[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33847-33850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16594]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2509, 2520 and 2550
RIN 1210-AA51
Removal of Interpretive Bulletins and Regulations Relating to
ERISA
AGENCY: Pension and Welfare Benefits Administration, DOL.
ACTION: Final rule.
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SUMMARY: This rule removes from the Code of Federal Regulations certain
interpretive bulletins and regulations (or portions thereof) under the
Employee Retirement Income Security Act of 1974 (ERISA), that the
Department of Labor (the Department) believes are obsolete
(collectively, the obsolete regulations). The obsolete regulations
generally provided transitional relief for plan sponsors, plan
administrators, and others subject to the requirements of title I of
ERISA, in coming into compliance with ERISA's requirements in the first
several years following ERISA's enactment in 1974. Because the election
periods or dates of applicability under these rules have expired, the
Department believes that the regulations are no longer needed. In other
instances, the obsolete regulations are unnecessary because they merely
provide notice of a rescission or withdrawal of prior guidance or
regulations, or were rendered ineffective by a subsequent Supreme Court
decision.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Katherine D. Lewis, Office of
Regulations and Interpretations, Pension and Welfare Benefits
Administration, U.S. Department of Labor, Rm. N-5669, 200 Constitution
Avenue, N.W., Washington, D.C. 20210 (telephone (202) 219-7461), or
Vicki Shteir-Dunn, Plan Benefits Security Division, Office of the
Solicitor, U.S. Department of Labor, Rm. N-4611, 200 Constitution Ave.,
N.W., Washington, D.C. 20210 telephone (202) 219-8610).
SUPPLEMENTARY INFORMATION: In accordance with the President's Executive
Order No. 12866 of September 1993, ``Regulatory Planning and Review,''
and the President's directive of March 4, 1995, ``Regulatory
Reinvention Initiative,'' the Department has undertaken to identify and
eliminate regulations which are no longer needed. Pursuant to a review
of regulations under the Employee Retirement Income Security Act of
1974 (ERISA), the Department identified 28 interpretive bulletins and
regulations (or portions thereof) which it believes to be obsolete.
Nearly all of these interpretive bulletins and regulations were issued
over fifteen years ago. This rule removes these interpretive bulletins,
regulations and paragraphs of regulations from the Code of Federal
Regulations, and makes conforming amendments where necessary to
accommodate the removal of identified provisions. In order to ensure
that members of the public had the opportunity to comment, the
Department initially published this rule in the Federal Register (61 FR
14690, April 3, 1996) as a notice of proposed rulemaking. The
Department received one public comment, which was fully supportive of
the proposal.
The rule removes the obsolete regulations prospectively, as of the
date of publication of this final rule, and has no effect on their
legal effectiveness prior to that date. Following is a brief
description of each of the obsolete interpretive bulletins and
regulations (or portions thereof) removed by the Department. All of
these items were in title 29 of the Code of Federal Regulations.
I. Part 2509--Interpretive Bulletins Relating to the Employee
Retirement Income Security Act of 1974
This rule removes interpretive bulletins 75-1, 75-7, 76-2 and 76-3
from subchapter A, part 2509 of the Code of Federal Regulations (29 CFR
Secs. 2509.75-1, 2509.75-7, 2509.76-2 and 2509.76-3). In addition, the
rule removes paragraph (b) of interpretive bulletin 75-2 (29 CFR
2509.75-2).
Interpretive bulletin 75-1 outlined and clarified section 414(c)(4)
of ERISA, which provided that sections 406 and 407(a) of ERISA
(relating to prohibited transactions) are not applicable to the
provision of certain services between a plan and a party in interest
before June 30, 1977, if certain conditions described in that section
are met. Interpretive bulletin 75-7 supplemented interpretive bulletin
75-1 and provided examples of its application. Interpretive bulletins
76-2 and 76-3 merely gave notice of the rescission or withdrawal of
earlier guidance relating to the definition of ``seasonal industries,''
a matter now under the jurisdiction of the Internal Revenue Service
pursuant to Reorganization Plan No. 4 of 1978. Paragraph (b) of
interpretive bulletin 75-2 took the position that consideration paid
for a contract or policy of insurance issued to a plan would not be
considered plan assets if placed in the general account of the issuing
insurance company, and therefore could not give rise to
[[Page 33848]]
prohibited transactions. This interpretation may no longer be relied on
as a result of the December 13, 1993 Supreme Court decision in John
Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 114
S. Ct. 517 (1993), and therefore, has no force or effect.
II. Part 2520--Rules and Regulations for Reporting and Disclosure
The rule removes ten regulations and provisions of two other
regulations from subchapter C, part 2520 of the Code of Federal
Regulations (29 CFR Part 2520), pertaining to reporting and disclosure
under ERISA.
From subpart C of Part 2520, the rule removes Sec. 103-6(b)(1)(ii),
which defined the current value of plan assets for purposes of
schedules of reportable transactions for plan years beginning in 1975.
The remainder of Sec. 103-6(b)(1) is revised to eliminate the reference
to Sec. 103-6(b)(1)(ii), and to otherwise conform to this change. The
rule also removes Sec. 103-7. This regulation, which provided special
accounting rules for plans filing the annual report for plan years
beginning in 1975, applied only with respect to plan years beginning in
1975 and not to any subsequent plan years.
The rule removes the following seven regulations from subpart D of
part 2520. The Department's regulation at Sec. 104-2 postponed the
effective date of annual reporting requirements for non-calendar year
plans and extended the reporting requirements under prior legislation
for such plans until the end of the first plan year beginning after
January 1, 1975. The Department's regulation at Sec. 104-3 deferred
certain reporting and disclosure requirements for welfare plans, and
provided an alternative method of compliance for pension plans, until
May 30, 1976. The Department's regulation at Sec. 104-5 deferred, until
no later than November 16, 1977, the application of certain reporting
and disclosure requirements relating to the summary plan description
for welfare plans. The Department's regulation at Sec. 104-6 provided
an alternative method of compliance for pension plans which elected to
defer the summary plan description reporting and disclosure
requirements. The availability of the deferral expired on November 16,
1977. The Department's regulation at Sec. 104-28 provided an extension
of time for filing and disclosure of the initial summary plan
description for certain employee benefit plans that became subject to
part 1 of title I of ERISA on or before July 17, 1977. The Department's
regulation at Sec. 104-45 provided a temporary exemption and
alternative method of compliance with respect to the requirement to
report insurance fees and commissions for insured plans with fewer than
100 participants. The regulation applied only to annual reports
required to be filed for the plan years beginning in 1975 and 1976.
From subpart F of part 2520, the rule removes and reserves certain
paragraphs of Sec. 104b-2 and Sec. 104b-4, and removes Secs. 104b-5 and
104b-12.
With respect to Sec. 104b-2, the rule revises paragraphs (b)(1) and
(b)(2), and removes and reserves paragraphs (c), (d), (e), (f) and (h).
Paragraphs (b)(1) and (b)(2) establish the periods within which updated
summary plan descriptions must be furnished to participants and
beneficiaries receiving benefits under the plan (which differ depending
on whether there have been amendments to the plan). In both cases, the
periods for providing an updated summary plan description are no later
than 210 days after the end of the plan year within which occurs the
later of a date certain (November 16, 1983 or November 16, 1987) or a
period of years after the last date a change in the information
required to be disclosed by section 102 of ERISA or Sec. 102-3 would
have been reflected in the most recently distributed summary plan
description. The rule revises paragraphs (b)(1) and (b)(2) to eliminate
the references to the dates certain.
Paragraph (c) of Sec. 104b-2 pertained to plans making elections
under Secs. 2520.104-5 and 2520.104-6, for which the election periods
expired in 1977. Paragraph (d) of the regulation provided an
alternative method of compliance for plans using a Form EBS-1 with a
print date of April 1975 as the summary plan description. The Form EBS-
1 was eliminated in 1976. Paragraph (e) of the regulation provided an
alternative method of compliance with ERISA's summary plan description
requirements for plans which filed and disclosed an initial summary
plan description on or before May 30, 1976, in reliance upon earlier
guidance of the Department. The availability of the alternative method
of compliance was conditioned on the disclosure by such plans, prior to
November 16, 1977, of a statement of ERISA rights which complied with
Sec. 2520.102-3(t). Paragraph (f) of the regulation provided an
alternative method of compliance for plans which were not described in
paragraphs (d) or (e) and which met certain requirements. The
alternative method of compliance under paragraph (f) expired on
November 16, 1977. Paragraph (h) of the regulation merely referred to
Secs. 2520.104-5 and 2520.104-6, both of which authorized alternative
methods of compliance which expired on November 16, 1977.
With respect to Sec. 104b-4, the rule removes paragraph (d). This
paragraph required certain plans to furnish information to certain
classes of participants or beneficiaries by November 16, 1977.
The rule also removes Sec. 104b-5 and Sec. 104b-12. The
Department's regulation at Sec. 104b-5 created a new disclosure
document, the ``ERISA Notice'', for use as an interim disclosure
document by welfare and pension benefit plans electing to use the
deferral until November 16, 1977 provided under Secs. 2520.104-5 and
2520.104-6. The Department's regulation at Sec. 104b-12 provided
multiemployer plans lacking records of covered participants with
optional methods of distributing the first summary annual report to
participants covered under the plan. The regulation generally applied
to reports distributed before February 15, 1977.
III. Part 2550--Rules and Regulations for Fiduciary Responsibility
The rule removes eight regulations from subchapter F, part 2550 of
title 29 of the Code of Federal Regulations, pertaining to fiduciary
responsibility under ERISA. These include Secs. 407a-3, 407a-4, 407c-3,
414b-1, 414c-1, 414c-2, 414c-3 and 414c-4, all of which provided
transitional relief for the first several years following ERISA's
enactment.
The Department's regulation at Sec. 407a-3 provided plan
administrators with prospective guidance clarifying the meaning of
section 407(a)(3)(B) of ERISA. This guidance assisted plan
administrators in determining whether their plans held qualifying
employer securities and/or qualifying employer real property the fair
market value of which, on any date between January 1, 1975 and December
31, 1984, did not exceed ten percent of the fair market value of the
plan's assets, and thus would not be subject to the ten percent holding
limitation contained in section 407(a)(3)(A) of ERISA. The period for
which plan administrators needed such prospective guidance was from
January 1, 1975 until December 31, 1984. Accordingly, the need for such
guidance no longer exists.
The Department's regulation at Sec. 407a-4 clarified the
requirements of section 407(a)(4) of ERISA, which required that plans
divest, by December 31, 1979, 50 percent of the qualifying employer
securities and qualifying real property which they would be required to
divest before January 1, 1985, under
[[Page 33849]]
section 407(a)(3) or 407(c) of ERISA. Accordingly, the transactions
addressed by the regulation were transactions that were required to
occur on or before December 31, 1979.
The Department's regulation at Sec. 407c-3 described an election
plans could make, prior to January 1, 1976, to utilize an alternate
method of calculating the value of employer securities for purposes of
satisfying the limitations of section 407(a)(3) of ERISA on the holding
of such securities or real property. The regulation also provided that
after making such an election, and before January 1, 1985, the plan
could not acquire any real property.
The Department's regulation at Sec. 414b-1 provided guidance to
plans applying to the Department of Labor, in accordance with section
414(b)(1) of ERISA, for postponement, until no later than January 1,
1976, of the effective date of certain provisions of ERISA.
Applications for such postponement generally had to be submitted to the
Department on or before December 31, 1974.
The Department's regulations at Secs. 414c-1, 414c-2, and 414c-3
provided guidance concerning transitional rules relating to certain
types of transactions prior to June 30, 1984, after which the rules
became inapplicable. Specifically, Sec. 414c-1 related to certain loans
or other extensions of credit prior to June 30, 1984; Sec. 414c-2
related to certain leases or joint uses of property prior to June 30,
1984; and Sec. 414c-3 related to certain sales, exchanges, or other
dispositions of property prior to June 30, 1984. The Department's
regulation at Sec. 414c-4 provided guidance regarding a transitional
rule relating to the provision of certain services until June 30, 1977,
after which the rule became inapplicable.
Executive Order 12866
The Department has determined that this regulatory action is not a
``significant rule'' within the meaning of Executive Order 12866
concerning Federal regulations, because it is not likely to result in:
(1) An annual effect on the economy of $100 million or more, or an
adverse and material effect on a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities; (2) the creation of a
serious inconsistency or interference with an action taken or planned
by another agency; (3) a material alteration in the budgetary impacts
of entitlement, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) the raising of novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in Executive Order 12866.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et. seq., requires
each Federal agency to perform a Regulatory Flexibility Analysis for
all rules that are likely to have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, organizations, and governmental jurisdictions; under ERISA,
a ``small plan'' is one with less than 100 participants. ERISA section
104(a)(2), 29 U.S.C. 1024(a)(2).
The Assistant Secretary of the Pension and Welfare Benefits
Administration certifies that the modifications set forth in this rule
will not have a significant economic impact on a substantial number of
small entities. The reasons for this certification are as follows:
(1) The rule merely removes obsolete or unnecessary interpretive
bulletins and regulations (or portions thereof) from the Code of
Federal Regulations, and, where appropriate, makes conforming
amendments to accommodate such removal; and
(2) The rule does not impose any new requirements on any entity.
Paperwork Reduction Act
This rule is not subject to the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) because it contains no
``collection of information'' as defined in 44 U.S.C. 3502(3).
List of Subjects
29 CFR Part 2509
Employee benefit plans, Pensions.
29 CFR Part 2520
Employee benefit plans, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 2550
Employee benefit plans, Pensions, Prohibited transactions.
Authority
For the reasons described in the preamble, parts 2509, 2520, and
2550 of chapter XXV of title 29 of the Code of Federal Regulations, are
amended as set forth below:
PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
1. The authority citation for part 2509 is revised to read as
follows:
Authority: 29 U.S.C. 1135. Sections 2509.75-10 and 2509.75-2
issued under 29 U.S.C. 1052, 1053, 1054. Secretary of Labor's Order
No. 1-87 (52 FR 13139).
Sec. 2509.75-1 [Removed]
2. Section 2509.75-1 is removed.
Sec. 2509.75-2 [Amended]
3. Section 2509.75-2 is amended by removing and reserving paragraph
(b).
Secs. 2509.75-7, 2509.76-2, 2509.76-3 [Removed]
4. Sections 2509.75-7, 2509.76-2 and 2509.76-3 are removed.
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
5. The authority citation for part 2520 continues to read as
follows:
Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2),
111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.
1021-25, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,
13-76, 1-87, and Labor Management Services Administration Order No.
2-6.
Subpart C--[Amended]
6. Section 2520.103-6 is amended by revising paragraph (b)(1) to
read as follows:
Sec. 2520.103-6 Definition of reportable transaction for Annual
Return/Report.
* * * * *
(b) Definitions. (1) Except as provided in paragraphs (c)(2) and
(d)(1)(vi) of this section (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.
* * * * *
Sec. 2520.103-7 [Removed]
7. Section 2520.103-7 is removed.
Subpart D--[Amended]
Secs. 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6, 2520.104-28,
2520.104-45 [Removed and Reserved]
8. Sections 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6,
2520.104-28, and 2520.104-45 are removed and reserved.
Subpart F--[Amended]
9. Section 2520.104b-2 is amended by revising paragraph (b) to read
as follows:
Sec. 2520.104b-2 Summary plan description.
* * * * *
(b) Periods for furnishing updated summary plan description. (1)
For
[[Page 33850]]
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 which occurs five years after the last date a change in
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 the 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) 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
which occurs ten years after the last date a change in 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 the Act.
* * * * *
Sec. 2520.104b-2 [Amended]
10. Paragraphs (c), (d), (e), (f) and (h) of Sec. 2520.104b-2 are
removed and reserved.
Sec. 2520.104b-4 [Amended]
11. Paragraph (d) of Sec. 2520.104b-4 is removed.
Secs. 2520.104b-5--2520.104b-12 [Removed]
12. Sections 2520.104b-5 and 2520.104b-12 are removed.
PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY
13. The authority citation for part 2550 is revised to read as
follows:
Authority: 29 U.S.C. 1135. Section 2550.401b-1 also issued under
sec. 102, Reorganization Plan No. 4 of 1978 (43 FR 47713, Oct. 17,
1978), effective December 31, 1978 (44 FR 1065, Jan. 3, 1979), 3
CFR, 1978 Comp., p. 332. Section 2550.404c-1 also issued under 29
U.S.C. 1104. Section 2550.407c-3 also issued under 29 U.S.C. 1107.
Section 2550.408b-1 also issued under sec. 102, Reorganization Plan
No. 4 of 1978 (43 FR 47713, Oct. 17, 1978), effective December 31,
1978 (44 FR 1065, Jan. 3, 1979), 3 CFR, 1978 Comp., p. 332, and 29
U.S.C. 1108(b)(1). Section 2550.412-1 also issued under 29 U.S.C.
1112. Secretary of Labor's Order No. 1-87 (52 FR 13139).
Secs. 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1, 2550.414c-1,
2550.414c-2, 2550.414c-3, 2550.414c-4 [Removed]
14. Sections 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1,
2550.414c-1, 2550.414c-2, 2550.414c-3, 2550.414c-4 are removed.
Signed at Washington, D.C., this 25th day of June, 1996.
Olena Berg,
Assistant Secretary for Pension and Welfare Benefits, U.S. Department
of Labor.
[FR Doc. 96-16594 Filed 6-28-96; 8:45 am]
BILLING CODE 4510-29-P
