DEPARTMENT OFLABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2509, 2520 and 2550
RIN 1210-AA51
Removal of Interpretive Bulletins and Regulations Relating to the
Employee Retirement Income Security Act of 1974
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Proposed rule.
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SUMMARY: This document contains a notice of a proposal to remove from
the Code of Federal Regulations certain interpretive bulletins and
regulations (or portions thereof) under the Employee Retirement Income
Security Act of 1974 (ERISA, 29 U.S.C. 1001, et. seq.) that the
Department of <strong>Labor</strong> (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
[[Page 14691]]
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.
DATES: Comments must be received by June 3, 1996.
ADDRESSES: All written comments and requests for a public hearing
(preferably three copies) should be sent to: Pension and Welfare
Benefits Administration, Office of Regulations and Interpretations,
Room N-5669, 200 Constitution Avenue, N.W., Washington, D.C. 20010.
This notice, as well as all comments received from interested persons,
will be available for public inspection in the Public Disclosure Room,
Pension and Welfare Benefits Administration, U.S. Department of <strong>Labor</strong>,
Room N-5638, 200 Constitution Ave., N.W., Washington, D.C. 20210.
FOR FURTHER INFORMATION CONTACT: Katherine D. Lewis, Office of
Regulations and Interpretations, Pension and Welfare Benefits
Administration, U.S. Department of <strong>Labor</strong>, 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 <strong>Labor</strong>, 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 April 24, 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 interpretative 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 document proposes the removal of these
interpretive bulletins, regulations and paragraphs of regulations from
the Code of Federal Regulations. In order to ensure that members of the
public have the opportunity to comment on the <strong>proposed</strong> removal, the
Department is publishing this notice as a notice of <strong>proposed</strong>
rulemaking.
The proposal would remove the obsolete regulations prospectively,
as of the date of publication of a final rule, and would have 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) <strong>proposed</strong> for removal by the
Department. All of these items are presently contained in title 29 of
the Code of Federal Regulations.
I. Part 2509--Interpretive Bulletins Relating to the Employee
Retirement Income Security Act of 1974
The Department is proposing to remove 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 Department is proposing to remove paragraph (b) of
interpretive bulletin 75-2 (29 CFR 2509.75-2).
Interpretive bulletin 75-1 outlines and clarifies section 414(c)(4)
of ERISA, which provides 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 supplemental 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 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 Department is proposing to remove 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 Department proposes to remove
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) would be revised
to eliminate the reference to Sec. 103-6(b)(1)(ii), and to otherwise
conform to this change. The Department also proposes to remove
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 Department proposes to remove 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. This regulation does not apply to
subsequent plan years. 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
regulation does not apply to any subsequent summary plan descriptions.
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 applies only to annual
reports required to be filed for the plan years beginning in 1975 and
1976, and does not apply to annual reports filed for subsequent plan
years.
[[Page 14692]]
From subpart F of part 2520, the Department proposes to remove and
reserve certain paragraphs of Sec. 104b-2 and Sec. 104b-4, and to
remove Secs. 104b-5 and 104b-12.
With respect to Sec. 104b-2, the Department proposes to revise
paragraphs (b)(1) and (b)(2), and to remove and reserve 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 <strong>proposed</strong> revisions to
paragraphs (b)(1) and (b)(2) would eliminate the references to the
dates certain.
Paragraph (c) of Sec. 104b-2 pertained to plans making elections
under Sec. 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 refers to
Secs. 2520.104-5 and 2520.104-6, both of which authorize alternative
methods of compliance which expired on November 16, 1977.
With respect to Sec. 104b-4, the Department proposes to remove
paragraph (d). This paragraph required certain plans to furnish
information to certain classes of participants or beneficiaries by
November 16, 1977.
The Department also proposes to remove 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 Department is proposing to remove 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 provide 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 clarifies 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 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 3,1
1979.
The Department's regulation at Sec. 407c-3 describes an election
plans could make, prior to January 1, 1976, to utilize an alternative
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. There are no provisions in the
regulation that remain applicable after January 1, 1985.
The Department's regulation at Sec. 414b-1 provided guidance to
plans applying to the Department of <strong>Labor</strong>, 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 relates to certain loans
or other extensions of credit prior to June 30, 1984; Sec. 414c-2
relates to certain leases or joint uses of property prior to June 30,
1984; and Sec. 414c-3 relates to certain sales, exchanges, or other
dispositions of property prior to June 30, 1984. The Department's
regulation at Sec. 414c-4 provides guidance regarding a transitional
rule relating to the provision of certain services until June 30, 1977,
after which the rule is inapplicable.
Executive Order 12866
The Department has determined that this <strong>proposed</strong> 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 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.
[[Page 14693]]
Regulatory Flexibility Act
This proposal will not have a significant economic impact on a
substantial number of small employers.
Paperwork Reduction Act
This proposal 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 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
<strong>proposed</strong> to be 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
also issued under 29 U.S.C. 1052, 1053, 1054. Secretary of <strong>Labor</strong>'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 Secs. 2509.75-7, 2509.76-2, 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, 204, 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, 1135); Secretary of <strong>Labor</strong>'s Order No. 27-74, 13-
76, 1-87, and <strong>Labor</strong> Management Services Administration Order No. 2-
6.
Subpart C of Part 2520--[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) (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.
* * * * *
7. Subpart C of part 2520 is amended by removing Sec. 2520.103-7.
Subpart D of Part 2520--[Amended]
8. Subpart D of part 2520 is amended by removing Secs. 2520.104-2,
2520.104-3, 2520.104-5, 2520.104-6, 2520.104-28, and 2520.104-45.
Subpart F of Part 2520--[Amended]
9. Section 2520.104b-2 is amended by revising paragraphs (b)(1) and
(b)(2) to read as follows:
Sec. 2520.104b-2 Summary plan description.
* * * * *
(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 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),
reburied by section 204(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. Subpart F of part 2520 is amended by removing and reserving
paragraphs (c), (d), (e), (f) and (h) of Sec. 2520.104b-2.
Sec. 2520.104b-4 [Amended]
11. Subpart F of part 2520 is amended by removing paragraph (d) of
Sec. 2520.104b-4.
Secs. 2520.1046-5, 2520.104b-12 [Amended]
12. Subpart F of part 2520 is amended by removing Secs. 2520.104b-5
and 2520.104b-12.
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., 332. Section 2550.404c-1 also issued under 29
U.S.C. 1104. Section 2550.407c-3 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., 332, reprinted in 5 U.S.C.
app. at 1163 (1982), and under 29 U.S.C. 1108(b)(1). Section
2550.412-1 also issued under 29 U.S.C. 1112. Secretary of <strong>Labor</strong>'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]
15. Sections 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1,
2550.414c-1, 2550.414c-2, 2550.414c-3 and 2550.414c-4 are removed.
[[Page 14694]]
Signed at Washington, DC, this 27th day of March, 1996.
Olena Berg,
Assistant Secretary for Pension and Welfare Benefits, U.S. Department
of <strong>Labor</strong>.
[FR Doc. 96-7878 Filed 4-2-96; 8:45 am]
BILLING CODE 4510-29-M
