h.
10. Benefits paid 35e(iii) colt b 3 1g(ii) colt b.
(44 FR 19403, April 3, 1979, as amended by 44 FR 31640, June 1, 1979, by 47 FR 31871 on July 20, 1982 and by 54 FR 8624 on March I, 1989.)
Temporary and Proposed Regulations
The temporary and proposed Reg. Section 2520.104b-12 was filed with the Federal Register on February 9, 1977, and published in the Federal Register on February 11, 1977. It is effective upon publication in the Federal Register.
TITLE 29 LABOR CHAPTER XXV
PENSION AND WELFARE BENEFIT
PROGRAMS DEPARTMENT OF LABOR
PART 252-RULES AND
REGULATIONS FOR REPORTING AND
DISCLOSURE
Summary Annual Report for 1975 Plan
Year Optional Method of Disclosure for
Certain Multi-employer Plans
The new Section 2520.104b-12 contained in this regulation provides an optional method of distribution of the first summary annual report for those multi-employer pension and welfare plans whose record keeping systems do not yet contain a complete list of participants covered under the plan (See 29 CFR 2510.3-3(d)). Because the earliest date for distribution of the summary annual report, February 15, 1977 (Section 2520.104b-10(b), 41 F.R. 32537, and Section 2520.104b-ll(a), 41 F.R. 32538, August 3, 1976), is rapidly approaching, such plans must be afforded relief from the provisions of 29 CFR 2520.104b-1, which they otherwise could not meet.
Section 2520.104b-12 provides multi-employer plans lacking records of covered participants with optional methods of distribution to participants covered under the plan which parallel those provided for the ERISA Notice under Section 2520.104b-5(d). The administrator may satisfy the requirement to furnish a copy of the summary annual report to participants covered under the welfare or pension plan by using methods such as supplying participating employers or employee organizations with copies to be furnished to employees or members who are participants, or by publishing the summary annual report in a periodical the circulation of which includes participants. Such special methods of distribution should not be necessary for participants and beneficiaries receiving benefits under a pension plan because a complete mailing list should be available for such persons. Subparagraph (c)(2) therefore makes it clear that the option provided by this Section does not apply to the requirement of Section 2520.104b-1 to furnish a copy of the summary annual report to participants and beneficiaries receiving benefits under a pension plan (beneficiaries receiving benefits under a welfare plan are not required to be furnished a copy of the summary annual report under Section 2520.104b-l).
It is recognized that because of the publication date of this regulation, some plan administrators will not be able to take the measures described in paragraph (b) of Section 2520.104b-12 prior to the February 15, 1977 date. In such cases the plan administrator should make a good faith effort to meet the requirements of the regulation as soon as possible. If in light of all the facts and circumstances a good faith effort has been made, the Department will take no action if disclosure has not been made by February 15. In most cases, the plan administrator should be able to complete the measures described in paragraph (b) within 30 days of the February 15 disclosure date.
This Section has not previously been proposed and is promulgated as a temporarily effective rule under the authority of 5 U.S.C. Section 553(a)(3)(B) of the Administrative Procedure Act, which permits an agency for good cause to issue a final rule without notice and opportunity for comment if "notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest." Pursuant to the requirement of 5 U.S.C. Section 553(a)(3)(B), a brief statement of reasons supporting a finding of good cause by an agency must accompany the issuance of a final rule without public notice and comment under this Section. The following findings are made pursuant to 5 U.S.C. Section 553(a)(3)(B):
Issuance of a proposal to establish these optional methods of distribution of the summary annual report would be impracticable because the problem of the inadequacy of certain multi-employer plan records has only recently been brought to the attention of the Department, and the time remaining before the February 15, 1977 date is inadequate to undertake and complete the process of notice and public procedure.
However, because many plans will have disclosure dates under Sections 2520.104b-10(b) and 2520.104b-ll(a) which are well after February 15, 1977, Section 2520.104b-12 is also a proposed regulation for final adoption. Interested persons are invited to submit written data, views, or arguments concerning the regulation contained in this document on or before March 7, 1977. Such data, views, and arguments should be submitted to the Office of Regulatory Standards and Exceptions, Pension and Welfare Benefits Programs, U.S. Department of Labor, Washington, D.C. 20216, Attn: ME/ SAR.
Accordingly, Chapter XXV of Title 29 of the Code of Federal Regulations is amended by adding a new Section 2520.104b-12 to read as follows:
Subpart A - General Reporting and Disclosure Requirements
Section 2520.104b-12 Summary Annual Report for 1975 Plan Year Optional Method of Distribution for Certain Multi-employer Plans.
Authority: Sections 101, 104, and 505, Pub. L. 93-406, 88 Stat. 847, 849, 894 (29 U.S.C. 1021, 1024, 1135); Secretary of Labor's Order No. 13-76.
Subpart A - General Reporting and Disclosure Requirements
Section 2520.104b-12. Summary Annual Report for 1975 Plan Year Optional Method of Distribution for Certain Multi-employer Plans.
(a) In the case of a multi-employer plan which
(1) is required to disclose a summary annual report to its participants and beneficiaries under Section 104(b)(3) of the Act and Section 2520.104b-10 or Section 2520.104b-11, and
(2) does not, as of the date for disclosure of the summary annual report described in those sections, maintain complete records of participants covered under the plan, the administrator of such plan will be deemed to have used methods reasonably calculated to ensure timely receipt of the summary annual report by participants covered under the plan, as required by Section 2520.104b-1 (relating to methods of disclosure), if the administrator meets the requirements of paragraph (b).
(b) No later than the dates set forth in Section 2520.104b-10(b) or Section 2520.104b-ll(a), as appropriate, the administrator shall take measures to furnish copies of the summary annual report to substantially all individuals who, as of the date of such disclosure, are participants covered under the plan who can be identified. These measures may include the following.
(1) The administrator may deliver copies of the summary annual report to employers whose employees are participants covered under the plan, or employee organizations whose members are participants covered under the plan, or to both, in sufficient quantity and sufficiently in advance of the date by which disclosure must be made to enable such employers or employee organizations to furnish them by that date to employees or members who are participants covered under the plan. The administrator shall take whatever steps are necessary and feasible under the circumstances to ensure that employers or employee organizations actually perform those duties. For example, an administrator secures written commitments from appropriate employers and employee organizations that they will furnish copies of the summary annual report to identifiable participants covered under the plan who are in their workforce or membership; or
(2) The administrator may publish the summary annual report, on or before the date by which disclosure must be made, in a periodical or periodicals, the circulation of which includes participants covered under the plan.
(c) Limitations.
(1) This Section applies to only the summary annual report required to be disclosed for the plan year which began in 1975.
(2) This Section does not exempt an administrator from the requirement of Section 2520.104b-1 to furnish copies of the summary annual report to participants and beneficiaries receiving benefits under a pension plan.
Section 2520.104b-30 Charges for documents. -
(a) Application. The plan administrator of an employee benefit plan may impose a reasonable charge to cover the cost of furnishing to participants and beneficiaries upon their written request as required under Section 104(b)(4) of the Act, copies of the following information, statements or documents: the latest updated summary plan description, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. No charge may be assessed for furnishing information, statements or documents as required by other provisions of the Act, which include, in Part 1 of Title I, sections 104(b)(1), (2), (3) and (c) and 105(a) and (c).
(b) Reasonableness. The charge assessed by the plan administrator to cover the costs of furnishing documents is reasonable if it is equal to the actual cost per page to the plan for the least expensive means of acceptable reproduction, but in no event may such charge exceed 25 cents per page. For example, if a plan printed a large number of pamphlets at $1.00 per 50-page pamphlet, the actual cost of reproduction for the entire pamphlet ($1.00) would be equal to 2 cents per page. If only one page of such a pamphlet were requested, the actual cost of providing that page from the printed copy would be $1.00, since the copy would no longer be complete. In such a case, the least expensive means of acceptable reproduction would be individually reproducing the page requested at a charge of no more than 25 cents. On the other hand, if six pages of the same plan document were requested and each page cost 20 cents to be reproduced, the actual cost of providing those pages would be $1.20. In such a case, if a printed copy is available, the least expensive means of acceptable reproduction would be to use pages from the printed copy at a charge of no more than $1.00. No other charge for furnishing documents, such as handling or postage charges, will be deemed reasonable. The plan administrator shall provide information to a plan participant or beneficiary, upon request, about the charge that would be made to provide a copy of material described in this paragraph. (Added by 41 FR 16957, effective April 23, 1976.)
REPORTING OF PARTICIPANT'S BENEFIT RIGHTS
Act Sec. 105.
(a) Each administrator of an employee pension benefit plan shall furnish to any plan participant or beneficiary who so requests in writing, a statement indicating, on the basis of the latest available information
(1) the total benefits accrued, and
(2) the non-forfeitable pension benefits, if any, which have accrued, or the earliest date on which benefits will become nonforfeitable.
(b) In no case shall a participant or beneficiary be entitled under this Section to receive more than one report described in Subsection (a) during any one 12-month period.
(c) Each administrator required to register under Section 6057 of the Internal turnover Code of 1986 shall, before the expiration of the time prescribed for such registration, furnish to each participant described in Subsection (a)(2)(C) of such Section, an individual statement setting forth the information with respect to such participant required to be contained in the registration statement required by Section 6057(a)(2) of such Code. Such statement shall also include a notice to the participant of any benefits which are forfeitable if the participant dies before a certain date.
(d) Subsection (a) of this Section shall apply to a plan to which more than one unaffiliated employer is required to contribute only to the extent provided in regulations prescribed by the Secretary in coordination with the Secretary of the Treasury.
Amendments
P.L. 101-239, Section 7891(a)(I):
Titles I, III, and IV of ERISA (other than sections 3(37)(E), 301(a)(7), and 308, the last sentence of Section 408(d), and Sections 414(c), 4001, and 4303) are each amended by striking Internal turnover Code of 1954, each place it appears and inserting internal turnover Code of 1986," effective October 22,1986.
P.L. 101-239, Section 7894(b)(6):
Amended ERISA Sec. 105(b) by striking "6 month," and inserting "12-month," effective September 2, 1974.
P.L. 98-397, Section 106
Act Sec. 106 amended ERISA Sec. 105(c) by adding the last sentence at the end thereof.
The above amendment applies to plan years beginning after December 31,1984.
However, Act Sec. 302(b) provides:
(b) Special Rule for Collective Bargaining Agreements. In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and I or more employers ratified before the date of enactment of this Act, except as provided in Subsection (d) or Section 303, the amendments made by this Act shall not apply to plan years beginning before the earlier official the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or January 1, 1987.
For purposes of paragraph (1), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by Title I or II shall not be treated as a termination of such collective bargaining agreement.
.09 Committee Report on P.L. 98-397.
(Senate Committee Report)
Under the bill, any statement provided to a plan participant of total accrued benefits and non-forfeitable accrued benefits, or any statement provided to a separated plan participant who has a vested deferred benefit, must include a notice to the participant that certain benefits may be forfeited if the participant dies before a particular date. The notice that certain benefits may be forfeited if a participant dies before a particular date need not include the amount of the benefits that are forfeitable.
REPORTS MADE PUBLIC INFORMATION
Act Sec. 106.
(a) Except as provided in Subsection (b), the contents of the descriptions, annual reports, statements, and other documents filed with the Secretary pursuant to this part shall be public information and the Secretary shall make any such information and data available for inspection in the public document room of the Department of Labor. The Secretary may use the information and data for statistical and research purposes, and compile and publish such studies, analyses, reports, and surveys based thereon as he may deem appropriate.
(b) Information described in sections 105(a) and 105(c) with respect to a participant may be disclosed only to the extent that information respecting that participant's benefits under Title II of the Social Security Act may be disclosed under such Act.
Amendment
P.L. 101-239, Section 7894(106):
Amended ERISA Sec. 106(b) by striking "Section" and inserting sections effective September 2, 1974.
.10 Conference Committee Explanation (P.L. 93-406). Reports made public information. The contents of the description of plans and reports filed with the Secretary of Labor are to be public information and are to be available for inspection in the Department of Labor. In addition, the Secretary of Labor may use the information and data for statistical and research purposes and for the compiling and publishing of studies as he may deem appropriate. However, information with respect to a plan participant's accrued benefits and non-forfeitable pension rights is to be disclosed only to the extent that information respecting a participant's benefits for old age retirement insurance may be disclosed under the Social Security Act.
RETENTION OF RECORDS
Act Sec. 107.
Every person subject to a requirement to file any description or report or to certify any information therefor under this Title or who would be subject to such a requirement but for an exemption or simplified reporting requirement under Section 104(a)(2) or (3) of this Title shall maintain records on the matters of which disclosure is required which will provide in sufficient detail the necessary basic information and data from which the documents thus required may be verified, explained, or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than six years after the filing date of the documents based on the information which they contain, or six years after the date on which such documents would have been filed but for an exemption or simplified reporting requirement under Section 104(a)(2) or (3).
.10 See Committee Reports at 114,220.10, 14,230.10, and 14,240.10.
RELIANCE ON ADMINISTRATIVE INTERPRETATIONS
Act Sec. 108.
In any criminal proceeding under Section 501 based on any act or omission in alleged violation of this part or Section 412, no person shall be subject to any liability or punishment for or on account of the failure of such person to
(1) comply with this part or Section 412, if he pleads and proves that the act or omission complained of was in good faith, in conformity with, and in reliance on any regulation or written ruling of the Secretary, or
(2) publish and file any information required by any provision of this part if he pleads and proves that he published and filed such information in good faith, and in conformity with any regulation or written ruling of the Secretary issued under this part regarding the filing of such reports. Such a defense, if established, shall be a bar to the action or proceeding, non-withstanding that
(A) after such act or omission, such interpretation or opinion is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect, or
(B) after publishing or filing the plan description, annual reports, and other reports required by this Title, such publication or filing is determined by judicial authority not to be in conformity with the requirements of this part.
Amendment
P.L. 101-239, Section 7894:
Amended ERISA Sec. 108 by striking "Act of omission" and inserting "act or omission" effective September 2, 1974.
.10 House Education and Labor Committee
Report (P.L. 93-406). Proven reliance upon a regulation or interpretation by the Secretary of Labor would constitute a defense in a criminal or civil proceeding under certain sections of the Act.
FORMS
Act Sec. 109.
(a) Except as provided in Subsection (b) of this Section, the Secretary may require that any information required under this Title to be submitted to him, including but not limited to the information required to be filed by the administrator pursuant to Section 103(b)(3) and (c), must be submitted on such forms as he may prescribe.
(b) The financial statement and opinion required to be prepared by an independent qualified public accountant pursuant to Section 103(a)(3)(A), the actuarial statement required to be prepared by an enrolled actuary pursuant to Section 103(a)(4)(A) and the summary plan description required by Section 102(a) shall not be required to be submitted on forms.
(c) The Secretary may prescribe the format and content of the summary plan description, the summary of the annual report described in Section 104(b)(3) and any other report, statements or documents (other than the bargaining agreement, trust agreement, contract, or other instrument under which the plan is established or operated), which are required to be furnished or made available to plan participants and beneficiaries receiving benefits under the plan.
.10 Conference Committee Explanation (P.L. 93406). Forms to be provided. The Secretary of Labor may require that any information required to be filed with the Labor Department, including statements and schedules attached to the annual report, must be submitted on forms that he may prescribe. The financial statement prepared by the independent qualified accountant and the actuarial statement prepared by the enrolled actuary and the summary of the plan description are not required to be submitted on forms. However, the Secretary may prescribe the format and content of the accountant's and actuary's statements and of the summary plan description, the summary annual report, and other statements or reports required under Title I to be furnished or made available to participants and beneficiaries.
The two Secretaries (Labor and Treasury) are to unify, to the extent feasible, the reports made to them and it is expected that all of the material subject to the form authority of either Secretary, comprising the annual reports to be made by a plan, can and should be reported on a single form.
ALTERNATIVE METHODS OF COMPLIANCE
Act Sec. 110.
(a) The Secretary on his own motion or after having received the petition of an administrator may prescribe an alternative method for satisfying any requirement of this part with respect to any pension plan, or class of pension plans, subject to such requirement if he determines
(1) that the use of such alternative method is consistent with the purposes of this Title and that it provides adequate disclosure to the participants and beneficiaries in the plan, and adequate reporting to the Secretary.
(2) that the application of such requirement of this part would
(A) increase the costs to the plan, or
(B) impose unreasonable administrative burdens with respect to the operation of the plan, having regard to the particular characteristics of the plan or the type of plan involved; and
(3) that the application of this part would be adverse to the interests of plan participants in the aggregate.
(b) An alternative method may be prescribed under Subsection (a) by regulation or otherwise. If an alternative method is prescribed other than by regulation, the Secretary shall provide notice and an opportunity for interested persons to present their views, and shall publish in the Federal Register the provisions of such alternative method.
.10 See Committee Report at paragraph 14,210. 10.
REPEAL AND EFFECTIVE DATE
(a) (1) The Welfare and Pension Plans Disclosure Act is repealed except that such Act shall continue to apply to any conduct and events which occurred before the effective date of this part.
(2) (A) Section 664 of Title 18, United States Code, is amended by striking out "any such plan subject to the provisions of the Welfare and Pension Plans Disclosure Act" and inserting in lieu thereof "any employee benefit plan subject to any provision of Title I of the Employee Retirement Income Security Act of 1974".
(B) (i) Section 1027 of such Title 18 is amended by striking out "Welfare and Pension Plans Disclosure Act" and inserting in lieu thereof "Title I of the Employee Retirement Income Security Act of 1974", and by striking out "Act" each place it appears and inserting in lieu thereof "Title".
(ii) The heading for such Section is amended by striking out "WELFARE AND PENSION PLANS DISCLOSURE ACT" and inserting in lieu thereof "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974".
(iii) The table of Sections of chapter 47 of such Title 18 is amended by striking out "Welfare and Pension Plans Disclosure Act" in the item relating to Section 1027 and inserting in lieu thereof "Employee Retirement Income Security Act of 1974".
(C) Section 1954 of such Title 18 is amended by striking out "any plan subject to the provisions of the Welfare and Pension Plans Disclosure Act as amended" and inserting in lieu thereof "any employee welfare benefit plan or employee pension benefit plan, respectively, subject to any provision of Title I of the Employee Retirement Income Security Act of 1974" and by striking out "Sections 3(3) and 5(b)(1) and (2) of the Welfare and Pension Plans Disclosure Act, as amended" and inserting in lieu thereof "Sections 3(4) and (3)(16) of the Employee Retirement Income Security Act of 1974".
(D) Section 211 of the Labor-Management Reporting and Disclosure Act of 1959 (29 U.S.C. 441) is amended by striking out "Welfare and Pension Plans Disclosure Act" and inserting in lieu thereof "Employee Retirement Income Security Act of 1974".
(b) (l) Except as provided in paragraph (2), this part (including the amendments and repeals made by Subsection (a)) shall take effect on January 1, 1975.
(2) In the case of a plan which has a plan year which begins before January 1, 1975, and ends after December 31, 1974, the Secretary may postpone by regulation the effective date of the repeal of any provision of the Welfare and Pension Plans Disclosure Act (and of any amendment made by Subsection (a)(2)) and the effective date of any provision of this part, until the beginning of the first plan year of such plan which begins after January 1, 1975.
(c) The provisions of this Title authorizing the Secretary to promulgate regulations shall take effect on the date of enactment of this Act.
(d) Subsections (b) and (c) shall not apply with respect to amendments made to this part in provisions enacted after the date of the enactment of this Act.
Amendment
P.L.101-239, Section 7894(h)(1):
Amended ERISA Sec. 1ll by adding new Subsection (d) to read as above effective September 2,1974.
.10 Conference Committee Explanation (P.L. 93-406). Effective dates. The conference agreement provides that the reporting and disclosure provisions generally are to take effect on January 1, 1975. However, in the case of a fiscal year plan year which begins before January 1, 1975, and ends after December 31, 1974, the Secretary of Labor may by regulation postpone the effective date until the beginning of the first plan year of the plan which begins after January 1, 1975.
Section 2509.75-9 Independence of Accountant Retained by Employee Benefit Plan. The Department of Labor today announced guidelines for determining when a qualified public accountant is independent for purposes of auditing and rendering an opinion on the financial information required to be included in the annual report filed with the Department.
Section 103(a)(3)(A) requires that the accountant retained by an employee benefit plan be "independent" for purposes of examining plan financial information and rendering an opinion on the financial statements and schedules required to be contained in the annual report.
Under the authority of Section 103(a)(3)(A) the Department of Labor will not recognize any person as an independent qualified public accountant who is in fact not independent with respect to the employee benefit plan upon which that account renders an opinion in the annual report filed with the Department of Labor. For example, an accountant will not be considered independent with respect to a plan if:
(1) During the period of professional engagement to examine the financial statements being reported, at the date of the opinion, or during the period covered by the financial statements, the accountant or his or her firm or a member thereof had, or was committed to acquire, any direct financial interest or any material indirect financial interest in such plan, or the plan sponsor, as that term is defined in Section 3(16)(B) of the Act.
(2) During the period of professional engagement to examine the financial statements being reported, at the date of the opinion, or during the period covered by the financial statements, the accountant, his or her firm or a member thereof was connected as a promoter, underwriter, investment advisor, voting trustee, director, officer, or employee of the plan or plan sponsor except that a firm will not be deemed not independent in regard to a particular plan if a former officer or employee of such plan or plan sponsor is employed by the firm and such individual has completely disassociated himself from the plan or plan sponsor and does not participate in auditing financial statements of the plan covering any period of his or her employment by the plan or plan sponsor. For the purpose of this bulletin the term "member" means all partners or shareholder employees in the firm and all professional employees participation in the audit or located in an office of the firm participating in a significant portion of the audit;
(3) An accountant or a member of an accounting firm maintains financial records for the employee benefit plan.
However, an independent qualified public accountant may permissibly engage in or have members of his or her firm engage in certain activities which will not have the effect of removing recognition of his or her independence.
For example, (1) an accountant will not fail to be recognized as independent if at or during the period of his or her professional engagement with the employee benefit plan the accountant or his or her firm is retained or engaged on a professional basis by the plan sponsor, as that term is defined in Section 3(16)(B) of the Act. However, to retain recognition of independence under such circumstances the accountant must not violate the prohibitions against recognition of independence established under paragraphs (1), (2) or (3) of this interpretive bulletin: (2) the rendering of services by an actuary associated with an accountant or accounting firm shall not impair the accountant's or accounting firm's independence. However, it should be noted that the rendering of services to a plan by an actuary and accountant employed by the same firm may constitute a prohibited transaction under Section 406(a)(1)(C) of the Act. The rendering of such multiple services to a plan by a firm will be the subject of a later interpretive bulletin that will be issued by the Department of Labor.
In determining whether an accountant or accounting firm is not, in fact, independent with respect to a particular plan, the Department of Labor will give appropriate consideration to all relevant circumstances, including evidence bearing on all relationships between the accountant or accounting firm and that of the plan sponsor or any affiliate thereof, and will not confine itself to the relationships existing in connection with the filing of annual reports with the Department of Labor.
Further interpretive bulletins may be issued by the Department of Labor concerning the question of independence of an accountant retained by an employee benefit plan. (Amended by 40 FR 59728, filed with the Federal Register December 29, 1975, and published in the Federal Register December 30, 1975.)