Enforcement Manual

The Employee Benefits Security Administration published this manual solely for the use of its employees. It is not meant to limit EBSA’s discretion regarding its responsibilities set by ERISA.

This manual is not intended to:

• be an interpretation of law or regulation,
• address agency policy on issues or potential violations,
• serve as guidance for persons outside the Department of Labor,
• give any person, including the subject of an EBSA investigation or enforcement action, a right to rely on any policy or procedure contained in the manual, or
• create any other substantive or procedural rights.

Background

Since at least 1996, EBSA has had an Enforcement Manual Committee (Committee). The Director of Enforcement is responsible for appointing and overseeing the Committee. The Committee is comprised of national and regional office members (including, but not limited to: Regional Directors, Deputy Regional Directors, Associate Regional Directors, Supervisory Investigators, Investigator and Office of Enforcement staff). The Committee’s co-chairs will be a Senior Enforcement Advisor, Enforcement and a Deputy Regional Director. EBSA staff can suggest changes to the Enforcement Manual through an e-mail address posted on the EBSA Intranet.

Process

The Enforcement Manual review process is as follows:

• The Committee reviews and drafts proposed changes to the Enforcement Manual that impact the investigative process, as needed, but not less than every two years.
• The Committee makes recommendations for any changes or updates to the Enforcement Manual to the Director of Enforcement.
• Director of Enforcement reviews proposed changes with the Regional Directors (RDs) and the Deputy Assistant Secretary for National Office Operations and the Deputy Assistant Secretary for Regional Offices, as appropriate.
• Office of the Solicitor (SOL)/Plan Benefits Security Division (PBSD) review and clear proposed changes.
• The Director of Enforcement, the Deputy Assistant Secretary for National Office Operations and the Deputy Assistant Secretary for Regional Offices review final changes, as appropriate.

Implementation

Changes to the Enforcement Manual are made electronically. A table describing the changes and dates of changes will be included as an Appendix to the Enforcement Manual. The electronic version annotates by section the date of changes. A memorandum to the field summarizes the changes, as needed, but no less than every two years.

Record Maintenance

The Committee will maintain the following records:

• Suggestions for changes.
• A redline of all revisions.
• A chart of all revisions, reason for the change and date.
• Copies of all memorandum memorializing the changes.
• HTML and PDF versions.

The Employee Benefits Security Administration is an agency within the Department of Labor that administers and enforces the provisions of Title I of the Employee Retirement Income Security Act (ERISA). ERISA established fiduciary and other standards for employee benefit plans sponsored by private-sector employers. The Assistant Secretary, appointed by the President, directs EBSA and reports directly to the Secretary of Labor.

Headquarters and Staffing

EBSA headquarters is located in Washington, D.C. Its enforcement activities are performed mostly in field offices located in 13 cities throughout the United States. Over 400 investigators/auditors work in field offices, all of whom are highly skilled professionals. Many are lawyers or Certified Public Accountants, and others have advanced degrees in business and finance. The Office of Enforcement is responsible for operational review and oversight, and enforcement policy.

Responsibility

EBSA shares responsibility with the Internal Revenue Service and the Pension Benefit Guaranty Corporation for the administration and enforcement of ERISA. Under ERISA, the Secretary of Labor is responsible for protecting the rights and financial security of approximately 143 million employee benefit plan participants and beneficiaries and for assuring the integrity and effective management of the private pension and welfare benefit system. EBSA has enforcement authority over employee benefit plans covering workers in a variety of industries, including communications, retail, shipping, and financial services.

Employee benefit plans invest in a variety of investment vehicles, including stocks, bonds and real estate. Individuals and companies who provide services to employee benefit plans, such as investment advisors, trust departments, insurance companies, consultants, and others, are also governed by ERISA.

EBSA carries out its responsibilities by conducting a wide range of activities, including civil and criminal investigations, to determine whether there are violations of ERISA and the sections of Title 18, as they relate to employee benefit plans.

• ACA – Affordable Care Act
• APP – Abandoned Plan Program
• COBRA – Consolidated Omnibus Budget Reconciliation Act
• Department - Department of Labor
• DOL - Department of Labor
• DES - Division of Enforcement Support
• DFO - Division of Field Operations
• DO - District Office
• DOJ - Department of Justice
• DRC - Division of Reporting Compliance
• DS – District Supervisor
• DTAI - Division of Technical Assistance and Inquiries
• EBSA – Employee Benefits Security Administration
• ERISA - Employee Retirement Income Security Act
• FBI – Federal Bureau of Investigation
• FDIC - Federal Deposit Insurance Corporation
• FOIA - Freedom of Information Act
• FRB - Board of Governors of the Federal Reserve System
• HHS – Health and Human Services, Department of
• HIPAA – Health Insurance Portability and Accountability Act
• HMO – Health Maintenance Organization
• IRC - Internal Revenue Code
• Code - Internal Revenue Code
• IRS - Internal Revenue Service
• MEWA - Multiple Employer Welfare Arrangement
• MHPA – Mental Health Parity Act
• MHPAEA - Mental Health Parity and Addiction Equity Act
• MOU – Memorandum of Understanding
• NCUA - National Credit Union Administration
• NO – National Office
• OCA - Office of the Chief Accountant
• OCC - Office of the Comptroller of the Currency
• OE - Office of Enforcement
• OED - Office of Exemption Determinations
• OIG – Office of the Inspector General
• OPM - Office of Personnel Management
• OHPSCA – Office of Health Plan Standards and Compliance Assistance, EBSA
• OLR – Office of Labor Racketeering
• OOCR - Office of Organized Crime and Racketeering
• OPA – Office of Participant Assistance, EBSA
• OPM – Office of Personnel Management
• OPPEM - Office of Program Planning, Evaluation and Management
• ORI – Office of Regulations and Interpretations, EBSA
• OTS - Office of Thrift Supervision
• PA – Plan Administrator
• PBGC - Pension Benefit Guaranty Corporation
• PBSD – Plan Benefits Security Division, SOL
• PHS – Public Health Service
• PRA – Paperwork Reduction Act
• PTE – Prohibited Transaction Exemption
• PWBA – Pension and Welfare Benefits Administration
• RD - Regional Director
• RFPA - Right to Financial Privacy Act
• RI - Report of Interview
• RO - Regional Office
• ROI - Report of Investigation
• RSOL - Regional Office of the Solicitor
• SBREFA – Small Business Regulatory Enforcement Fairness Act
• SEC – Securities and Exchange Commission
• Secretary - Secretary of Labor
• SOL - Office of the Solicitor
• SPD – Summary Plan Description
• SSN – Social Security Number
• TE/GE – Tax Exempt and Government Entities, IRS
• USAO - U.S. Attorney's Office
• UCC – Uniform Commercial Code
• UST – U.S. Trustee’s Office
• VC – Voluntary Compliance
• VFCP – Voluntary Fiduciary Correction Program
• WHCRA – Women’s Health and Cancer Rights Act

1. Statutory Authority. The investigative authority given to the Secretary of Labor (Secretary) under ERISA is in Section 504 and Section 506 (as amended by the Comprehensive Crime Control Act of 1984) and relates to all investigations undertaken pursuant to Title I of the Act.

2. Interpretation of Section 504. Section 504(a) gives investigative authority to the Secretary to determine whether any person has violated Title I of ERISA or any related regulations or orders. This authority extends to investigations of actual or potential violations of Title I.

3. Interpretation of Section 506. Section 506(b), as amended by the Comprehensive Crime Control Act of 1984, gives the Secretary the authority to investigate criminal violations under Title 18 of the USC as they relate to employee benefit plans. Specifically, the Secretary has jurisdiction to investigate potential criminal violations of Sections 664, 1027, 1954, 669, 1035, 1347, and 1518 of Title 18. However, the Secretary continues to observe certain limitations on the exercise of this authority under an agreement with the DOJ. See paragraph 6 below.

4. Making Information Available to Affected Person. Section 504(a) provides that the Secretary may make information available to any person actually affected by any matter that is the subject of an investigation. Generally, such persons will include plan fiduciaries, participants, beneficiaries, or their representatives. In appropriate cases, others may also be included.

   Section 504(a) does not permit disclosure of information specifically prohibited by another statute, such as grand jury information subject to Rule 6(e) of the Federal Rules of Criminal Procedure or tax information subject to Section 6103 of the Internal Revenue Code. (See the Enforcement Manual section on the Release of Information, for discussion of restrictions on disclosure).

5. Delegation of Authority to Assistant Secretary for Employee Benefits Security Administration. Secretary's Order 1-87 dated April 13, 1987,⁽¹⁾ and Secretary's Order 1-2003⁽⁴⁾, dated February 3, 2003, delegated authority to the agency's Assistant Secretary to carry out programs and activities to be performed by the Secretary under the following laws (Figure 1):

   1. ERISA, as amended, except for subtitle C of Title III, and Title IV;⁽²⁾

   2. The Welfare and Pension Plans Disclosure Act of 1958, as amended;⁽³⁾ and

   3. The Federal Employees' Retirement System Act of 1986.

6. Investigation of Criminal Matters Related to ERISA.

   1. On February 9, 1975, the Department and the DOJ executed a Memorandum of Understanding (MOU) that provided for a specific case-by-case delegation from the DOJ regarding investigations of criminal matters relating to employee benefit plans (Figure 2). With the passage of the Comprehensive Crime Control Act of 1984, the Department has express statutory authority to investigate criminal matters relating to employee benefit plans.

      The Department is no longer required to obtain delegation on a case-by-case basis; however, EBSA Investigators/Auditors will contact the appropriate United States Attorney's Office (USAO) as early as possible in the investigation to determine interest by the USAO. (See the Enforcement Manual section on the Criminal Investigations Program for EBSA policy concerning criminal investigations involving employee benefit plans.)

   2. The Secretary will investigate matters that may form the basis for possible criminal action under Section 501 of ERISA, codified at 29 USC 1131 based on either the receipt of a complaint of an alleged violation or on his/her own volition. These matters include reporting and disclosure provisions under part 1 of Title I and any regulations issued thereunder.

7. Parallel Civil and Criminal Investigations. Occasionally, EBSA personnel may request to terminate or postpone a civil ERISA investigation pending completion of another government agency's investigation of a parallel criminal matter. Procedures for handling such requests are set forth in the Enforcement Manual section on the Criminal Investigations Program.

8. Section 411(a) Exemption Proceedings. Pursuant to the MOU between the Department and the DOJ, the investigation and presentation of issues concerning the appropriateness of a grant of a Certificate of Exemption under Section 411(a) to a person by a federal court will be the responsibility of the Department, including appearances before the court. (See the Enforcement Manual section on Prohibited Persons.)

9. Investigations under Title IV of ERISA. The statute does not give the Secretary authority to investigate under Title IV of the Act. Under Section 4003(d), the Pension Benefit Guaranty Corporation (PBGC) may make agreements with the Secretary to help carry out the provisions of Title IV.

10. Health Oversight Authority. The HIPAA (Health Insurance Portability and Accountability Act of 1996) privacy regulations, collectively known as the “Privacy Rule,” set forth several “permitted uses”, “disclosures” or “standards” which allow covered entities to disclose Protected Health Information without patient authorization. The Privacy Rule's “health oversight” standard enables EBSA to obtain Protected Health Information from plans, their service providers, and physicians as is necessary to ensure compliance with ERISA. EBSA is a health oversight agency.

11. Litigation Responsibility for Civil Cases. An MOU entered into on February 11, 1975, between the DOJ and the Department established litigation responsibility under ERISA (Figure 3). Pursuant to the agreement, the Office of the Solicitor of Labor has primary litigation responsibility for civil cases, arising in the district courts and courts of appeals, under ERISA. There are certain exceptions that are set out in the MOU.

12. Prosecution of Criminal Matters. The MOU between the Department and the DOJ provides that DOJ will prosecute (Figure 2) all cases involving ERISA criminal provisions.

13. Agreements with Other Government Agencies. EBSA, in addition to having agreements with the DOJ, has agreements with various government agencies, including, but not limited to the following:

    1. Internal Revenue Service (see Enforcement Manual section on Relationship with IRS);

    2. Departments of Treasury and Health and Human Services (see Enforcement Manual section on Relationship with IRS);

    3. Office of the Inspector General, Office of Labor Racketeering (see Enforcement Manual section on Relationship with OIG/Office of Labor Racketeering);

    4. Federal Financial Institution Regulatory Agencies (Federal Reserve System, Federal Deposit Insurance Corporation; National Credit Union Administration, and the Office of the Comptroller of the Currency) (see Enforcement Manual section on Relationship with Federal Financial Agencies and other Regulatory Agencies);

    5. Securities and Exchange Commission (see Enforcement Manual section on Relationship with Federal Financial Agencies and other Regulatory Agencies);

    6. State Insurance Agencies;

    7. State Attorneys General; and

    8. National Association of Insurance Commissioners.

¹ The Secretary of Labor can delegate this authority to the Assistant Secretary of Labor for Employee Benefits and Security.

(Figure 1)
Secretary's Order 01-2003

Subject: Delegation of Authority and Assignment of Responsibilities to the Employee Benefits Security Administration

1. Purpose. To delegate authority and assign responsibilities for the administration of the Department of Labor's responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA), the Welfare Pension Plans Disclosure Act (WPPDA) and the Federal Employees' Retirement System Act of 1986 (FERSA), and to change the name of the office of the Assistant Secretary for Pension and Welfare Benefits and the Pension and Welfare Benefits Administration (PWBA).

2. Authority and Directives Affected. This Order is issued pursuant to 5 U.S.C. 301; 29 U.S.C. 551, et seq.; and 5 U.S.C. 5315. This order supersedes the Secretary's Order 1-87, 52 Fed. Reg. 13139 (Apr. 21, 1987), and the memoranda to Meredith Miller, on Oct. 28, 1998, 63 Fed. Reg. 59339 (Nov. 3, 1998), and on December 16, 1998, 63 Fed. Reg. 71506 (Dec. 28, 1998).

3. Background. ERISA places responsibility in the Department of Labor for the administration of a comprehensive program to protect the interests of participants and beneficiaries of private sector employee benefit plans. Secretary's Order 1-87 delegated authority for this program to the Pension and Welfare Benefits Administration (PWBA), which was headed by the Assistant Secretary for Pension and Welfare Benefits who reported to the Secretary of Labor.

   FERSA requires the Department of Labor to, among other things, administer and enforce the fiduciary responsibility, prohibited transaction, and bonding provisions of FERSA. Secretary's Order 1-87 also delegated these responsibilities to PWBA.

   In more recent years, statutes such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, the Women's Health and Cancer Rights Act of 1998, and the Child Support Performance and Incentive Act of 1998 amended ERISA. Pursuant to Secretary's Order 1-87, PWBA has carried out the Department's additional responsibilities under these Acts.

   Changing the agency's name to the Employee Benefits Security Administration (EBSA) will more clearly communicate the agency's mission of protecting private sector employee benefits. Restating the delegations contained in Secretary's Order 1-87, and including an additional delegation regarding claims of governmental privileges, previously published separately, will provide a single source for questions regarding the Assistant Secretary's current authority and responsibility.

4. Re-Designation of the Assistant Secretary for Pension and Welfare Benefits and the Pension and Welfare Benefits Administration.

   1. The title and position of the Assistant Secretary for Pension and Welfare Benefits is re-designated Assistant Secretary for Employee Benefits Security. The Office of the Assistant Secretary for Pension and Welfare Benefits is re-designated the Office of the Assistant Secretary for Employee Benefits Security, and

   2. The Pension and Welfare Benefits Administration is re-designated as the Employee Benefits Security Administration.

   3. All offices, subdivisions and positions within the Department of Labor deriving their names in whole, or in part, from the Office of the Assistant Secretary for Pension and Welfare Benefits or the Pension and Welfare Benefits Administration shall accomplish an appropriate change of name pursuant to this order.

   4. All employees of the Office of Assistant Secretary for Pension and Welfare Benefits and the Pension and Welfare Benefits Administration are re-designated employees of the Office of the Assistant Secretary for Employee Benefits Security Administration, respectively.

   5. All programs, activities, functions, and responsibilities delegated to the Office of the Assistant Secretary for Pension and Welfare Benefits or the Pension and Welfare Benefits Administration are re-designated programs, activities, functions and responsibilities of the Office of the Assistant Secretary for Employee Benefits Security or the Employee Benefits Security Administration, respectively.

   6. All currently effective delegations made by the Assistant Secretary for Pension and Welfare Benefits to employees of the Pension and Welfare Benefits Administration are deemed delegations by the Assistant Secretary for Employee Benefits Security to employees of the Employee Benefits Security Administration.

   7. Other agencies within the Department of Labor shall make any appropriate re-designation in conformity with the spirit and purpose of this order.

5. Delegation of Authority and Assignment of Responsibilities

   1. Except as hereinafter provided, the Assistant Secretary for Employee Benefits Security is delegated the authority (including the authority to re-delegate) and assigned the responsibilities of the Secretary of Labor:

      1. under the following statutes, including any amendments:

         1. The Employee Retirement Income Security Act of 1974, as amended, except for subtitle C of Title III and Title IV (29 U.S.C. §§ 1001-1232);

         2. the Welfare and Pension Disclosure Act of 1958, as amended Pub. L. 85-836, 72 Stat. 997; Pub. L. 86-624, 74 Stat. 417; Pub. L. 87-420, 76 Stat. 35;

         3. The Federal Employees' Retirement System Act of 1986 (5 U.S.C. §§ 8401-8479); and

         4. as directed by the Secretary, such additional Federal acts similar to or related to those listed in paragraphs (i) through (iii), above, that from time to time may assign additional authority or responsibilities to the Secretary.

      2. to request information the Internal Revenue (IRS) possesses for use in connection with the administration of Title I of ERISA of 1974.

      3. to invoke all appropriate governmental privileges, arising from the functions of the Employee Benefits Security Administration, following his/her personal consideration of the matter and in accordance with the following guidelines:

         1. Generally Applicable Guidelines. The Assistant Secretary may not re-delegate the authority to invoke a privilege. The privilege may be asserted only with respect to specifically described information and only where the Assistant Secretary determines the privilege is applicable. In asserting a privilege, the Assistant Secretary shall articulate in writing the specific reasons for preserving the confidentiality of the information.

         2. Informant's Privilege (to protect from disclosure the identity of any person who has provided information to the Employee Benefits Security Administration in cases arising under the statutory provisions listed in 5.a.(1) of this order that are delegated or assigned to the Employee Benefits Security Administration). To assert this privilege, the Assistant Secretary must first determine that disclosure of the privileged matter may: (A) interfere with the Employee Benefits Security Administration's enforcement of a particular statute for which it exercises investigative or enforcement authority; (B) adversely affect persons who have provided information to the Employee Benefits Security Administration; or (C) deter other persons from reporting violations of the statute.

         3. Deliberative Process Privilege (to withhold information which may disclose pre-decisional intra-agency or inter-agency deliberations in cases arising under the statutory provisions listed in paragraph 5.a.(1) of this order including: the analysis and evaluation of facts; written summaries of factual evidence; and recommendations, opinions, or advice on legal or policy matters.) To assert this privilege, the Assistant Secretary must first determine that: (A) the information is not purely factual and does not concern recommendations that the department expressly adopted or incorporated by reference in its ultimate decision; (B) the information was generated prior to and in contemplation of a decision by a part of the Department; and (C) disclosure of the information would have an inhibiting effect on the Department's decision-making process.

         4. Privilege for Investigative Files compiled for law enforcement purposes (to withhold information which may reveal the Employee Benefits Security Administration's confidential investigative techniques and procedures). To assert this privilege, the Assistant Secretary must first determine that disclosure of the privileged matter may have an adverse impact upon the Employee Benefits Security Administration's enforcement of the statutory provisions listed in paragraph 5.a.(1) of this order, by: (A) disclosing investigative techniques and methodologies; (B) deterring persons from providing information to the Employee Benefits Security Administration; (C) prematurely revealing the facts of the Department's case; or (D) disclosing the identities of person who have provided confidential information under an express or implied promise of confidentiality.

         5. Prior to filing a formal claim of privilege, the Assistant Secretary shall personally review the information sought to be withheld, including all documents sought to be withheld (or, in cases where the volume of information is so large all of it cannot be personally reviewed in a reasonable time, an adequate and representative sample of such information) and a description or summary of the litigation in which the disclosure is sought.

         6. The Assistant Secretary may comply with any additional requirements imposed by local court rules or precedent in asserting a governmental privilege.

         7. In asserting a governmental privilege, the Assistant Secretary may ask the Solicitor of Labor or the Solicitor's representative to prepare and file any necessary legal papers or documents.

   2. The Solicitor of Labor is responsible for providing legal advice and assistance to all officials of the Department relating to the administration of the statutes listed in paragraphs 5.a.(1) of this order, for bringing appropriate legal actions on behalf of the Secretary, and representing the Secretary in all civil proceedings. The Solicitor of Labor is also authorized to request information the IRS possesses for use in connection with the administration of Title I of ERISA.

   3. The Inspector General is authorized to request information the IRS possesses for use in connection with the administration of Title I of ERISA.

6. Reservation of Authority

   1. The submission of reports and recommendations to the President and the Congress concerning the administration of the statutes listed in paragraph 5.a.(1) of this order and responsibilities under Subtitle C of Title III of ERISA are reserved to the Secretary. The Pension Benefit Guaranty Corporation carries out responsibilities under Title IV of ERISA.

   2. This Secretary's Order does not affect the authorities and responsibilities of the Office of Inspector General under the Inspector General Act of 1978, as amended, or under Secretary's Order 2-90 (January 31, 1990)

7. Effective Date. This order is effective upon date of publication in the Federal Register.

(Figure 2)
Memorandum Of Understanding

Memorandum of Understanding Between the Departments of Justice and Labor Relating to the Investigation and Prosecution of Crimes and Related Matters under Title I of the Employee Retirement Income Security Act of 1974

It is hereby agreed and understood between the Department of Justice and the Department of Labor as follows:

Whereas Title I of the Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829, 29 U.S.C. 1001, hereinafter referred to as "the Act") imposes certain duties and responsibilities upon the Attorney General and the Secretary of Labor with regard to prosecution of crimes and related matters arising under the Act; and

Whereas, section 504 of the Act imposes upon the Secretary of Labor the responsibility for conducting investigations of persons who have violated or are about to violate any provision of Title I of the Act or any regulation issued thereunder; and

Whereas, section 506 of the Act provides that the Secretary of Labor may make interagency agreements to avoid unnecessary expense and duplication of functions among government agencies and ensure cooperation and mutual assistance in the performance of his functions under the Act; and

Whereas, section 506 of the Act provides that the Attorney General or his representative shall receive from the Secretary of Labor for appropriate action such information developed in the performance of the Secretary's functions under Title I of the Act as may be found to warrant consideration for criminal prosecution; and

Whereas, it is desirable and essential that the areas of responsibility and the procedure to be used in investigations and prosecutions of offenses arising under the Act should be the subject of a formal agreement between the Departments;

1. Criminal Prosecution

   All cases involving violation of criminal provisions of the Act will be prosecuted by the Department of Justice. Those cases investigated by the Department of Labor which may warrant criminal prosecution will be referred to the Management and Labor Section, Criminal Division, Department of Justice.

2. Investigations of Matters made Criminal by the Act

   Subject to specific arrangements agreed upon by the two Departments on a case-by-case basis, investigations of criminal matters under the Act will be conducted as follows:

   1. The Department of Justice will investigate all matters arising under 18 U.S.C. 664 (theft or embezzlement from employee benefit plan), 1027 (false statements and concealment of facts in relation to documents required by the Act) and 1954 (offer, acceptance, or solicitation to influence operations of employee benefit plans).

   2. The Secretary of Labor will either on complaint of a violation or on his own motion investigate through his own staff all matters that may form the basis for possible criminal action under section 501 of the Act. These matters include reporting and disclosure provisions under Part I of Title I of the Act and any regulations issued thereunder.

   3. The Department of Justice will under delegation from the Secretary of Labor investigate those criminal matters arising under:

      1. Section 411 of the Act (prohibition against certain persons being a consultant to, employed by, or holding office in an employee benefit plan and against allowing such persons to act as a consultant to, be employed by, or hold office in an employee benefit plan).

      2. Section 511 of the Act (interference with the rights of a participant or beneficiary by fraud or coercion).

3. Parole Board Proceedings

   The investigation and presentation of issues concerning the appropriateness of a grant of a certificate under Section 411(a) of the Act to a person by the Board of Parole of the Department of Justice will be the responsibility of the Department of Labor, including appearances before the Board of Parole.

4. Instructions

   So that the terms of this Memorandum of Understanding will be effectively performed, both Departments will issue instructions for the guidance of their officers and employees in the matters referred to in the preceding paragraphs, such instructions to be submitted for comment to the other Department prior to their issuance.

5. Adjustments

   Periodic reviews of this agreement will be made to determine whether any adjustments are desirable in light of experience under the Act.

(Figure 3)
United States Department Of Justice
United States Department Of Labor
Memorandum Of Understanding

Whereas, the Employee Retirement Income Security Act of 1974 (P.L. 93-406; 88 Stat. 829), the Occupational Safety and Health Act of 1970 (P.L. 91-596; 84 Stat, 1590), and the Farm Labor Contractor Registration Act Amendments of 1974 (P.L. 93-518; 88 Stat. 1652), each provide that except for litigation in the Supreme Court of the United States and the United States Court of Claims, attorneys appointed by the Secretary of Labor may represent the Secretary in civil actions, subject to the direction and control of the Attorney General;

Whereas, this memorandum has been entered into in accordance with the legislative history of the aforementioned provisions; and

Whereas, satisfactory cooperative relationships exist between the Civil Division of the Department of Justice and the Department of Labor with respect to the conduct of litigation under other statutes administered by the Department of Labor;

Now, therefore, the following memorandum of understanding is entered into between the Attorney General of the United States and the Secretary of Labor for the purposes of promoting the efficient and effective handling of government litigation concerning these statutes.

1. It is the intention of the Attorney General to delegate primary litigative responsibility for the preparation and presentation of most civil cases arising in the district court and courts of appeal under the Occupational Safety and Health Act of 1970, the Employee Retirement Income Security Act of 1974, and the Farm Labor Contractor Registration Act of 1974, to attorneys appointed by the Secretary of Labor. The delegation of primary litigative responsibility shall, in the normal course, include the preparation and filing of all papers, the conduct of trials and the presentation of oral arguments. These activities shall be performed with the cooperation and assistance of the United States Attorneys and the Civil Division of the Department of Justice and be subject to the direction and control of the Attorney General.

2. There will be, however, a limited number of cases in which primary litigative responsibility may be retained in the Civil Division of the Department of Justice.

   The criteria for retention of primary litigative responsibility are:

   1. Cases raising significant issues concerning the validity or construction of statutes or important governmental regulatory schemes;

   2. Cases having a significant impact on, or which can be expected to have a significant impact on, the government as a whole, or on agencies, or programs of agencies, other than the Department of Labor.

3. To facilitate determinations by the Assistant Attorney General for the Civil Division as to the delegation of primary litigative responsibility, the Department of Labor shall, as to any case subject to this memorandum, provide the Civil Division with:

   1. A copy of any claim, complaint or petition for review proposed to be filed by the Department of Labor;

   2. A copy of any complaint, responsive pleading or petition for review filed by a party to litigation other than the Department of Labor, whenever such pleading has not otherwise been served on the Attorney General;

   3. Immediate notice should a case, the primary responsibility for which has been delegated to the Department of Labor, come within the criteria of paragraph 2, supra, during the course of the proceedings in that case;

   4. A memorandum proposing an appeal be taken from a district court from a decision adverse to the government; and

   5. A memorandum describing any case in which a district court decision favorable to the government has been appealed by another party to the litigation.

   The Department of Labor shall provide the Civil Division with all of the material necessary for a determination as to the delegation of primary litigative responsibility within a reasonable time. The Assistant Attorney General for the Civil Division shall make the determination within 20 days time of receipt of the above material or within such reasonable time as the exigencies of the situation demand.

4. In each instance where the Civil Division determines to retain primary litigative responsibility for the handling of litigation under the criteria set forth in paragraph 2, supra, it shall be the responsibility of the Assistant Attorney General for the Civil Division to set forth in writing in a communication to the Solicitor of Labor the basis for the retention of primary responsibility and the reasons therefore. If the Solicitor of Labor disagrees with any such determination, he shall present his views to the Deputy Attorney General who shall have final authority to resolve the matter.

5. In the conduct of any litigation subject to this agreement, regardless of where primary litigative responsibility is reposed, Department of Justice and Department of Labor attorneys will cooperate and collaborate in the preparation and representation of such actions and the Attorney General will retain the final authority to determine, where appropriate, the government's litigating position.

6. This memorandum is intended to provide a general description of the delegation of litigation responsibility. Decisions regarding the implementation of this agreement, including the development of special procedures for the handling of cases in which circumstances require the immediate filing of a pleading, are to be made by the Solicitor of Labor and the Assistant Attorney General for the Civil Division.

7. Nothing in this agreement shall affect any authority of the Department of Labor to take action under the statutes subject to this agreement, other than the instituting or conducting of litigation in court under such statutes.

8. Nothing in this agreement shall affect any authority of the Solicitor General to authorize or decline to authorize appeals by the government from any district court to any appellate court or petitions to such courts for the issuance of extraordinary writs, such as the authority conferred by 28 C.F.R. 0.20(b).

9. In order effectively to implement the terms of this Memorandum, each Department will issue to all personnel affected by its provisions a copy of this Memorandum. This Memorandum shall not preclude both Departments from entering into mutually satisfactory arrangements concerning the handling of a particular case.

10. This agreement shall apply to all cases filed on or after the date of approval of this agreement by the Department of Justice and the Department of Labor.

With respect to cases arising before the effective date of this agreement, the Departments of Justice and Labor shall enter into mutually satisfactory arrangements for the transfer of litigation responsibility in individual cases, consistent with the purposes of this agreement and where such transfer will not be prejudicial to the handling of such cases.

Footnotes

1. This Order superseded Secretary's Order 1-86 dated January 16, 1986 that transferred the delegated authority and assigned responsibilities for the administration of ERISA from the Office of Pension Welfare Benefit Programs to the Pension and Welfare Benefits Administration.
2. Regional Directors have received re-delegated authority and assigned responsibility for ERISA enforcement activities, including authority to sign and issue certain subpoenas, among other powers. Regional Directors have discretion to further delegate certain signatory responsibility to selected staff. See Subpoenas section.
3. This authority has been redelegated to the Deputy Assistant Secretary for Program Operations and the Director of Enforcement.
4. Secretary's Order 01-2003 superseded Secretary's Order 1-87. 68 Fed. Reg. 5373 (Feb. 3, 2003).

1. Purpose. To provide guidance on implementing agreements between the Department and the IRS for coordinating investigations of employee benefit plans. (Figure 1)

2. IRS Background.

   1. Divisions. The IRS has four operating divisions: Wage and Investment, Small Business/Self-Employed, Large Business and International, and Tax Exempt and Government Entities (TE/GE). The Department coordinates primarily with the IRS TE/GE division, which services employee plans, tax-exempt organizations, and government entities.

   2. Employee Plans (EP). The Department works closest with the EP segment of the TE/GE division. The EP segment serves retirement plans, IRAs, related trusts, plan participants, beneficiaries, and employer sponsors of retirement plans. The EP segment has following departments: Determinations, Voluntary Compliance, Examinations, and Customer Account Services.

   3. EP Offices. The EP segment covers five geographic examination areas based on customer locations, workforce size, and employee locations. EP Examinations and the geographic examination areas:

      Geographic Areas

      Office	Location	Jurisdiction
      Northeast	Hartford, CT	Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont
      Great Lakes	Chicago, IL	Minnesota, Nebraska, North Dakota, South Dakota, Wisconsin, Illinois, Indiana, Iowa, Kentucky, Michigan
      Gulf Coast	Nashville, TN	Alabama, Arkansas, Florida, Georgia, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee, Texas
      Mid-Atlantic	Philadelphia, PA	Delaware, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, West Virginia, Washington, D.C.
      Pacific Coast	Denver, CO	Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Oregon, Nevada, New Mexico, Utah, Washington, Wyoming

   4. EP Contact Information. Employee Plan Customer Service⁽¹⁾:

      Internal Revenue Service
      Attn: EP Customer Service Manager
      P.O. Box 2508
      Cincinnati, OH 45201
      (P) 877-829-5500

3. Minimum Standards Scope.

   Responsibility. The Department and the IRS both have responsibilities for benefit plans based on ERISA Title I part 2 (participation, vesting, and benefit accrual for retirement plans) and part 3 (funding defined benefit pension plans, money purchase pension plans and target benefit plans). Department Investigator/Auditors must determine if the benefit plan is subject to parts 2 and 3. If so, it may be possible to work with the IRS. Section 22 below provides information on referrals between the agencies. If an investigator believes a violation of Title I part 2 or part 3 may also violate part 4, the region should consult with OE prior to making a final determination.

4. Benefit Plans Not Covered by Parts 2 and 3. The following types of plans are not covered:

   1. Welfare Plans. There are no minimum standards under Parts 2 and 3 for welfare plans. Rather, welfare plans are subject to Parts 1 (disclosure), 4 (fiduciary responsibility), and 5 (enforcement provision) under ERISA.

   2. Retirement Plans in Sections 201 and 301. Certain types of retirement plans, such as excess benefit plans or unfunded deferred compensation plans for management or highly compensated employees, are excluded from coverage under Parts 2 and 3.

5. Fiduciary Duties and Minimum Standards. Parts 2 and 3 establish minimum standards for participation, vesting, benefit accrual, and funding for retirement plans. These parts do not address a fiduciary’s individual responsibilities to a plan, such as prudence and care. However, if a plan does not adhere to the minimum standards, there is a corresponding fiduciary duty under Section 404 to bring the plan into compliance.

6. Pension Plan Definitions. Under ERISA Title I, the terms “employee pension benefit plan” and “pension plan” refer to all retirement plans within the definition in Section 3(2). However, under the Code, the term “pension plan” refers only to defined benefit, money purchase and target benefit plans. The Code uses terms such as “profit sharing plans” and “savings and thrift plans” to refer to other types of retirement plans that would be called a “pension plan” under Title I.

7. Qualified Plans. Under the Code, certain types of retirement plans may qualify for favorable tax treatment if they meet requirements described in Section 401(a) of the Code. The requirements under the Code are substantially the same as the standards under ERISA Parts 2 and 3. ERISA applies to both qualified and non-qualified retirement plans.

8. Jurisdiction. Because most retirement plans are qualified plans under the Code, the IRS has primary authority for administering the minimum standards provisions of ERISA.

   1. Tax Qualification. If the IRS determines that a plan meets the requirements for tax qualification, the Department is required under ERISA Section 3001(d) to accept that as prima facie evidence of the plan's initial compliance with Parts 2 and 3.

   2. Participation and Vesting. The Department should generally refer to the Secretary of the Treasury alleged violations of participation and vesting standards in a qualified plan. Since the IRS is the agency within the Treasury Department that is responsible for the administration of the Code, including the provisions dealing with qualified plans, the Department should refer to IRS most complaints concerning the minimum standards provisions. If an investigator believes a violation of Title I part 2 or part 3 may also violate part 4, the region should consult with OE prior to making a final determination.

   3. Interpretive Authority. The Department has interpretive authority for plans where violations of Parts 2 and 3 are alleged and the plan is not qualified under the Code. The Department should refer these matters to the IRS through OE.

   4. Multiple Employer Plans. The Department also has authority regarding special rules for multiple employer plans.

9. Participation. ERISA Section 202 establishes the minimum standards related to age and length of service for participation in a retirement plan. However, a plan may impose additional eligibility conditions, such as salaried employees only, hourly employees only, or members of a specific bargaining unit.

10. Vesting. ERISA Section 203 establishes minimum vesting standards for employer contributions. This means that a plan can only require an employee to work for a certain time before the employer contributions vest. A plan must adhere to one of two vesting schedules outlined in Section 203(a)(2).⁽²⁾

    If an employee contributes to the plan, then those contributions are vested immediately (i.e., as soon as the contributions are made). Section 204(c) provides rules for separating the benefits derived from employee contributions and those derived from employer contributions.

11. Suspension of Benefits. Under Section 203, benefit payments under specific circumstances may be suspended. For example, benefits may be suspended when a retired employee comes back to work for the same employer who maintains the plan.⁽³⁾ See 29 C.F.R. 2530.203 3 for interpretive guidance in this area.⁽⁴⁾

12. Benefit Accrual. A defined benefit pension plan must meet one of three tests to ensure that benefits accrue at a relatively uniform rate over a participant's career.⁽⁵⁾ In general, these tests:

    1. Specify the accrued benefit with which an employee must be credited;

    2. Prohibit retroactive reductions in participants' accrued benefits; and

    3. Require a separate accounting for each participant's accrued benefit under an individual account plan. There must be separate accounting for the portion of each participant's voluntary employee contributions.

13. Early Retirement Benefits. A defined benefit plan may provide an early retirement benefit⁽⁶⁾ that does not vest in accordance with the benefit accrual requirements above. However, the plan must also provide for a normal retirement benefit that meet the statutory standards. The normal retirement cannot be less than the early retirement benefit.

14. Commencement of Benefits. Unless a participant otherwise elects, a pension plan must start paying benefits within 60 days after the close of the plan year in which the following conditions have all been met:

    1. When the participant reaches age 65;

    2. By the 10th anniversary of his/her participation in the plan; or

    3. By the date of the participant's termination of service.

15. Assignment of Benefits. ERISA Section 206(d) does not allow the assignment or alienation of pension plan benefits. Exceptions include:

    1. Voluntary assignments that do not exceed 10 percent of a benefit payment;

    2. Most irrevocable assignments executed before ERISA was enacted; or⁽⁷⁾

    3. A loan made by a plan to a participant under ERISA Section 408(b)(1).

16. Joint and Survivor Annuity. Joint and survivor annuity benefits apply to all plans except certain defined contribution plans in limited circumstances. If a vested participant passes away before the annuity starting date and has a surviving spouse, then that spouse is eligible for a qualified pre-retirement survivor annuity.

17. Recordkeeping and Reporting. ERISA Section 209⁽⁸⁾ generally requires employers to maintain records necessary to determine benefits. It also requires pension plan administrators to provide individual benefit reports to participants under certain circumstances.

18. Special Rules for Plans Maintained by more than one Employer. ERISA Section 210 provides rules for services considered for purposes of participation, benefit accrual, and vesting in the case of plans maintained by more than employer, including both multiemployer and multiple employer plans. Under this Section and the Department's regulations, all of an employee's service in a job classification covered by a multiple employer plan and all "contiguous non covered service" must be included.⁽⁹⁾

19. Failure of Employer to Make Required Contributions to a Plan Maintained by more than one Employer. A pension plan maintained by more than one employer must credit an employee for service towards benefit accrual (and eligibility for participation and vesting) even if the employer fails to make required contributions to the plan.

    Any Department referral to the IRS relating to violations of this nature should contain information regarding the plan's tax qualification status, including the dates of the plan's most recent submission of a determination request, and the IRS response, if any. The referral should also indicate whether there is express language in the plan's documents on the plan's denial of benefits.

20. Controlled Groups. ERISA Section 210 applies to plans maintained by a business entity that is under common control with one or more business entities. These plans must credit a participant’s service with any of the entities for eligibility and vesting purposes.⁽¹⁰⁾

21. Funding. ERISA Title I, Part 3 establishes minimum funding standards for defined benefit pension plans⁽¹¹⁾, money purchase pension plans, and target benefit plans.⁽¹²⁾

22. General Coordination of Examination Programs.

    1. The procedures established in the coordination agreement (Figure 1) apply to all civil examinations conducted by EBSA and the IRS. However, nothing in the agreement limits the agencies from agreeing to use special procedures, such as joint investigations, if appropriate.

    2. EBSA ROs will notify the IRS of the names of plans selected for civil investigation at the beginning of each week (for case opening activity for the prior week.

23. Examination Referral Program. The IRS and the Department checksheets determine whether issues in an examination/investigation by one agency should refer to the other. The check sheets are Checksheets A (Form 6212A) and B (Form 6212B). Each referring agency will complete the appropriate checksheet based on the information obtained through their investigation/examination, per the following procedure:

    1. Referral Checksheets. EBSA Investigators/Auditors will complete Checksheet A during their investigations. IRS examiners will complete Checksheet B during their examinations. Any checksheets with answers circled in the right column may be referred to the other agency. Agencies will include necessary information in the remarks section to support the referral.

    2. Transmittals. These exchanges occur between the EP Classification Unit in Baltimore and the EBSA RO that has jurisdiction over the plan under examination.

    3. IRS Address. When a referral is required, the initiating agency will send two copies of the checksheet to the EP Classification Unit in Baltimore and maintain a copy for its records. Referrals should be sent to:

       Internal Revenue Service
       ATTN: Manager, Employee Plans Classification
       31 Hopkins Plaza, Room 1550
       Baltimore, MD 21201

    The IRS EP Classification Unit will then forward the referral to the appropriate EBSA or IRS office. The agency receiving the form will retain one copy of the referral and will return a copy to the initiating agency.

    Referral Receipt. An agency receiving a referral may request additional information within 15 workdays from the date the referral. The request should not require an additional investigation or examination. EBSA requests for tax information must comply with Section 6103(l)(2) of the Internal Revenue Code. There is a form letter for that purpose (See Release of Information Figure 4).

24. EBSA Referrals to the IRS (Checksheet A).

    1. EBSA Investigators/Auditors must complete Checksheet A for retirement benefit civil investigations.

    2. If the case requires a referral to the IRS, EBSA will send Document Transmittal Form 217 along with the referral. The referral must be made by the earlier of:

       1. When the investigation is closed by the RO (but at least 20 days before the closing letter is issued), or;

       2. When there is a case referral to the RSOL or the Department National Office.

    3. The IRS will review any checksheet referred by EBSA and complete the "Action Taken" block. It will then return a copy to EBSA within 30 workdays of receiving the checksheet.

    4. If the IRS returns a copy of Checksheet A to EBSA indicating that it is not acting on the case, EBSA will continue its investigation according to its own existing procedures.

    5. If the IRS returns a copy of Checksheet A to EBSA indicating that it plans to take action, then the IRS will contact EBSA for any additional information that it needs. If EBSA requests that the IRS participate in the examination, then the agencies will coordinate their activities.

    6. If the IRS defers action in a case, then the EBSA RO will notify the Manager of EP Classification if EBSA makes any future referrals to RSOL or the Department National Office. If the RO makes such a referral, the IRS will defer further action.

    7. When EBSA refers a Checksheet A to the IRS involving issues other than prohibited transactions, the checksheet will include as an attachment only the Form 5500 series return.

    8. When EBSA refers a Checksheet A to the IRS that involves prohibited transactions of $20,000 or more, the following items must accompany the checksheet:

       1. Copies of Form 5500 series returns for all years in which a prohibited transaction was in effect;

       2. Available information about any taxpayer/disqualified persons, including particularly the EIN or SSN, address, educational level, and possible name changes;

       3. Copies of plan and trust documents, including restate¬ments and amendments (only if the IRS has not issued a determination letter on the plan and amendment). If the prohibited trans¬action is a loan to a plan participant, a copy of the plan loan provisions should be included;

       4. Copies of all EBSA correspondence related to the referred issue;

       5. Copy of the Report of Investigation (ROI) completed by the EBSA Investigator/Auditor and related work papers. The work papers should include financial statements of the trust and specific details of the prohibited transaction (including copies of sale or transfer documents, repayment documents, contracts, and agreements);

       6. A description of the current status of the prohibited transaction;

       7. EBSA draft closing letter or the voluntary compliance letter (if issued). The closing letter will advise the taxpayer:

          1. That a prohibited transaction has occurred;

          2. That the disqualified persons are required to file Form 5330, Return of Excise Tax Related to Employee Benefit Plans; and

          3. Where to seek assis¬tance in completing Form 5330.

       8. A description of the disqualified person's position regarding the prohibited transaction (if not contained in the ROI);

       9. Any other information that documents the reasons for the referral; and

       10. Any information EBSA has on the fiduciary/disqualified person's filing or intent to file for bankruptcy.

           1. When EBSA refers a Checksheet A to the IRS that involves prohibited transactions of less than $20,000, only a copy of EBSA’s closing letter or the voluntary compliance letter, and a copy of the ROI (without attachments) need to be included.

25. IRS referrals to EBSA (Checksheet B).

    1. IRS examiners must complete a Checksheet B as soon as possible in all IRS field examinations of retirement benefit plans. When an entry on a Checksheet B requires the referral of the checksheet to EBSA, the IRS will refer the checksheet to EBSA.

    2. Once EBSA receives a Checksheet B, it will complete the "Action Taken" block, and return a copy to the IRS within 30 workdays. EBSA should use the EBSA Form 217 to transmit the Checksheet B back to the IRS.

    3. If EBSA indicates in the “Action Taken” block that it is not going to pursue the matter, then the IRS will continue its examination according to its own existing procedures.

    4. If EBSA indicates that it will take action on the matter, EBSA will contact the IRS to coordinate the activities of the agencies.

    5. If the IRS refers a Checksheet B to EBSA with an entry indicating a violation of fiduciary standards or a prohibited transaction, then the referral is a notice to the Department under ERISA Section 3003(a).

    6. If the IRS refers a Checksheet B to EBSA indicating that a violation of the minimum funding requirements of Section 412 occurred, then the referral is a notice to the Department under ERISA Section 3002(b).

    7. If the IRS refers a Checksheet B to EBSA indicating that a fiduciary violation occurred and that the IRS is considering disqualifying the plan due to a violation of the exclusive benefit rule, the agencies will process the case according to Section 103 of Reorganization Plan No. 4 of 1978.

    8. If the IRS defers action in a case as a result of EBSA referring the matter to the Department National Office, the IRS will not take further action until the earlier of:

       1. The date when RO notifies the Manager of EP Classification of EBSA's final action in the case, or;

       2. The collection of a tax is in jeopardy, the imminent running of the statute of limitations, or protecting plan assets or the interests of participants.

26. IRS Appeals Office Procedures. When the IRS Appeals office receives cases that involve employee benefits, the following procedures will apply:

    1. The applicable Appeals Area Director will notify, in writing, the EBSA Regional Director that a case is in his or her office. When applicable, the written letter is the notice required under IRC Sections 4971(d) and 4975(h).

    2. The Appeals Area Director will not take final action to settle the case, concede any government issue, enter into a closing agreement, issue any notice of deficiency with respect to taxes under Sections 4971(a) and/or (b) or 4975 that are not in jeopardy, or proceed with any action to revoke the favorable determination or qualification letter of any plan prior to the earlier of:

       1. The date when the Appeals Area Director receives a response from EBSA; or

       2. 60 days after the date of the Appeals Area Director’s letter to EBSA.

    3. Within 60 days of receiving the letter from the Appeals Area Director, EBSA will reply in writing stating whether it will be taking any action on the referred case. If EBSA is taking action, then the Appeals Area Director will coordinate with EBSA before taking any action described above.

    4. If the IRS Appeals Area Director and the EBSA RD are unable to reach agreement as to how to proceed with the case, the matter goes to the IRS National Chief of Appeals to coordinate with the EBSA Director of Enforcement.

27. Litigation Notice.

    1. IRS Litigation.

       1. The IRS Division Counsel/Associate Chief Counsel (TE/GE) will forward to the Department Solicitor (Attention: Associate Solicitor, Plan Benefits Security Division), and the EBSA Director of Enforcement at the earliest possible date a copy of any complaint or other opening pleading in litigation concerning ERISA Title I to which the IRS, the Treasury, the United States or any official thereof is a party, either in the Tax Court, Claims Court or in district court. Additional information forwarded upon request.

       2. The IRS Division Counsel/Associate Chief Counsel (TE/GE) will notify the Department Solicitor at the earliest possible date when the IRS determines that it will seek to intervene in any action in which the Secretary of the Treasury is entitled to do so under ERISA Section 502(h).

       3. The IRS provides the initial pleadings submitted on behalf of the Secretary to the Associate Solicitor. Further information forwarded upon request.

    2. Department Litigation.

       1. The Solicitor of Labor will notify the IRS Division Chief/Associate Chief Counsel (TE/GE) and the Director of EP Examinations when Department litigation relating to employee benefit plans is warranted. The Department will provide copies of the proposed complaint (or other opening pleading and supporting documents) to the IRS Chief Counsel and to the Department of Justice for assignment of primary litigation responsibility.

       2. The Solicitor of Labor will forward to the IRS Division Counsel/Associate Chief Counsel (TE/GE) a copy of any pleading filed that names the Secretary of Labor as a defendant and relates to employee benefit plans. Further information forwarded upon request.

       3. The Solicitor of Labor will notify the IRS Division Counsel/Associate Chief Counsel (TE/GE) at the earliest possible date when the Department determines that it will seek to intervene in any action in which the Secretary of the Treasury is entitled to do so under ERISA Section 502(h).

       4. The Solicitor of Labor will submit the initial pleadings submitted on behalf of the Secretary to the Director of EP. Further information forwarded upon request.

28. Tracking/Feedback.

    1. Referral Reconciliation. EBSA ROs and the designated IRS contacts will reconcile their lists of pending referrals twice yearly.

    2. IRS Examinations. When the IRS closes an examination initiated by an EBSA referral, the IRS will forward a copy of Checksheet A, which indicates the proposed or assessed excise tax⁽¹³⁾. If the IRS will not propose or assess excise taxes, then it will enter the reasons in the “Remarks” Section of Checksheet A.

    3. Quarterly Meetings. At least once per quarter, IRS EP Examinations Headquarters and Department National Office personnel will meet to resolve any referrals where there is a dispute of an appropriate enforcement action. They will also resolve problems encountered by EBSA ROs and IRS EP Examinations in following the provisions of this Agreement.

    4. Annual Meeting. The IRS Director of EP Examinations (or representative) and the EBSA Director of Enforcement will meet each year in October to review work plan and initiatives for the fiscal year.

    5. Contact Lists. EP Examinations and EBSA will update their Local Contact List at least once a year.

29. Requesting Information from IRS.

    1. Disclosure Restrictions. In general, there is a prohibition of IRS from disclosing any tax information to anyone outside IRS. However, IRC Section 6103(l)(2) allows the IRS to furnish information (including tax return information) to the Department and PBGC to enforce Titles I and IV of ERISA.

    2. Making Information Requests. During an investigation, the RO can request information from the IRS if the RO believes the information will help EBSA carry out the provisions of Title I (See Release of Information Figure 4). Requests for IRC 6103(l)(2) information should be electrically transmitted to the IRS through the Secure Data Transfer tool in place between the Department and IRS.

    3. IRC Section 6104 Information. The RO should not request IRC Section 6103(l)(2) information that is already authorized to be disclosed under IRC Section 6104.

       IRC Section 6104 provides that any application for tax-qualified status, tax-exempt status, or papers submitted in support of any such applications is open for public inspection.⁽¹⁴⁾ However, if a plan has 25 or fewer participants, this right of public inspection is open only to a plan participant. Section IRC Section 6104 specifies places and times for public inspection. Materials or documents regarding an individual's compensation are not open to public inspection.

    4. Securing IRS Materials. Each Department Investigator/Auditor should know the proper procedures for securing IRS information. Unauthorized inspection and disclosure of information may subject the individual to penalties under IRC Sections 7213 and 7213A.⁽¹⁵⁾

30. Examinations Pursuant to HIPAA.

    1. Titles I and IV of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) amended the Code, ERISA, and the Public Health Service Act to improve access, portability, and continuity of health insurance coverage in the group and individual markets.

    2. Per HIPAA Section 104, the Secretary of Treasury, the Secretary of Labor, and the Secretary of Health and Human Services entered into an Interim Memorandum of Understanding in December 1999 (Figure 3) to coordinate the enforcement of the shared provisions under HIPAA. Under this MOU, the three agencies work together to avoid enforcement duplication and to assign priorities.

    3. The terms of the Interim MOU also apply to interpretations and enforcement of the Newborns’ and Mothers’ Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Woman’s Health and Cancer Rights Act of 1998.

31. Voluntary Fiduciary Correction Programs. Both the Department and IRS maintain separate voluntary programs to encourage voluntary compliance by self-correcting violations of the law. See the Voluntary Fiduciary Correction Program for information on EBSA’s program.

(Figure 1)
Memorandum Of Understanding
Internal Revenue Service/Department of Labor Coordination Agreement

In order for the IRS and DOL to fulfill the mandates of the Employee Retirement Income Security Act of 1974 (ERISA) Sections 3003 and 3004 and in accordance with ERISA Section 506, the IRS and DOL have executed the Internal Revenue Service/Department of Labor Coordination Agreement (Agreement).

The attached Agreement reflects changes resulting from the Modernization of the IRS, the change in name of the Department of Labor's benefit plan regulatory agency from the Pension and Welfare Benefits Administration (PWBA) to the Employee Benefits Security Administration (EBSA), and other revisions identified from the agencies' experiences under the prior Agreements.

Although an essential component of the Agreement is timely coordination and emphasis on the need to eliminate duplicative investigative efforts, the agencies recognize there may be situations that require both agencies to become involved. The IRS and DOL agree to identify past situations where both agencies have had an examination/investigation on the same subject and to determine when it may be beneficial for the agencies and the public for examinations/investigations to be conducted jointly.

In reviewing the Agencies' experiences under the prior Agreements, it was determined that both agencies are devoting resources to the coordination of welfare plan investigations that appear to be unnecessary. In that regard, case opening notification (EBSA Form 205) and referral checksheet completion (IRS Form 6212-C) for welfare plans have been eliminated. DOL can make referrals to the IRS for tax matters outside EP jurisdiction in the form of a letter.

DOL will continue to refer Checksheet A to IRS (Form 6212-A) to IRS for pension benefit plans in accordance with the requirements of Article II, D., of the Agreement. IRS will continue to make referrals to DOL on Checksheet B (Form 6212-B) in accordance with the requirements of Article II, C. of the Agreement. Both forms have been revised. See Appendices B and C.

Under the Modernization of the IRS, Employee Plans and Exempt Organizations are separate units under the Tax Exempt/Government Entities Operating Division. The Employee Plans Examinations Headquarters is located in Baltimore. The Director, EP Examinations,

supervises six Area Managers located around the country and the Manager of EP Examinations, Programs and Review. The IRS Key District concept was eliminated. Referrals made by EBSA personnel are now made to the IRS through the Manager, EP Examinations Classification in Baltimore.

In accordance with Article V.C of the Agreement, representatives of the IRS and DOL will meet quarterly.

(Figure 1a)
IRS/DOL Coordination Agreement
Index

1. Notification of Examination

   1. General

   2. IRS Action on Notification

   3. EBSA Action After Positive Feedback

2. Examination Referral Program

   1. General

   2. Referral Procedures

   3. Examinations Initiated by IRS

   4. Investigations Initiated by EBSA

3. IRS Appeals Office Procedures

4. Notification of Litigation

   1. Litigation Involving IRS and Relating to the Administration of Title I of ERISA

   2. Litigation Involving DOL and Relating to Employee Benefit Plans

5. Tracking/Feedback

6. EBSA Requests for Tax Return Information from the IRS

List of Appendices

1. IRS / EBSA Office Referral Directory

2. Referral Checksheet 6212-A

3. Referral Checksheet 6212-B

4. EBSA Form 217, Document Transmittal

5. Section 103 of the Reorganization Plan No. 4 of 1978

[Note: Some of the above listed appendices are not included in the current version of the Enforcement Manual.]

This document provides the procedures for the coordination of examination and litigation activities involving employee benefit plans between the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) and the Employee Plans (EP) of the Internal Revenue Service (IRS).

1. Notification of Examinations

   1. General

      For the agencies to avoid unnecessary duplication in examinations, the EBSA Regional Offices will notify the IRS Employee Plans Classification Unit in Baltimore weekly of the names of pension benefit plans selected for civil investigation. Generally, a Regional Office will not begin its investigation of a plan until 10 workdays after the date the information was provided to the IRS. However, nothing contained in this agreement shall preclude the agencies from agreeing to use special procedures, including joint or concurrent investigations/examinations in appropriate cases.

   2. IRS Action on Notification

      Within 9 workdays after the date that the listings of plans are provided to the Employee Plans Classification Unit in Baltimore, the Classification Unit will determine whether the investigation would duplicate an examination by IRS and, if the investigation is duplicative, advise, the appropriate EBSA Regional Director.

      1. For purposes of notifying EBSA of examinations in process by IRS, a plan will be considered under examination if: (1) an examination was closed by IRS with respect to the plan within 12 months of the date of receipt from EBSA; (2) an examination case with respect to the plan is in inventory in EP Examinations but not yet assigned; or (3) an examination with respect to the plan is currently assigned within the EP Examinations.

      2. If the EP Classification Unit determines that a plan on the EBSA listing is not under examination, the EP Classification Unit will take action to associate the EBSA notification with the IRS administrative file relating to the plan. If the EP Classification Unit subsequently assigns such a plan for examination, the EP Classification Unit will, prior to examining the plan, contact the appropriate EBSA Regional Director concerning the status and/or result of DOL's investigation.

   3. EBSA Action After Positive Feedback

      Generally, EBSA will not begin an investigation of a plan if IRS advises the Regional Director that the investigation would be duplicative. If IRS has selected a plan for examination but has not yet initiated contact with the plan, the EBSA Regional Office and the EP Examinations Area Office with jurisdiction over the plan will decide which agency will examine/ investi­gate the plan. Any jurisdictional disputes will be resolved in accordance with section A.6. of Part II below.

2. Examination Referral Program

   1. General

      1. The agencies have developed checksheets for determining whether issues presented in an examination/investigation by one agency should be referred to the other agency. The checksheets can be three-part snap out forms or computer generated forms (respectively known as Checksheets A and B, or Forms 6212A and B – see Appendices). When either agency completes a checksheet during an examination/investigation, an entry in the right hand column with respect to any item on the checksheet will indicate that referral of the checksheet to the other agency may be required. The checksheets completed by the IRS contain confidential tax return information provided by the IRS and must be safeguarded by EBSA.

      2. For purposes of the Examination Referral Program (Part II) and IRS Appeals Office Procedures (Part III), the term "examination" means:

         1. In the case of an examination of an employee benefit plan conducted by IRS, any field examination by EP specialists of the books and records of an employee benefit plan. An examination described in this paragraph will be subject to the referral procedures without regard to whether the examination is an on-site examination or an office correspondence/interview examination.

         2. In the case of an investigation of an employee benefit plan conducted by EBSA, any investigation or audit of the books and records of an employee benefit plan; and

         3. In the case of an examination/investigation of an entity other than a plan by either agency, any examination/investigation the purpose of which is to determine compliance with the Employee Retirement Income Security Act of 1974 (ERISA), related sections of the Internal Revenue Code, or both.

         4. Consideration pursuant to a correction program described in Rev. Proc. 2002-47 or its successors is not an examination within the meaning of section 7605(b) of the Code.

      3. An agency initiating a referral may request that the receiving agency participate in the examination. These requests will be made by checking the "Participation Requested" box on the referral checksheet and obtaining the signature of the Regional Director or the EP Area Manager. The agency requesting the assistance will not generally take dispositive action on the investigation or examination until a response is received from the other agency. However, an agency may take dispositive action if collection of a tax is in jeopardy, the running of the statute of limitations is imminent, or plan assets or the interests of plan participants must be protected. In such a case, the agency taking the dispositive action will immediately notify the other agency of the action by telephone and confirm the notification in writing within five workdays.

      4. Except as stated in 3. above, an agency initiating a referral is generally not required to postpone taking dispositive action on an examination.

      5. If the agency receiving a referral checksheet indicates an interest in the case, the agencies will coordinate in accordance with the procedures described in Sections B., C. and D. of Part II.

      6. Disagreement concerning appropriate enforcement action in a specific case will generally be resolved jointly by the EP Examinations Area Office and the appropriate EBSA Regional Office. If the EP Examinations Area Office and the EBSA Regional Office are unable to reach agreement in a case, they will consult with EP Examinations and the Office of Enforcement for final resolution.

   2. Referral Procedures

      1. EBSA investigators/auditors will complete Checksheet A during their investigations. Checksheets referred to the IRS will be sent to the Manager, EP Classification in Baltimore using Document Transmittal Form 217 (see Appendix D) on the last workday of each week.

      2. IRS examiners will complete Checksheet B during their examina­tions. Checksheets requiring referral to EBSA will be sent (along with copies of 5500 Series returns relating to the plans subject to the referral) to the EP Classification Unit in Baltimore. The EP Classification Unit will send this information to the appropriate Regional Director on the last workday of each week.

      3. The initiating agency will complete the appropriate checksheet during an examination/investigation. If a referral is required, the agency initiating the referral will retain a copy of the checksheet (maintained in the EP Classification Unit and in each EBSA Regional Office). The agency making the referral will transmit two copies to the other agency. The receiving agency will complete the "Action Taken" portion of the referral checksheet, retain a copy and return the other copy to the initiating agency to be included in the appropriate plan administrative/case file.

      4. After receiving a referral, an agency may request additional information from the initiating agency (EBSA Regional Office or IRS EP Classification Unit) with respect to the plan involved. Such a request should be made within 15 workdays of the date the referral was mailed. The request should not require the initiating agency to conduct additional investigative work or examination. A request for additional information by DOL must comply with the requirements of Section 6103(l)(2) of the Code.

      5. An agency initiating a referral where participation is not requested will generally not take dispositive action on the investigation or examination until 20 days after the date of the referral. However, an agency may take dispositive action if collection of a tax is in jeopardy, the running of the statute of limitations is imminent, or plan assets or the interest of plan participants must be protected. In such a case, the agency taking the dispositive action will immediately notify the other agency of the action by telephone and confirm the notification in writing within five workdays.

   3. Examinations Initiated by the IRS

      1. IRS examiners will complete Checksheet B during all IRS field examinations.

      2. When an entry on a Checksheet B requires the referral of the checksheet to EBSA, IRS will refer the checksheet in accordance with section B.2. of this Part.

      3. EBSA will review Checksheet B, complete the "Action Taken" portion of the referral checksheet, and return a copy to IRS EP Classification Unit within 20 workdays of the referral. Checksheet B will be transmitted by EBSA using Document Transmittal Form 217 (see Appendix D).

      4. When EBSA returns a copy of Checksheet B to the IRS EP Classification Unit with an entry in the "Action Taken" portion of the referral checksheet indicating that EBSA is taking no action, IRS will continue its examination in accordance with its existing procedures.

      5. When EBSA returns a copy of Checksheet B to the IRS EP Classification Unit with an entry indicating that it is taking action, EBSA will also contact the IRS EP Area Office to obtain information that EBSA needs to complete its planned action.

      6. In all unagreed IRS cases involving Internal Revenue Code section 4971(a) and/or (b) or 4975, Form 6212-B (or a copy of Form 6212-B) will be completed with an entry in the box for "DOL Participation Requested." A copy of the report to the taxpayer (including a copy of the proposed 30-day letter) will be sent with a copy of the Form 6212-B by the IRS EP Mandatory Review Unit. The Form 6212-B should be sent to the EBSA Regional Director at least 30 days prior to sending the report, including the 30-day letter, to the taxpayer. If EBSA declines to participate in the examination, the case file will be documented accordingly. Generally IRS should not close a case until 30 days from the date the Form 6212-B is sent to the Regional Director.

      7. If IRS refers a Checksheet B to the EBSA Regional Director with an entry indicating that a violation of the fiduciary provisions under Title I of ERISA or a violation of the ERISA prohibited transaction requirements has occurred, the referral will constitute a notice to the Department of Labor within the meaning of section 3003(a) of ERISA and 4975(h) of the Code.

      8. If IRS refers a Checksheet B to the EBSA Regional Director indicating that a violation of the minimum funding requirements of section 412 has occurred, the referral will constitute a notice to the Depart­ment of Labor within the meaning of section 3002(b) of ERISA and 4971(d) of the Code.

      9. If IRS refers a Checksheet B to the EBSA Regional Director with an entry indicating that a fiduciary violation under Title I of ERISA has occurred with respect to an employee benefit plan and that IRS is considering action to disqualify the plan because the plan is also in violation of the exclusive benefit rule under the Internal Revenue Code, the agencies will process the case in accordance with section 103 of Reorganization Plan No. 4 of 1978. (See Appendix E.)

      10. IRS will defer action in a case when, as a result of a referral of a checksheet between the agencies, the EBSA Regional Office advises the Manager, EP Classification, in writing that the case has been referred to the DOL National Office. IRS will not take further action in the case until the date when EBSA notifies the EP Classification Unit of EBSA's final action in the case, unless the provisions of Part II A.3. become applicable.

   4. Investigations Initiated by EBSA

      1. EBSA investigators/auditors will complete Checksheet A during all civil pension benefit investiga­tions.

      2. If an entry on a completed checksheet requires a referral to the IRS, the referral will be made not later than the earlier of (1) the date the investigation is closed by the Regional Office (but at least 20 days before the closing letter is issued) or (2) the case is referred to the EBSA National Office. EBSA will refer checksheets in accordance with section B.1. of this Part, using Document Transmittal Form 217 (see Appendix D).

      3. The IRS will review any checksheet referred by EBSA, complete the "Action Taken" portion of the referral checksheet, and return a copy to the Regional Director within 20 workdays of the date of the Document Transmittal Form 217 memorandum or other document transmitting the checksheet to the IRS.

         1. If the IRS returns a copy of Checksheet A to the Regional Director with an entry indicating that IRS is taking no action in the case, EBSA will continue its investigation in accordance with its existing procedures. However, see Part V below regarding the information IRS must provide to DOL.

         2. If the IRS returns a copy of Checksheet A to the Regional Director with an entry indicating that IRS is taking action with respect to the referral, IRS will contact EBSA to obtain any additional information that IRS needs to complete its examination. If EBSA completes the checksheet with an entry in the "IRS Participation Requested" block, the agencies will coordinate their activities in the case. However, see Part V below regarding the information IRS must provide to DOL when the case is closed.

         3. The IRS will defer action in a case when as a result of a checkshe­et referral between the agencies, the EBSA Regional Office notifies the IRS EP Classification Unit of any referral of the case to the DOL National Office in accordance with section C.10. of this Part.

      4. When EBSA refers a Checksheet A to the IRS involving issues other than prohibited transactions, only the Form 5500 series return must be attached to the checksheet.

      5. When EBSA refers a Checksheet A to the IRS that involves prohibited transactions of twenty thousand dollars or more, the following items must accompany the checksheet:

         1. Copy of Form 5500 series returns for all years in which a prohibited transaction was in effect.

         2. Available information about taxpayer/disqualified person including, particularly the EIN or SSN, address, educational level and possible name changes.

         3. Copy of plan and trust documents including restatements and/or amendments (only if IRS has not issued a determination letter on the plan and/or amendment). If the prohibited transaction is a loan to a plan participant, a copy of the loan provisions of the plan should be included.

         4. Copy of all EBSA correspondence related to the referred issue.

         5. Copy of the Report of Investigation (ROI) completed by EBSA investigator/auditor and related work papers. The work papers should include financial statements of trust, specific details of the prohibited transaction including copies of sale/transfer documents, repayment documents, contracts and agreements.

         6. A description of the current status of the prohibited transaction, including possible corrective action.

         7. EBSA draft closing letter and if applicable, the voluntary compliance letter. The closing letter will advise the taxpayer that (a) a prohibited transaction has occurred, (b) the disqualified person(s) is/are required to file Form 5330, Return of Excise Tax Related to Employee Benefit Plans and where assistance in completing Form 5330 can be obtained.

         8. A description of the disqualified person's position regarding the prohibited transaction (if not contained in the ROI).

         9. Any other information that documents the reason for the referral.

         10. Information in EBSA's possession concerning the fiduciary/ disqualified person's filing or intent to file for bankruptcy.

      6. When EBSA refers a Checksheet A to the IRS that involves prohibited transactions of less than twenty thousand dollars, only a copy of EBSA's closing letter or the voluntary compliance letter (prepared in accordance with 5(g) above) that describes the transaction, and a copy of the Report of Investigation (without attachments) needs to be transmitted.

      7. When an EBSA Regional Office refers a checksheet to the EP Classification Unit concerning a vp>iolation of the prohibited transaction provisions, the EP Classification Unit/EP Examinations Area Office will generally take action to assess the excise tax under IRC section 4975 if: (1) the tax under section 4975(a) for any taxable year is at least equal to the amount specified in Part VII of the IRS Law Enforcement Manual; (2) 180 days or more remain before the expiration of the statute of limitations with respect to the prohibited transaction; and (3) the information described in section D.5. of this Part is attached to the checksheet when it is referred. If a case referred to EP satisfies the foregoing requirements and action is not taken to assess the tax under section 4975(a), the case file will be annotated to reflect the reason for such failure and the remarks section of the checksheet returned to the DOL will contain an explanation why the assessment was not made.

3. IRS Appeals Office Procedures

   The following procedures apply to all cases received by IRS Appeals Offices involving examinations of employee benefit plans within the meaning of section A.2. of Part II.

   1. The applicable Appeals Area Director (or designee) will notify, in writing, the EBSA Regional Director's Office as listed in Appendix A that an employee plans case has been received in their office. To ensure that notice has been given to DOL as required by Sections 4971(d) and 4975(h) of the Internal Revenue Code, the Appeals Office shall follow the procedures of B. and C. of this part.

   2. The Appeals Area Director will not take final action to settle the case, concede any Government issue, enter into a closing agreement with any taxpayer, issue any notice of deficiency with respect to taxes under section 4971(a) and/or (b) and 4975 that are not in jeopardy, or proceed with any action to revoke the favorable determination or qualification letter of any plan prior to the earlier of the date when the Appeals Area Director receives a response from EBSA or 60 days after the date of the Appeals Office's letter to EBSA.

   3. EBSA will, within 60 days of the date of the letter from the Appeals Area Director, reply to the Appeals Area Director in writing if EBSA is taking any action concerning the referred case. If EBSA is taking action with respect to the case, the Appeals Area Director will coordinate with EBSA before taking any of the actions described in Section B. of this Part.

   4. If the Appeals Area Director and the EBSA Regional Director are unable to reach agreement regarding disposition of the case, the matter will be forwarded to the National Chief, Appeals to coordinate final resolution with the Director, EBSA Office of Enforcement, DOL.

4. Notification of Litigation

   1. Litigation Involving IRS and Relating to the Administration of Title I of ERISA

      1. The Division Counsel/Associate Chief Counsel (TE/GE) (or designee), will forward to the DOL Solicitor (Attention: Associate Solicitor, Plan Benefits Security Division), and Director, Office of Enforcement, EBSA, at the earliest possible date, a copy of any complaint or other opening pleading in litigation to which the IRS, the Treasury, the United States or any official thereof is party, either in Tax Court, Claims Court or in district court, and that presents issues relating to the admini­stration of Title I of ERISA. Further pleadings in such matters will be furnished upon request.

      2. The Division Counsel/Associate Chief Counsel (TE/GE) (or designee), will notify the DOL Solicitor (Attention: Associate Solicitor, Plan Benefits Security Division), at the earliest possible date, whenever IRS determines that it will seek to intervene in any action in which the Secretary of the Treasury is entitled to do so under the provisions of ERISA section 502(h). The initial pleadings submitted on behalf of the Secretary will be forwarded to the Associate Solicitor. Further pleadings in such matters will be furnished upon request.

   2. Litigation Involving DOL and Relating to Employee Benefit Plans

      1. The Solicitor of Labor (or designee) will notify the Division Chief/Associate Chief Counsel (TE/GE), and the Director, EP Examinations T:EP:E, when it is determined that litigation by DOL relating to employee benefit plans is warranted. Copies of the proposed complaint (or ­other opening pleading and supporting documents) will be furnished to the Chief Counsel for review and to the Department of Justice for its assignment of primary litigative responsibility under the Memorandum of Understanding of February 11, 1975.

      2. The Solicitor of Labor (or designee) will forward to the Division Counsel/Associate Chief Counsel (TE/GE) a copy of any pleading filed naming the Secretary of Labor as a defendant and presenting issues relating to employee benefit plans. Further pleadings in such matters will be furnished upon request.

      3. The Solicitor of Labor (or designee) will notify the Division Counsel/Associate Chief Counsel (TE/GE) at the earliest possible date whenever DOL determines that it will seek to intervene in any action in which the Secretary of Labor is entitled to do so under the provisions of ERISA section 502(h). The initial pleadings submitted on behalf of the Secretary will be forwarded to the IRS counsel. Further pleadings in such matters will be furnished upon request.

5. Tracking/Feedback

   1. EBSA Regional Offices and IRS EP Classification Unit will reconcile their listings of pending referrals at least once a quarter.

   2. IRS EP Classification, upon closure of an examination initiated as the result of a referral from DOL, will forward to the EBSA Regional Director Form 6212-A (or a copy of Form 6212-A) indicating the amount of Internal Revenue Code section 4971(a) and/or (b) or 4975 proposed or assessed excise tax. If the IRS does not propose or assess excise taxes, then the reasons will be entered in the "Remarks" section of Form 6212-A.

   3. IRS EP Examinations and DOL National Office personnel will meet at least quar­terly to resolve any referrals on which the appropriate enforcement action is ­in dispute. These quarterly meetings will also be used as a medium for discussions of issues encountered by EBSA Regional Offices and IRS EP Examinations in following the provisions of this Agreement.

6. EBSA Requests for Tax Return Information from the IRS

   Internal Revenue Service
   Manager, EP Classification
   31 Hopkins Plaza
   Room 1550
   Baltimore MD 21201

   1. In general, IRS is prohibited from disclosing any tax information to anyone outside of the IRS. IRC section 6103 lists the exceptions to this general rule. IRC section 6103(l)(2) allows the IRS to furnish information to the DOL and PBGC for the enforcement of Titles I and IV of ERISA. This includes requests for tax returns and tax return information.

   2. If during any investigation, the Regional Office believes that information in the possession of the IRS will help in carrying out the provisions of Title I, a request will be made to the IRS for such information. Requests for IRC 6103(l)(2) information should be sent to the following address:

   3. Information that can be disclosed under IRC section 6104 should not be requested under this procedure. IRC section 6104(a)(1)(B) provides that any application for tax-qualified status of a pension, profit sharing, stock bonus, annuity, individual retirement account, or individual retirement annuity plan, any application filed with respect to the tax‑exempt status of an organization forming part of such plan or account, any papers submitted in support of any such application and any letter or other document issued by the IRS in connection with such tax qualification or tax exemption is to be open for public inspection; however, if a plan does not have more than 25 participants, this right of public inspection is open only to a plan participant. The places and times for the right of public inspection are specified in the regulations issued under IRC section 6104. Materials or documents from which an individual's compensation may be ascertained are not open to public inspection. This right of public inspection applies to applications filed and documents issued after September 2, 1974.

   4. EBSA personnel will employ proper procedures for obtaining and safeguarding the information received from the IRS. Unauthorized disclosure of information received from the IRS may subject the individual disclosing such information to both civil and criminal penalties as provided for in the Internal Revenue Code.

(Figure 1b)
Addendum to IRS/DOL Coordination Agreement

For purposes of implementing the Internal Revenue Service/Department of Labor Coordination Agreement after the date this Addendum is agreed to by both Agencies, the following provisions of the Agreement are modified as follows:

1. Notification of Examinations

   1. General

      1. Section I A.

         EBSA Regional Office personnel will no longer be required to wait 10 workdays after notifying IRS Employee Plans Examinations (EP Examinations) that a pension plan was selected for investigation. EBSA Regional Office personnel will continue to provide case opening notifications to the IRS. EP Classification will also continue to notify EBSA Regional Offices if they are aware of any open EP Examinations at the time of initial notification.

   2. IRS Action on Notification

      1. Section I.B.2

         This section of the MOU is no longer operative.

2. Examination Referral Program

   1. General

      1. Section II.A.3

         An agency initiating a referral with the "Participation Requested" box checked will now be required to attach a memorandum signed by the Regional Director or the EP Area Manager requesting joint investigation. These referrals will be prioritized and should be responded to generally within 20 days of receipt.

   2. Referral Procedures

      1. Section II.B.1

         Electronic means of transmission for referrals will be used wherever possible by both Agencies. The electronic software for electronic referrals must meet the encryption level security FIPS 140-2. Electronic transmissions to and from Classification will use: tege.ep.class.dol@irs.gov. Referrals that cannot be forwarded electronically should be mailed to the designated EP Examination and EBSA Regional Office addresses.

      2. Section II.B.2

         EP Examinations will send Form 6212-B and include necessary information in the remarks section to support the referral item. Upon acceptance additional information will be provided in accordance with Section VI. The 6212-B checksheet and attachments will be sent using Document Transmittal Form 3210. (See Appendix I)

      3. Section II.B.5

         In general, referrals not requesting participation will be responded to within 30 days.

      4. Section II.B.6 (added)

         EBSA referrals to the IRS involving the late remittance of employee contributions and loan repayments with less than $6,700 in Lost Opportunity Costs in a plan year are referred to as Streamline Referrals. EBSA will provide the following information in the Remarks section of Form 6212-A:

         1. A notation that the referral is "Streamlined – LOC Under $6,700/Plan Year"

         2. Lost opportunity costs for each plan year will be provided separately for each plan year.

         3. A notation that the correction has been completed.

         No other documents will need to be included with Form 6212-A.

         EBSA will continue to refer untimely contribution/loan repayment prohibited transactions where there are multiple issues related to the investigation using Form 6212-A in accordance with Section II.D.5 and II.D.6 of the Agreement.

   3. Examinations Initiated by the IRS

      1. Section II.C.3

         EBSA Regional Offices, in general, will respond to referrals submitted by EP Classification within 30 days.

   4. Investigations Initiated by EBSA

      1. Section II.D.3

         EP Classification, in general, will respond to referrals submitted by EBSA Regional Offices within 30 days.

      2. Section II.D.7(1)

         When an EBSA Regional Office refers a checksheet to the EP Classification Unit concerning a violation of the prohibited transaction provisions, the EP Classification Unit/EP Examinations Area Office will generally take action to assess the excise tax under IRC section 4975 if: (1) 180 days or more remain before the expiration of the statute of limitations with respect to the prohibited transaction; and (2) the information described in section D.5. of this Part is attached to the checksheet when it is referred. If a case referred to EP satisfies the foregoing requirements and action is not taken to assess the tax under section 4975(a), the case file will be annotated to reflect the reason for such failure and the remarks section of the checksheet returned to the DOL will contain an explanation why the assessment was not made.

3. [No changes to Section III]

4. Notification of Litigation

   1. Litigation Involving IRS and Relating to the Administration of Title I of ERISA

      1. Section IV.A.1

         1. The Division Counsel/Associate Chief Counsel (TEGE) (or designee), will forward to the DOL Solicitor (Attention: Associate Solicitor, Plan Benefits Security Division), and Director, Office of Enforcement, EBSA, at the earliest possible date, a copy of any complaint or other opening pleading in litigation to which the IRS, the Treasury, the United States or any official thereof is party, either in Tax Court, Claims Court or in district court, and that presents issues relating to the administration of Title I of ERISA. Further pleadings in such matters will be furnished upon request.

      2. Section IV.A.2

         2. The Division Counsel/Associate Chief Counsel (TEGE) (or designee), will notify the DOL Solicitor (Attention: Associate Solicitor, Plan Benefits Security Division), at the earliest possible date, whenever IRS determines that it will seek to intervene in any action in which the Secretary of the Treasury is entitled to do so under the provisions of ERISA section 502(h). The initial pleadings submitted on behalf of the Secretary will be forwarded to the Associate Solicitor. Further pleadings in such matters will be furnished upon request.

   2. Litigation Involving DOL and Relating to Employee Benefit Plans

      1. Section IV.B.1

         1. The Solicitor of Labor (or designee) will notify the Division Counsel/Associate Chief Counsel (TEGE), and the Director, EP Examinations T:EP:E, when it is determined that litigation by DOL relating to employee benefit plans is warranted. Copies of the proposed complaint (or other opening pleading and supporting documents) will be furnished to the Division Counsel/Associate Chief Counsel (TEGE) for review and to the Department of Justice for its assignment of primary responsibility under the Memorandum of Understanding of February 11, 1975.

      2. Section IV.B.2

         2. The Solicitor of Labor (or designee) will forward to the Division Counsel/Associate Chief Counsel (TEGE) a copy of any pleading filed naming the Secretary of Labor as a defendant and presenting issues relating to employee benefit plans. Further pleadings in such matters will be furnished upon request.

      3. Section IV.B.3

         3. The Solicitor of Labor (or designee) will notify the Division Counsel/Associate Chief Counsel (TEGE) at the earliest possible date whenever DOL determines that it will seek to intervene in any action in which the Secretary of Labor is entitled to do so under the provisions of ERISA section 502(h). The initial pleadingssubmitted on behalf of the Secretary will be forwarded to the Division Counsel/Associate Chief Counsel (TEGE). Further pleadings in such matters will be furnished upon request.

5. Tracking/Feedback

   1. Section V.A

      Agencies will conduct formalreferral reconciliations twice yearly. Agencies are not precluded from communicating more frequently on referrals as needed.

   2. Section V.D (added.)

      The IRS Director of EP Examinations (or Representative) and the EBSA's Director of Enforcement (or Representative) will meet at the start of each fiscal year but no later than October 31st to review work plan and initiatives for the fiscal year (i.e. programs, data mining, projects).

   3. Section V.E (added)

      IRS-EP Examinations and DOL-EBSA Local Contact List will be updated annually. Agencies are not precluded from updating list more frequently as needed. (Appendix J)

6. EBSA Requests for Tax Return Information from the IRS

   1. Section VI.B

      EBSA personnel will forward IRC Section 6103(l)(2) requests electronically to tege.ep.class.dol@irs.gov permitting that the electronic software meets the encryption level security FIPS 140-2. IRC 6103(l)(2) information will be provided by electronic media (i.e. scanned originals, facsimile and transcripts).

IRS – EP & DOL - EBSA Local Contacts

(Figure 2)
Reorganization Plan No. 4 Of 1978

Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, August 10, 1978, pursuant to the provisions of Chapter 9 of Title 5 of the United States Code.

Employee Retirement Income Security Act Transfers

Section 101. Transfer to the Secretary of the Treasury

Except as otherwise provided in Sections 104 and 106 of this plan, all authority of the Secretary of Labor to issue the following described documents pursuant to the statutes hereinafter specified is hereby transferred to the Secretary of the Treasury:

1. regulations, rulings, opinions, variances and waivers under Parts 2 and 3 of Subtitle B of Title I and subsection 1012(c) of Title II of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001) (hereinafter referred to as "ERISA"), Except for sections and subsections 201,203(a)(3)(B), 209, and 301(a) of ERISA;

2. such regulations, rulings, and opinions which are granted to the Secretary of Labor under Sections 404, 410, 411, 412, and 413 of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the "Code"), Except for subsections 411(a)(3)(B) of the Code and the definitions of "collectively bargained plan" and "collective bargaining agreement" contained in subsections 404(a)(1)(B) and (a)(1)(C), 410(b)(2)(A) and (b)(2)(B), and 413(a)(1) of the Code; and

3. regulations, rulings, and opinions under subsections 3(19), 3(22), 3(23), 3(24), 3(25), 3(27), 3(28), 3(29), 3(30), and 3(31) of Subtitle A of Title I of ERISA.

Section 102. Transfers to the Secretary of Labor

Except as otherwise provided in Section 105 of this Plan, all authority of the Secretary of the Treasury to issue the following described documents pursuant to the statutes hereinafter specified is hereby transferred to the Secretary of Labor:

1. regulations, rulings, opinions, and exemptions under section 4975 of the Code,

   Except for (i) subsections 4975(a), (b), (c)(3), (d)(3), (e)(1), and (e)(7) of the Code; (ii) to the extent necessary for the continued enforcement of subsections 4975(a) and (b) by the Secretary of the Treasury, subsections 4975(f)(1), (f)(2), (f)(4), (f)(5) and (f)(6) of the Code; and (iii) exemptions with respect to transactions that are exempt by subsection 404(c) of ERISA from the provisions of Part 4 of Subtitle B of Title I of ERISA; and

2. regulations, rulings, and opinions under subsection 2003(c) of ERISA, Except for subsection 2003(c)(1)(B).

Section 103. Coordination Concerning Certain Fiduciary Actions

In the case of fiduciary actions which are subject to Part 4 of Subtitle B of Title I of ERISA, the Secretary of the Treasury shall notify the Secretary of Labor prior to the time of commencing any proceedings to determine whether the action violates the exclusive benefit rule of subsection 401(a) of the Code, but not later than prior to issuing a preliminary notice of intent to disqualify under that rule, and the Secretary of the Treasury shall not issue a determination that a plan or trust does not satisfy the requirements of subsection 401(a) by reason of the exclusive benefit rule of subsection 401(a), unless within 90 days after the date on which the Secretary of the Treasury notifies the Secretary of Labor of pending action, the Secretary of Labor certifies that he has no objection to the disqualification or the Secretary of Labor fails to respond to the Secretary of the Treasury. The requirements of this paragraph do not apply to the case of any termination or jeopardy assessment under sections 6851 or 6861 of the Code that has been approved in advance by the Commissioner of Internal Revenue, or, as delegated, the Assistant Commissioner for Employee Plans and Exemption Organizations.

Section 104. Enforcement by the Secretary of Labor

The transfers provided for in Section 101 of this Plan shall not affect the ability of the Secretary of Labor, subject to the provisions of Title III of ERISA relating to jurisdiction, administration, and enforcement, to engage in enforcement under Section 502 of ERISA or to exercise the authority set forth under Title III of ERISA, including the ability to make interpretations necessary to engage in such enforcement or to exercise such authority. However, in bringing such actions and in exercising such authority with respect to Parts 2 and 3 of Subtitle B of Title I of ERISA and any definitions for which the authority of the Secretary of Labor is transferred to the Secretary of the Treasury as provided in Section 101 of this Plan, the Secretary of Labor shall be bound by the regulations, rulings, opinions, variances, and waivers issued by the Secretary of the Treasury.

Section 105. Enforcement by the Secretary of the Treasury

The transfers provided for in Section 102 of this Plan shall not affect the ability of the Secretary of the Treasury, subject to the provisions of Title III of ERISA relating to jurisdiction, administration, and enforcement, (a) to audit plans and employers and to enforce the excise tax provisions of subsections 4975(a) and 4975(b) of the Code, to exercise the authority set forth in subsections 502(b)(1) and 502(h) of ERISA, or to exercise the authority set forth in Title III of ERISA, including the ability to make interpretations necessary to audit, to enforce such taxes, and to exercise such authority; and (b) consistent with the coordination requirements under Section 103 of this Plan, to disqualify, under section 401 of the Code, a plan subject to Part 4 of Subtitle B of Title I of ERISA, including the ability to make the interpretations necessary to make such disqualification. However, in enforcing such excise taxes, and, to the extent applicable, in disqualifying such plans the Secretary of the Treasury shall be bound by the regulations, rulings, opinions, and exemptions issued by the Secretary of Labor pursuant to the authority transferred to the Secretary of Labor as provided in Section 102 of this Plan.

Section 106. Coordination for Section 101 Transfers

1. The Secretary of the Treasury shall not exercise the functions transferred pursuant to Section 101 of this Plan to issue in proposed or final form any of the documents described in subsection (b) of this Section in any case in which such documents would significantly impact on or substantially affect collectively bargained plans unless, within 100 calendar days after the Secretary of the Treasury notifies the Secretary of Labor of such proposed action, the Secretary of Labor certifies that he has no objection or he fails to respond to the Secretary of the Treasury. The fact of such notification, except for such notification for documents described in subsection (b)(iv) of this Section, from the Secretary of the Treasury to the Secretary of Labor shall be announced by the Secretary of Labor to the public within ten days following the date of receipt of the notification by the Secretary of Labor.

2. The documents to which this Section applies are:

   1. amendments to regulations issued pursuant to subsections 202(a)(3), 203(b)(2) and (3)(A), 204(b)(3)(A), (C) and (E), and 210(a)(2) of ERISA, and subsections 410(a)(3) and 411(a)(5), (6)(A), and (b)(3)(A), (C), and (E), 413(b)(4) and (c)(3) and 414(f) of the Code;

   2. regulations issued pursuant to subsections 204(b)(3)(D), 302(c)(8), and 304(a) and (b)(2)(A) of ERISA, and subsections 411(b)(3)(D), 412(c)(8), (e), and (f)(2)(A) of the Code; and

   3. revenue rulings (within the meaning of 26 CFR Section 601.201(a)(6)), revenue procedures, and similar publications if the rulings, procedures and publications are issued under one of the statutory provisions listed in (i) and (ii) of this subsection; and

   4. rulings (within the meaning of 26 CFR Section 601.201(a)(2)) issued prior to the issuance of a published regulation under one of the statutory provisions listed in (i) and (ii) of this subsection and not issued under a published Revenue Ruling.

3. For those documents described in subsections (b)(i), (b)(ii) and (b)(iii) of this Section, the Secretary of Labor may request the Secretary of the Treasury to initiate the actions described in this Section 106 of this Plan.

Section 107. Evaluation

On or before April 30, 1980, the President will submit to both Houses of the Congress an evaluation of the extent to which this Reorganization Plan has alleviated the problems associated with the present administrative structure under ERISA, accompanied by specific legislative recommendations for a long-term administrative structure under ERISA.

Section 108. Incidental Transfers

So much of the personnel, property, records, and unexpended balances of appropriations, allocations and other funds employed, used, held, available, or to be made available in connection with the functions transferred under this Plan, as the Director of the Office of Management and Budget shall determine, shall be transferred to the appropriate agency, or component at such time or times as the Director of the Office of Management and Budget shall provide, except that no such expended balances transferred shall be used for purposes other than those for which the appropriation was originally made. The Director of the Office of Management and Budget shall provide for terminating the affairs of any agencies abolished herein and for such further measures and dispositions as such Director deems necessary to effectuate the purpose of this Reorganization Plan.

Section 109. Effective Date

The provisions of this Reorganization Plan shall become effective at such time or times, on or before April 30, 1979, as the President shall specify, but not sooner than the earliest time allowable under Section 906 of Title 5, United States Code.

(Figure 3)
Memorandum of Understanding Among the U.S. Department of the Treasury,
the U.S. Department of Labor,
and the U.S. Department of Health and Human Services

Article I

Introduction and Purpose

The Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), Pub. L. No. 104-191, was enacted on August 21, 1996. Titles I and IV of HIPAA amended the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, and the Public Health Service Act to add provisions to improve access, portability and continuity of health insurance coverage in the group and individual health insurance markets.

Section 104 of HIPAA directs the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to enter into an interagency memorandum of understanding. Section 104 requires that the memorandum of understanding ensure that regulations, rulings, and interpretations relating to the changes made by Subtitle A of Title I and section 401 of Title IV of HIPAA over which two or more Secretaries have responsibility ("shared provisions") are administered so as to have the same effect at all times. Section 104 also requires the coordination of policies relating to enforcing the shared provisions in order to avoid duplication of enforcement efforts and to assign priorities in enforcement. This memorandum of understanding (MOU) is adopted pursuant to section 104 of HIPAA.

This MOU formally establishes an interagency agreement among the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to ensure coordination in the manner and for the purposes set forth in section 104 of HIPAA. The Departments also intend to follow the process set forth in this MOU, to the extent appropriate, with regard to interpretations and enforcement of the provisions of the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, and Subsequent Legislation. In addition, the Departments of Labor and HHS agree to follow the process set forth in this MOU, to the extent appropriate, with regard to interpretations and enforcement of the provisions of the Women's Health and Cancer Rights Act of 1998.

Article II

Authority

This MOU is entered pursuant to the authority set forth in section 104 of HIPAA, Pub. L. No. 104-191.

Article III

Definitions

• "Agency" refers to a component of a Department. For purposes of the MOU, this includes the Internal Revenue Service (IRS) within the Department of the Treasury, the Pension and Welfare Benefits Administration (PWBA) within the Department of Labor, and the Health Care Financing Administration (HCFA) within the Department of Health and Human Services.
• "Code" refers to the Internal Revenue Code of 1986.
• "Committee" refers to the Coordinating Committee described in Article V.
• "Department" refers to each of the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services.
• "Departments" refers collectively to the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services.
• "ERISA" refers to the Employee Retirement Security Act of 1974.
• "HCFA" refers to the Health Care Financing Administration.
• "HHS" refers to the Department of Health and Human Services.
• "Interpretations" refers to any written Agency or Departmental statement, guidance ruling, pronouncement, or explanation regarding a statute described in Article I of the MOU that is not a Regulation. Interpretations include statements such as Revenue Rulings, Technical Bulletins/Releases, Advisory Opinions, and similar Agency or Departmental releases that are binding on the issuing Agency or Department. Interpretations also include policy guidance, such as information letters, bulletins and policy letters, whether or not such guidance is binding on the issuing Agency or Department.
• "IRS" refers to the Internal Revenue Service.
• "Labor" and "DOL" refer to the Department of Labor.
• "MHPA" refers to the Mental Health Parity Act of 1996.
• "NMHPA" refers to the Newborns' and Mothers' Health Protection Act of 1996.
• "PHS Act" refers to the Public Health Service Act.
• "PWBA" refers to the Pension and Welfare Benefits Administration.
• "Regulations" refers to rules that are promulgated in accordance with the provisions of the Administrative Procedure Act applicable to substantive rules and that are published in the Federal Register and codified in the Code of Federal Regulations.
• "Related Acts" refers to MHPA and NMHPA.
• "Subsequent Legislation" refers to future federal legislative enactments concerning health care which result in two or more of the Departments having shared jurisdiction.
• "Treasury" refers to the Department of the Treasury.
• "WHCRA" refers to the Women's Health and Cancer Rights Act of 1998.

Article IV

Background

Subtitle A of Title I and section 401 of Title IV of HIPAA are intended to improve the availability of private health insurance by increasing portability, access and renewability in the group market. HIPAA establishes limits on the imposition of preexisting condition exclusions and generally prohibits group health plans and health insurance issuers from discriminating against individuals based on health status when determining eligibility to enroll in a group health plan or to obtain related insurance or in deciding the amount of premium to be charged to similarly situated individuals. Employers may not be denied continued access to multiemployer plans, or multiple employer welfare arrangements, except for certain reasons set forth in HIPAA.

HIPAA and Related Acts amended three federal statutes: the Code, administered by the Treasury through IRS; ERISA, administered by DOL through PWBA; and the PHS Act, administered by HHS through HCFA. Under the Code, as amended by HIPAA and Related Acts, the Treasury has authority over group health plans (including church plans) and their sponsors, and IRS enforced the requirements of HIPAA and Related Acts through the imposition of an excise tax. Under ERISA, as amended by HIPAA and Related Acts, DOL has increased authority over group health plans that are subject to Part 7 of subtitle B of Title I of ERISA. Health insurance issuers offering health insurance coverage in connection with such plans are also subject to Part 7. However, in accordance with the provisions of HIPAA, only participants and beneficiaries (and not DOL) may bring an enforcement action against health insurance issuers under Part 7.

Under the PHA Act, as amended by HIPAA and Related Acts, HCFA has authority over health insurance issuers and nonfederal governmental plans. If a State fails to substantially enforce Parts A and B of Title XXVII of the PHS Act, or requests that HCFA enforce the provisions or requirements, HCFA enforces the group and individual market requirements by imposing a civil monetary penalty on issuers that fail to comply with HIPAA's requirements in that State.

There are differences in some of the amendments that HIPAA and Related Acts made to the three statutes. In some instances, changes were made to only one of the federal statutes with no counterpart in the other two statutes. Section 104 of HIPAA requires the Secretaries of the Treasury, Labor and HHS to coordinate in the areas of parallel responsibility relating to the share provisions of HIPAA.

Article V

Scope of Work

The Departments agree to assign representatives to work closely to ensure that all Interpretations, Regulations and enforcement strategies relating to shared provisions of Subtitle A of Title I and section 401 of Title IV of HIPAA and Related Acts will be developed and implemented in a coordinated manner. All such Interpretations, Regulations and enforcement strategies will be administered in a manner that promotes consistency in effect, that avoids duplication of enforcement efforts, and that reflects consideration of the appropriate priorities in enforcement.

In this regard, the Departments will continue to work together closely through regular joint meetings and frequent consultation, consistent with the process (i.e., by mutual consent) that has been used in developing existing Regulations and Interpretations under HIPAA and Related Acts. Similarly, DOL and HHS will continue to work together closely through regular joint meetings and frequent consultation to develop Regulations and Interpretations under WHCRA.

In order to further effectuate this coordination, the Treasury, IRS, DOL, and HHS each will name a "Department Designee" to serve on a Coordinating Committee. The Committee's task will be to ensure the identification and coordination of policies involving areas of shared responsibility under HIPAA and Related Acts to maintain consistency in the application of these provisions that amend the Code, ERISA, and the PHS Act.

The Committee also will take steps to maximize the efficiency of Agency enforcement efforts, including developing the terms of further agreement(s), as necessary. The Committee members shall meet, quarterly, or at such times as they may agree, to review and discuss relevant pending Regulations and Interpretations to evaluate whether the position(s) set forth therein reflect a coordinated position. Committee meetings will be held at locations agreed to by the Committee members. Upon agreement of the Committee members, such meetings may be held by conference call. Each Department will assume the costs associated with the participation of its respective Committee members.

Timely and prompt consensus will be sought in the development and administration of all Interpretations affected by this MOU. Any Department Designee can bring any matter subject to the MOU before the Committee. The Department Designees serving on the Committee will attempt to reach consensus on issues within 45 days (except in unusual circumstances) after such issues have been formally presented (including a written summary) at a meeting of the Committee. If consensus on particular issues is reached by the members of the Committee, appropriate clearance will be initiated within each Department.

Article VI

Coordinated Enforcement Strategy

Generally, the Departments intend to continue the current informal arrangements that have developed for cooperation and collaboration in the handling of inquiries arising under HIPAA, MHPA, NMHPA, and WHCRA. In addition, pursuant to Section 104(2) of HIPAA and this MOU, the Committee, and any appropriate individuals designated by the Agencies or Departments, shall develop a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns priorities in enforcement. The Agencies or Departments shall first designate, within six months of the execution of this MOU, individuals who are to work with the Committee in developing the enforcement strategy. This group shall also devise a written operational agreement for the sharing of information that is related to enforcement cases among the Departments. Moreover, the operational agreement may address procedures for the referral of cases, the development of audit checklists and training materials, and the coordination of public affairs information. The operational agreement may also describe the individuals within each Department who are responsible for implementing the sharing of information.

Subject to applicable legal restrictions (including section 6103 of the Code), the Departments agree, absent exigent circumstances, to notify each other in writing (through the Department Designee) prior to the commencement of any administrative or judicial proceeding on matters within the scope of this MOU and to inform each other of the final action resulting from such proceeding.

Nothing in this section shall be construed to affect the enforcement authority that HIPAA or Related Acts confers on any Department, including enforcement concerning a matter as to which a Department has given or received the information or notice described herein, nor shall this paragraph be construed to preclude the Departments from agreeing to different arrangements on a case by case basis.

Article VII

Confidentiality of Information

The Departments agree that any information shared or disclosed pursuant to this MOU will be held in strict confidence and may be used only for purposes consistent with this MOU or as otherwise permitted by law. All requests by parties other than the Departments for disclosure of information shall be coordinated with the Agency that initially compiled or collected the information, provided that no Agency shall disclose information initially compiled by another Agency to the public without the approval of the appropriate Agency or Department unless the Agency is required by law to do so (e.g., Freedom of Information Act (FOIA), 5 U.S.C. 552; Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2), in which event it will notify the appropriate Department or Agency in writing of its intent to disclose such information. Nothing in this MOU shall be deemed to confer rights on any party other than the Departments as a result of any act or omission by any Agency or Department with respect to its obligations under this MOU.

Article VIII

Duration of Agreement

This MOU will become effective upon the date of the final signature and may be amended by written agreement of the undersigned. It will remain in effect until amended by the parties, or until terminated by any of the parties upon 30 days written notice to the other parties and, upon the agreement of the Departments, shall apply to Subsequent Legislation.

Article IX

Officials Responsible for MOU

The appropriate Departmental officials will appoint their respective Department Designees to the Committee within 30 days after the signing of this MOU and will appoint any successors in a timely manner.

We, the undersigned, do hereby agree to the foregoing provisions of this MOU.

Dated: April 8, 1999.
Donald C. Lubick,
Assistant Secretary for Tax Policy, Department of the Treasury.

We, the undersigned, do hereby agree to the foregoing provisions of this MOU.

Dated: April 21, 1999.
Robert E. Wenzel,
Deputy Commissioner, Internal Revenue Service, Department of the Treasury.

We, the undersigned, do hereby agree to the foregoing provisions of this MOU.

Dated: March 17, 1999.
Richard M. McGahey,
Assistant Secretary, Pension and Welfare Benefits Administration, Department of Labor.

We, the undersigned, do hereby agree to the foregoing provisions of this MOU.

Dated: March 30, 1999.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration, Department of Health and Human Services.

Footnotes

1. The Customer Account Services group can assist consumers with account-specific questions, basic information about Employee Plan Forms (Forms 5300, 5330, 5307, 5310, 5500-EZ, 8955-SSA), and the status of pending applications.
2. In addition, a plan must provide that an employee's normal retirement benefit i.e., the accrued benefit payable at normal retirement age becomes non-forfeitable if the employee reaches normal retirement age while still employed by the employer sponsoring the plan, to the extent that the accrued benefit has not yet become vested before that date.
3. ERISA Section 203 also provides that a multiemployer plan, without violating the vesting requirements, provide for the suspension of benefits after they have commenced for periods during when the participant is employed in the same industry, trade, or craft, and in the same geographic area covered by the plan, as when the benefits commenced.
4. The Department's authority to interpret ERISA Section 203 did not transfer to the Department of the Treasury pursuant to Reorganization Plan No. 4 of 1978 (Figure 2).
5. This is to prevent excessive "backloading," i.e., the pre ERISA practice of deferring the accrual of all or most of an employee's benefits under a pension plan until the latter years of an employee's career.
6. A benefit that employees may begin to receive before the plan’s normal retirement age.
7. IRS regulation 401(a)(13) of the Code [26 C.F.R. 1.401(a) 13] describes what constitutes an alienation or assignment of benefits. They also describe certain arrangements that do not constitute such an assignment or alienation. Most significantly, these regulations provide that a participant's direction that the plan pay all, or any portion, of a benefit payment to a third party does not constitute an assignment or alienation if such direction is revocable at any time. The recipient of the directed payments must also file a written acknowledgement with the plan administrator that he/she has no enforceable right to any benefit payment or portion thereof.
8. The Department retained authority to interpret this provision under Reorganization Plan No. 4 of 1978.
9. Generally, contiguous non-covered service is service with an employer maintaining a multiple employer plan if such service is performed before or after a period of covered service and no quitting, discharge, or retirement occurs between the periods of covered and non-covered service. For example, if an employee hired by an employer maintaining a multiple employer plan in a non-covered job classification without a termination of the employment relationship, service in the non-covered job classification is deemed "contiguous non-covered service" and must be taken into account to determine the employee's eligibility to participate in the plan and for vesting.
10. Exception: if a participant works for a business that is under common control but has no role or association with the plan, then there is no requirement for service credit for that non-participating employer.
11. For defined benefit pension plans, the design of minimum funding standards ensure sufficient assets accumulate during employees' working careers to pay their benefits when they retire. To this end, the statute requires funding for defined benefit plans in accordance with appropriate actuarial techniques. Certain defined benefit plans funded exclusively through insurance contracts (generally annuity contracts) are exempt from the minimum funding standards, as long as all premium payments are made when due.
12. In the case of a money purchase or target benefit plan, the minimum funding standards require only that employer contributions specified under the plan be made when due.
13. Per IRC Section 4971(a) and/or (b) or 4975.
14. This right of public inspection applies to applications filed and documents issued after September 2, 1974.
15. For defined benefit pension plans, the design of minimum funding standards ensure sufficient assets accumulate during employees' working careers to pay their benefits when they retire.  To this end, the statute requires funding for defined benefit plans in accordance with appropriate actuarial techniques.  Certain defined benefit plans funded exclusively through insurance contracts (generally annuity contracts) are exempt from the minimum funding standards, as long as all premium payments are made when due.

1. Purpose. The purpose of the Memorandum of Understanding (Figure 1) between EBSA and the Office of the Inspector General is to improve the effectiveness of the Department's enforcement activities. Specifically, EBSA and OIG coordinate activity in relation to organized crime and racketeer infiltration, control, and influence in employee benefit plans, and to strengthen the protection afforded to plan participants and their beneficiaries.

2. Background. OIG and EBSA have agreed to exchange information in investigations involving matters of interest to both agencies. The agreement provides a mechanism for EBSA and OIG to cooperate to the maximum extent possible under applicable laws, rules, and regulations to achieve Departmental objectives respecting the administration of ERISA and to remove organized crime and its influence from employee benefit plans.

3. Plans Under Investigation by OIG. On a quarterly basis, OIG will provide EBSA with a list of all of its cases under investigation, involving employee benefit plans. The sole exception will consist of any investigation that the Deputy Inspector General determines to be highly confidential in nature. OIG contemplates to use this exception rarely.

4. Plans Investigated by EBSA. On a quarterly basis, EBSA will provide OIG with a list of all investigations that may reasonably contain matters within OIG’s jurisdiction. These include investigations involving individuals believed affiliated with organized crime and matters in which OIG has previously expressed interest.

5. OIG Industries. EBSA’s National Office will provide OIG a list of all employee benefit plans, affiliated with unions that EBSA has opened for investigation, within 90 days following the transmittal of the list by OIG. EBSA will provide this list on a quarterly basis after receiving OIG’s list of investigated industries.

6. Identifying Plans Affiliated with Unions within Investigated Industries. To fulfill EBSA's obligations pursuant to the Memorandum of Understanding, EBSA will identify during the case opening whether a labor organization is involved in the employee benefit plan under investigation.

   If a labor organization is involved, the case opening must include the LM number of the organization as well as the business, product or service codes of the industry. Employee benefit plans use these codes to prepare Form 5500s.

7. Indices Searches and Requests for Information. Upon request, OE and each RO (after consultation with OE) will conduct and furnish to OIG results of any indices searches and information concerning specific individuals or organizations in its files. These results are subject to restriction under Rule 6(e) of the Federal Rules of Criminal Procedure, applicable restrictions of the Internal Revenue Code (IRC), and restrictions of other applicable laws.

   Upon request, OIG will provide EBSA the results of indices searches and information from its files concerning specific individuals or organizations, subject to Rule 6(e), the IRC, or other applicable restrictions. OE and each RO (after consultation with OE) transmit such requests to OIG.

8. Other Investigative Aids. When requested by OIG, OE will furnish other materials that may be of investigative assistance, such as computer printouts of reporting employee benefit plans. OIG is under a similar obligation to respond to requests from EBSA. The manner for channeling such requests to OIG shall be the same as in paragraph 7 above.

9. Need for Immediate Action by the Other Agency. If during the course of an investigation, a RO develops or acquires information requiring a possible need for prompt action by OIG, the RO should bring this matter to the attention of OE, who will inform OIG. In an emergency, such notification may be by telephone. This disclosure is subject to the restrictions under Rule 6(e) of the Federal Rules of Criminal Procedure, applicable restrictions of the IRC, and restrictions of other applicable law. OIG is under a similar obligation to promptly provide EBSA any information indicating a possible need for immediate action by EBSA.

10. Potential Criminal Violation in Plans Previously Identified to OIG. OE will inform OIG of information concerning alleged criminal violations obtained in EBSA investigations involving employee benefit plans previously identified to OIG. OE will notify OIG upon receipt of the information from the RO.

11. Referral of Cases to SOL. When the RO refers a ROI to the Office of the Solicitor (either PBSD or RSOL) with a recommendation for enforcement action, OE will furnish a synopsis of the case to OIG. At the request of OIG, OE will make available, subject to relevant legal considerations, the underlying documents and other materials pertaining to the ROI. If OIG determines that it has an interest in investigating any matter brought to its attention through this procedure, OIG will notify OE for appropriate coordination of any such investigation with EBSA enforcement action. Under no circumstances will OIG initiate any contact with plan officials based on information obtained pursuant to this paragraph without prior consultation with EBSA.

12. Closed Cases. OE will notify OIG when a RO closes an investigation previously identified to OIG without recommendation for enforcement action.

13. Relations with Other Agencies. OIG does not have the authority to represent EBSA in any matter involving an ongoing investigation, including coordination and communication with DOJ, or any other agency. EBSA will communicate directly with such agencies. In the event that a dispute arises which cannot be resolved at the local office level, EBSA will refer the matter by a memorandum (or in emergencies, by telephone) to OE’s Chief of Criminal Investigation Division.

(Figure 1)
Memorandum Of Understanding
Between The Office Of Inspector General And LMSA

1. Purpose

   The purpose of this memorandum is to improve the effectiveness of the enforcement activities of the parties to this agreement in relation to organized crime (OC) and racketeer infiltration, control and influence in the employee benefit plan field, and in relation to the protection of employee benefit plan participants and beneficiaries.

2. Coverage

   This agreement applies to the Office of Inspector General (OIG)/Office of Organized Crime and Racketeering (OOCR) and LMSA Pension and Welfare Benefit Programs and the Special Investigations Staff (hereinafter collectively "PWBP").

3. Objective

   Enforcement of the civil and criminal provisions of ERISA and related Title 18 statutes is essential to any serious attempt to address the problems of organized crime and racketeer influence in the Employee Benefit Plan field and to the protection of employee benefit plan participants and beneficiaries. It is understood that to the maximum extent permissible under applicable laws, rules and regulations, PWBP and OOCR shall work in concert to obtain the DOL objective of removing OC and racketeer control, domination and influence from Employee Benefit Plans, and to achieve the other objectives of the Department in connection with the administration of ERISA. OOCR and PWBP recognize their responsibilities to exercise their respective investigative powers and perform their duties in a manner that is consistent with the requirements of applicable law. All of the provisions contained herein shall be construed accordingly.

4. Effective Date

   This agreement shall become effective on April 15, 1980.

5. Responsibility And Authority

   1. PWBP is responsible for administering the Department's programs and operations and establishing policy related to ERISA.

   2. OOCR is responsible, among other things, for administering the Department's participation in the Organized Crime Strike Force Program.

   3. It shall be the mutual responsibility of the parties to this agreement to coordinate activities subject to this agreement in order to determine the most effective strategy in accomplishing the desired objectives. Moreover, pursuant to previous agreements between DOL and the Criminal Division - U.S. Department of Justice, a Work Group has been established involving representatives of both Departments. The Work Group serves as a coordination mechanism for matters of mutual concern. OOCR shall participate in the Work Group as appropriate.

6. Working Relations

   1. PWBP and OOCR will cooperate in an effort to control organized crime and racketeer influence in employee benefit plans through civil and/or criminal enforcement, and to achieve the other objectives of the Department in connection with the administration of ERISA.

   2. It is anticipated that some matters of mutual interest to OOCR and PWBP may be coordinated, and any differences resolved, at the local field level. In the absence of agreement as to the strategy to employ in any given case, the matter should be referred to the Work Group.

   3. Within 30 days after the effective date of this agreement, and quarterly thereafter, PWBP will provide OOCR with a list of all benefit plans investigated for audit within the following 90 days which are affiliated with unions within industries which have been identified by OOCR, and of all other matters presently under investigation which reasonably can be considered to be within the jurisdiction of OOCR.

      Within 30 days after the effective date of this agreement, and quarterly thereafter, OOCR, will provide PWBP with a list of all employee benefit plans involved in matters which it has under investigation or audit; provided however, that this provision does not apply in the case of any investigation determined by the Deputy Inspector General to be of a highly confidential nature.

   4. Each office will, upon request, conduct and furnish to the other, results of any indices search.

   5. Each office will, upon request, furnish to the other information concerning specific individuals or organizations in its files, subject to restrictions under Rule 6(e) of the Federal Rules of Criminal Procedure, applicable restrictions of the Internal Revenue Code and other applicable law.

   6. Each office will, upon request, furnish to the other matters which may be of an investigative aid, such as available computer printouts of reporting benefit plans, etc.

   7. Subject to the restrictions under Rule 6(e) of the Federal Rules of Criminal Procedure, applicable restrictions of the Internal Revenue Code and other applicable law, if either office develops or acquires, during the course of an investigation or otherwise, information indicating a possible need for prompt action by the other, the facts of the matter should be brought to the attention of the other as quickly as possible. PWBP will also inform OOCR of alleged criminal violations involving benefit plans previously identified to OOCR pursuant to paragraph 3 above.

   8. At the time PWBP refers a report of investigation to the Office of the Solicitor with a recommendation for enforcement action, PWBP will furnish to the Office of Organized Crime and Racketeering a synopsis of that report of investigation. With respect to any such synopsis, at the request of OOCR, PWBP will make available, subject to relevant legal considerations, the underlying documents and other materials pertaining to the report of investigation. In the event that OOCR determines that it has an interest in investigating any matter brought to its attention through this provision, OOCR shall first notify the Division of Enforcement, PWBP, so that appropriate arrangements for the coordination of any such investigation with the PWBP enforcement action can be made.

   9. Whenever PWBP closes, without recommendation for enforcement action, an investigation previously identified to OOCR pursuant to paragraph 3 above, notice of such closing shall be furnished to OOCR.

   10. When in the course of an investigation conducted by OOCR at the direction of a grand jury, or conducted by PWBP, a subpoena is executed for documents in the possession of an employee benefit plan, service provider or other party doing business with a plan, the investigators of the agency involved in the execution of the subpoena shall take all reasonable steps to ensure that, not later than 30 days after the commencement of the execution of the subpoena, the party from whom such documents were subpoenaed has available either the originals (returned) or copies of the original documents, or will otherwise make arrangements so that the parties from whom the documents have been subpoenaed can retrieve the originals or copies upon request and within a reasonable time thereafter.

   11. Notwithstanding any provision of paragraph 7 supra, neither OOCR nor PWBP has the authority to represent the other in any matter involving an ongoing investigation with regard to coordination and communication with local strike forces, the Department of Justice or any other agency. PWBP or OOCR, as applicable, will communicate directly with such agencies and, in the event any dispute arises which cannot be resolved at the local office level the matter will be referred to the Work Group.

Signed this 24^th day of March 1980.

1. Purpose. Sharing information and resources with federal financial and regulatory agencies can increase enforcement efficiency and investigation strategies.

2. Background. ERISA Section 3004(b) provides that the Secretary may utilize the facilities or services of any department, agency, or establishment of the United States, with the lawful consent of such department, agency, or establishment to obtain information and facilities, to the extent permitted by law, as the Secretary may require in the performance of his or her functions under ERISA.

3. Federal Financial Institution Regulatory Agencies. In 2006, an interagency agreement was signed between DOL and the federal financial institution regulatory agencies, i.e., the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and Office of Thrift Supervision (Figure 1). The agencies agreed to provide written notification to the Director of Enforcement of possible ERISA violations of a significant nature discovered in the course of their supervision of the fiduciary activities of institutions subject to their respective jurisdictions. Figure 2 describes the functions of each agency.

   A possible violation is significant when, in the view of the appropriate federal financial institution regulatory agency, it falls within:

   1. Title I, Part 4, Sections 404 and 405, except if a transaction, individually or in combination with other questionable transactions, is less than $100,000.

   2. Title I, Part 4, Sections 406 and 407(a), except a de minimis threat of loss to plan participants.

   3. Title I, Part 4, Sections 411 and 412, relating to the bonding requirements as applicable to the financial institution itself.

   4. Title I, Part 1 relating to reporting and disclosure in cases where a financial institution also serves as plan administrator or plan sponsor.

   The written notification to the Director of Enforcement shall include:

   1. The name of the financial institution;

   2. The name of the plan; and

   3. A brief description of the possible violation and any correction requested or initiated by the federal financial institution regulatory agency.

   Information received from the agencies pursuant to this agreement, to the extent permissible by law, will be held in strict confidence and may be used for investigative purposes only. Except as required by law, no other use of such information shall be made without the express written authorization of the agency that originally supplied the information. Regions should send all disclosure requests received pursuant to this agreement to the Director of Enforcement. Prior to disclosure, OE, in appropriate cases, will seek permission of the agency that provided the information.

   RO requests for information from an agency shall be made in writing to the Director of Enforcement. OE will be responsible for contacting the appropriate agency and obtaining permission for the RO to review the agency's file.

   If a RO opens a case pursuant to a referral from an agency, it should inform OE of the case opening and of the final disposition of that case. When the RO already has a case open at the time of the referral, it should inform OE of the case and its predication.

4. Securities and Exchange Commission. On July 25, 2013, DOL and the Securities and Exchange Commission (SEC) entered into a Memorandum of Understanding (MOU) to facilitate the exchange of information between the two agencies (Figure 3). The MOU sets forth periodic meetings to discuss matters of interest to the staffs, designates persons to serve as points of contact for each RO and headquarter office, and seeks to identify periodic internal training opportunities which may be appropriate for the other agency’s staff to attend.

   Under the MOU, DOL and SEC grant the other agency standing access to non-public examination information with respect to examinations that each agency’s staff determine are relevant to the other agency’s mission, with certain safeguards for confidentiality and the Right to Financial Privacy Act of 1978. Similarly, DOL and SEC intend to honor each other’s requests for enforcement information to the extent permitted by law and in through a set of procedures, including the use of “access request letters” and with certain safeguards for confidentiality. See Figure 4 for the SEC Access Request letter.

   RO requests shall be made in writing to the Director of Enforcement for non-public information from the SEC national office. OE will be responsible for contacting SEC and obtaining permission for the RO to review the agency's file.

   RO requests shall be made in writing directly to the appropriate office for non-public information from the SEC ROs. ROs can obtain public information directly from the appropriate SEC office.

5. Pension Benefit Guaranty Corporation. RO investigators, with the approval of the RD, may contact Pension Benefit Guaranty Corporation (PBGC) representatives directly to discuss PBGC referrals. RO can send requests directly to PBGC for non-public documents, with a copy to OE. ROs should send OE a copy of any formal referrals to PBGC.

6. State Agencies. On May 14, 1990, the Secretary wrote to each State Insurance Commissioner underscoring the Department's commitment to strengthen efforts to ensure maximum cooperation and coordination of enforcement with the States.

   Both federal and state laws regulate multiple employer welfare arrangements (MEWAs). The 1983 amendments to ERISA specifically granted authority to the states to regulate MEWAs even though a particular arrangement may be an ERISA covered plan.

   ROs will pursue cooperative arrangements with appropriate agencies pursuant to which the ROs will share and discuss information relating to open and closed MEWA cases. The ROs may also make documents, including documents obtained by voluntary production or civil subpoena, available to the state agency involved. Refer to the Enforcement Manual section on Release of Information for further guidance on the release of investigative material.

   DOL maintains an MOU with the National Association of Insurance Commissioners (NAIC) on MEWAs and pursuant to the MOU, DOL may pursue common interest agreements with state agencies to share case specific information. The states have not all signed the NAIC MOU. The ROs should coordinate with OE when seeking any MOUs or common interest agreements.

(Figure 1)
Interagency Agreement

Procedures for Cooperation Between the Federal Financial Institution Regulatory Agencies and the Department of Labor in the Enforcement of the Employee

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, the Office of the Comptroller of the Currency, and Office of Thrift Supervision (the federal financial institution regulatory agencies) as part of their supervision of the institutions regulated by them, conduct examinations and perform other functions which occasionally disclose violations of the Employee Retirement Income Security Act of 1974 (ERISA). The Department of Labor (DOL) is charged with the administration, interpretation, and enforcement of standards of conduct and responsibility of fiduciaries of employee benefit plans under ERISA.

Section 3004(b) of ERISA provides that the Secretary of Labor may utilize the facilities or services of any department, agency, or establishment of the United States, with the lawful consent of such department, agency, or establishment; and each department, agency or establishment of the United States is authorized and directed to cooperate with the Secretary of Labor and, to the extent permitted by law, to provide such information and facilities as the Secretary may request for his assistance in the performance of his functions under ERISA. This agreement is executed pursuant to that authority.

1. To the maximum extent consistent with law and dependent upon the availability of resources, the federal financial institution regulatory agencies shall provide written notification to the DOL of possible violations of ERISA of a significant nature, which are discovered in the course of their supervision of institutions subject to their respective jurisdiction.

2. A possible violation shall be considered significant when, in the view of the appropriate federal financial institution regulatory agency, it falls within the following circumstances:

   1. Where the financial institution does not serve as plan administrator or plan sponsor, as those terms are defined in ERISA Section 3(16), possible violations of:

      1. Title I, Part 4, Section 404, relating to fiduciary duties (including transactions directed by named fiduciaries or qualified investment managers), except where the transaction amounts, individually or in combination with other questionable transactions, constitute less than $100,000;

      2. Title I, part 4, Section 405, relating to liability for breach of co-fiduciary duties (including transactions directed by named fiduciaries or qualified investment managers), except where the transaction amounts, individually or in combination with other questionable transactions, constitute less than $100,000;

      3. Title I, Part 4, Sections 406 and 407(a), relating to prohibited transactions, except where the threat of loss to the plan participants is de minimis;

      4. Title I, Part 4, Section 411, relating to prohibition against certain persons holding certain positions;

      5. Title I, Part 4, Section 412, relating to the bonding requirements as applicable to the financial institution itself.

   2. Where the financial institution, in respect to a plan, also serves as plan administrator or plan sponsor, the agencies shall provide written notification of possible violations of the ERISA sections enumerated in a. above and, in addition, shall provide written notification of possible violations of Title I, Part 1 of ERISA relating to reporting and disclosure.

3. The written notification to the DOL shall include the following:

   1. The name of the financial institution.

   2. The name of the plan.

   3. A brief description of the nature of the possible violation, and any corrective action requested by the federal financial institution regulatory agency and/or initiated by the federal financial institution regulatory agency.

4. The DOL agrees that any information received from the federal financial institution regulatory agencies pursuant to this agreement shall, to the extent permissible by law, be held in strict confidence and may be used for investigative purposes only; and that no other use of such information shall be made without the express written authorization of the agency that supplied such information, except as required by law.

5. The written notification shall be sent to the Director of Enforcement, Employee Benefits Security Administration, U.S. Department of Labor, Washington, D.C. 20210.

For The Federal Financial Institution Regulatory Agencies

For the Department of Labor

(Figure 2)
The Federal Financial Institutions Regulator Agencies And Their Supervised Institutions

The Board Of Governors Of The Federal Reserve System (FRB)

• examines, supervises, and regulates state member banks, bank holding companies, and Edge and agreement corporations; approves or denies applications for mergers, acquisitions and change in control by state member banks and bank holding companies; and
• approves or denies applications for foreign operations of member banks and has residual supervisory responsibility for U.S. offices of foreign banks.

Implementation of policy decisions is carried out by the FRB and by the twelve Federal Reserve Banks, each of which has operational responsibility within a specific geographical area. Each Reserve Bank has a president and other officers and employs a staff of bank examiners who examine state member banks and inspect bank holding companies located within the Reserve Bank's district. All national banks must be members of the Federal Reserve System. State-chartered banks may apply and be accepted for membership.

The Federal Deposit Insurance Corporation (FDIC)

• provides deposit insurance for commercial banks, certain federal savings banks, and state-chartered savings banks;
• supervises FDIC-insured, state-chartered commercial and savings banks that are not members of the Federal Reserve System; and
• serves as receiver or liquidator of all closed national banks and as receiver of closed insured state-chartered banks.

The bank supervision functions of the FDIC are shared with state and other federal authorities. All national banks and state banks that are members of the Federal Reserve System must be insured by the FDIC. Nonmember state banks may apply for FDIC deposit insurance. The FDIC examines and supervises those banks under its purview, approves or denies applications for structural or corporate changes, and rules on applications for insurance.

The FDIC is organized geographically into nine regions, each of which is headed by a regional director.

The Office Of Thrift Supervision (OTS)

Effective July 21, 2011, the Office of Thrift Supervision (OTS) merged with the Office of the Comptroller of the Currency (OCC).

The National Credit Union Administration (NCUA)

The purpose of the NCUA is to charter, examine, supervise, and insure the nation's nearly 10,000 federal credit unions. In addition, NCUA also provides insurance for member accounts at 4,980 state-chartered credit unions.

The major responsibilities of the NCUA are:

• chartering, supervising, and examining federal credit unions;
• administering the National Credit Union Share Insurance Fund (NCUSIF); and
• managing the Central Liquidity Facility.

The NCUA also has statutory authority to examine and supervise NCUSIF-insured, state-chartered credit unions, which it does in coordination with state agencies.

The NCUA has five regions in addition to the Office of National Examinations and Supervision.

The Office Of The Comptroller Of The Currency (OCC)

The OCC is the regulator and supervisor of the national banking system and federal savings associations. The OCC is the only federal banking agency with authority to charter commercial banks. The OCC has authority to approve or deny applications for new bank charters, the establishment of branches, and mergers of national banks.

The principal supervisory tools of the OCC are on-site supervisory activities and detailed off-site analysis of national bank and federal savings association operations. As appropriate, the OCC issues rules and regulations concerning bank lending, bank investment, and other aspects of bank operations.

The OCC is organized geographically into six districts, each headed by a Deputy Comptroller.

(Figure 3)
Memorandum Of Understanding Concerning Cooperation Between
The U.S. Securities and Exchange Commission and The U.S. Department of Labor

To facilitate the ongoing consultation and communication between the U.S. Department of Labor's Employee Benefits Security Administration (DOL) and the U.S. Securities and Exchange Commission (SEC) concerning matters of mutual interest, the agencies have reached this Memorandum of Understanding (MOU) setting forth a framework for consultation and exchange of information. By this MOU, the agencies formally recognize their effective and informal working relationships and their expectation of continued cooperation.

1. Regular Meetings: The DOL and SEC staffs shall have periodic meetings to discuss matters of mutual interest, including, for example, regulatory requirements that impact each agency's responsibilities, examination and inspection findings and trends, enforcement cases, participant assistance, public outreach and investor education, research and data analysis, information technology and data sharing, and any other matters that the SEC and DOL staffs believe would be of interest to the other regulator in fulfilling their respective responsibilities.

2. Points of Contact. To facilitate communications between the SEC and DOL staffs in the agencies' field offices, the DOL and SEC staffs shall designate persons to serve as points of contact for each regulator in each of the SEC and DOL regional offices and respective headquarters office. Points of contact will assist the SEC and DOL staffs in communications with respect to matters of mutual interest.

3. Training. The agencies recognize that it is worthwhile to cross-train appropriate staff in order to enhance each agency's understanding of the other's mission and investigative jurisdiction so that our resources can effectively protect the public. Each agency will seek to identify periodic internal training opportunities which may be appropriate for the other agency's staff to attend. These training programs may be non-public, and each agency will require that its participating employees agree to maintain the confidentiality of any non­ public program materials and information obtained during such programs.

4. DOL and SEC Access to Non-Public Examination Information. To facilitate the exchange of examination-related information concerning investment advisers or other firms of mutual interest to the SEC and the DOL, and subject to applicable law, regulations, memoranda of understanding or other agreements, (a) the SEC grants DOL standing access to non-public examination information with respect to examinations that SEC staff determine are relevant to DOL's mission and (b) to the extent not addressed by section 5 below concerning enforcement-related information, the DOL grants SEC standing access to non-public information that DOL staff determine is relevant to SEC's mission, pursuant to the following safeguards and to the extent permitted by law:

   • DOL and SEC Assurances of Confidentiality. To the extent permitted by law, the DOL and SEC staffs will establish and maintain such safeguards as are necessary and appropriate to protect the confidentiality of the files to which access is granted and information derived therefrom. The exchange of such files and information is not a public disclosure under the Freedom of Information Act (5 U.S.C. §552). Such files and information may, however, be used for the purpose of the DOL's and SEC's investigation and/or proceeding and any resulting proceedings. They also may be transferred to criminal law enforcement authorities, self-regulatory organizations subject to the SEC's oversight and the Public Company Accounting Oversight Board ("PCAOB"). The DOL and SEC staffs will notify the other agency's staff in writing of any such transfer and use their best efforts to obtain appropriate assurances of confidentiality. The DOL and SEC staffs will: make no public disclosure of the files or information without the prior written approval of the other agency's staff; notify the other agency's staff in writing of any legally enforceable demand for such files or information prior to complying with the demand and assert all such legal exemptions or privileges on behalf of the other agency as may be requested; and not grant any other demand or request for such files or information without prior written notice to, and lack of objection by, the other agency's staff.
   • Right to Financial Privacy Act of 1978 ("RFPA ''): The files and information provided by the SEC and DOL staffs to the other agency's staff pursuant to this standing grant of access may from time to time contain "financial records" of "customers" of"financial institutions," as those terms are defined in RFPA [12 U.S.C. §§ 3401-22]. In the event the files and information shared pursuant to this standing grant of access contain such information, the DOL and SEC will represent that they have reason to believe that the files and information are relevant to their examination, investigation, and/or proceeding.

5. SEC and DOL Access to Non-Public SEC and DOL Enforcement Information: To facilitate the exchange of enforcement-related information concerning investment advisers or other firms of mutual interest to the SEC and the DOL, the agencies intend to honor each other's requests for enforcement information to the extent permitted by law and in accordance with the following procedures:

   • In order to streamline the access request process, the SEC and DOL staffs will provide each other with a form letter to request access to investigative files and enforcement information of the other agency ("access request letters"). These access request letters will specify the specific enforcement matter for which the information is needed and will contain the same assurances of confidentiality as contained in this Section 5.
   • SEC and DOL Assurances of Confidentiality: To the extent permitted by law, the SEC and DOL staffs will establish and maintain such safeguards as are necessary and appropriate to protect the confidentiality of the files to which access is granted and information derived therefrom. The exchange of such files and information is not a public disclosure under the Freedom of Information Act (5 U.S.C. §552). Such files and information may, however, be used for the purpose of the SEC's and DOL's investigation and/or proceeding and any resulting proceedings. The SEC may transfer such files and information to criminal law enforcement authorities, self-regulatory organizations subject to the SEC's oversight and the PCAOB. The DOL may transfer such files and information to criminal law enforcement authorities. The SEC and DOL staffs will notify the other agency's staff in writing of any such transfer and use their best efforts to obtain appropriate assurances of confidentiality. The SEC and DOL staffs will: make no public disclosure of such files or information without the prior written approval of the other agency; notify the other agency's staff in writing of any legally enforceable demand for such files or information prior to complying with the demand and assert all such legal exemptions or privileges on behalf of the other agency as may be requested; and not grant any other demand or request for such files or information without prior written notice to, and lack of objection by, the other agency's staff.

6. Privileges and Confidentiality of Information Maintained: The DOL and SEC intend that the sharing of information between the agencies will not constitute a waiver of privilege or confidentiality with respect to such information. The DOL and SEC shall have sole discretion to determine whether to provide the other agency with access to non-public information, in light of, among other things, any ongoing examinations, enforcement investigations, civil or criminal investigations or proceedings or internal policies. This MOU does not create any rights of access to non-public documents. Any access to non-public documents will adhere to Federal information protection requirements defined by the National Institute of Standards and Technology for secure transmission of data, including encryption requirements and/or minimum FIPS 140-2 Level l certified data transmission methodology. If a security incident is suspected or verifiably detected, the party shall immediately notify their designated counterparts so that steps may be taken to determine whether there has been a compromise, and that appropriate security precautions are taken. Each party will provide reasonable support to their counterparts in support of analysis and/or investigation into any security incidents. To safeguard the confidentiality of the data, access will be limited to only authorized users with a need to know as each agency conducts its respective mission activities, and such data will be stored in a secure data location, accessible only by those users.

7. Effect of Agreement: Nothing in this agreement shall be interpreted as limiting, superseding, or otherwise affecting either agency's normal operations or decisions in carrying out its statutory or regulatory duties. This agreement does not limit or restrict the parties from participating in similar activities or arrangements with other entities. This MOU does not create any legally enforceable rights, nor is it to be construed as obligating funds. This agreement will be executed in full compliance with the Privacy Act of 1974 and E­ Government Act of 2002. This agreement does not itself authorize the expenditure or reimbursement of any funds, nor does it serve to obligate the parties to expend appropriations.

8. Effective Date; Termination: This MOU shall become effective on the date on which it is signed by both parties. The SEC and DOL will review the operation of this MOU, as necessary, and the MOU may be modified by mutual agreement of the parties. Either party may terminate this agreement upon 30 days' written notice to the other party.

9. Survival of Terms: In the event this MOU is terminated, any files or information derived therefrom shared pursuant to this MOU shall remain non-public and subject to the safeguards contained herein despite such termination.

10. Authority: The parties enter into this MOU pursuant to authority set forth in Section 506(a) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Section 1136(a) and Section 24(c) of the Securities Exchange Act, 15 U.S.C. Section 78(x).

(Figure 4)
SEC Access Request Letter

Re: [Name of investigation]

Dear :

We request access to the investigative and other non-public files of the U.S. Securities and Exchange Commission (the "Commission") related to the captioned matter. This request is made in connection with an ongoing lawful investigation or official proceeding inquiring into a violation of, or failure to comply with, a criminal or civil statute or regulation, rule or order issued pursuant thereto, being conducted by the [insert region or district] Office of the Employee Benefits Security Administration.

[We understand that the files in this matter contain "financial records" of "customers" as those terms are defined in the Right to Financial Privacy Act 011978 (12 U.S.C. §§3401-22). We have reason to believe that that information is relevant to our investigation and/or proceeding.]⁽¹⁾

We will establish and maintain such safeguards as are necessary and appropriate to protect the confidentiality of files to which access is granted and information derived therefrom. The files and information may, however, be used for the purpose of our investigation and/or proceeding, and any resulting proceedings. They also may be transferred to criminal law enforcement authorities. We shall notify you of any such transfer and use our best efforts to obtain appropriate assurances of confidentiality.

Other than as set forth in the preceding paragraph, we will:

• make no public use of these files or information without prior approval of your staff;
• notify you of any legally enforceable demand for the files or information prior to complying with the demand, and assert such legal exemptions or privileges on your behalf as you may request; and
• not grant any other demand or request for the files or information without prior notice to and lack of objection by your staff.

[We recognize that until this matter has been closed, the Commission continues to have an interest and will take further investigatory or other steps as it considers necessary in the discharge of its duties and responsibilities.]⁽²⁾

Should you have any questions, please contact [insert contact name].

Sincerely,
Regional Director

Footnotes

1. This paragraph is necessary only when the files contain RFPA material.
2. This paragraph may be omitted if the Commission's case is closed.

1. General. The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that allows plan officials to identify and fully correct certain transactions such as prohibited purchases, sales and exchanges; improper loans; delinquent participant contributions; and improper plan expenses. The program includes 19 specific transactions and their acceptable means of correction, eligibility requirements, and application procedures. If an eligible party documents the acceptable correction of a specified transaction, EBSA will issue a no-action letter. (Figure 1)

2. Eligibility to Participate in the VFCP. Anyone who may be liable for fiduciary violations under ERISA, including employee benefit plan sponsors, officials, and parties in interest, may voluntarily apply for relief from enforcement actions provided they meet the criteria and follow the procedures outlined in the VFCP. The Department will consider an application if:

   1. Neither the plan nor the applicant is under investigation. "Under investigation" means:

      1. EBSA has notified a plan official or a representative of an investigation of the plan or an investigation of the potential applicant or plan sponsor in connection with an act or transaction directly related to the plan;
      2. Any governmental agency is conducting a criminal investigation of the plan, or of the potential applicant or plan sponsor in connection with an act or transaction directly related to the plan;
      3. The IRS TE/GE is conducting an EP examination of the plan; or
      4. The PBGC, any state attorney general, or any state insurance commissioner is conducting an investigation or examination of the plan, or of the applicant or plan sponsor in connection with an act or transaction directly related to the plan, unless the applicant notifies EBSA, in writing, of such an investigation or examination at the time of the application.
      5. A plan is not considered "under investigation" merely because EBSA staff has contacted a plan official with a complaint, unless the complaint concerns the transaction described in the application and the plan has not received the correction amount due under the VFCP by the time EBSA contacts the plan official.

   2. The application contains no evidence of potential criminal violations as determined by EBSA; and

   3. EBSA has not conducted an investigation that resulted in written notice to a plan fiduciary that the transaction, for which the potential applicant could otherwise have sought relief under the VFCP, and is referred to the IRS.

3. Application Procedures. The applicant or his or her authorized representative must prepare each application. An application submitted by a representative must include a statement signed by the applicant that a representative has the authority to represent the applicant. The application must also include the name, address, and telephone number of a contact person who must be familiar with the contents of the application, and have authority to respond to EBSA inquiries.

4. Application Contents. See VFCP Model Application Form. Applicants are not required to use the VFCP Model Application Form itself. If applicants choose to use a different form, they must include all of the same information as noted on the VFCP Model Application Form. Required information includes but is not limited to the following (See VFCP Model Application Form for the full list):

   1. Detailed narrative of the breach and corrective action, including:

      1. A list of all people materially involved in the breach and its correction;

      2. The EIN and address of the plan sponsor and administrator;

      3. The date the plan's most recent Form 5500 was filed;

      4. An explanation of the breach;

      5. An explanation of how the breach was corrected, by whom and when;

      6. Calculations demonstrating how the principal amount and lost earnings or restoration of profits were computed; and

      7. An explanation of why payment of lost earnings or restoration of profits was chosen to correct the breach.

   2. Supporting documentation, including:

      1. A copy of the relevant portions of the plan document or any other pertinent documents;

      2. Documentation supporting the narrative description of the transaction and correction;

      3. Documentation establishing lost earnings and restoration of profits amounts;

      4. Documentation relating to the specific transaction;

      5. A completed application checklist (Figure 2); and,

      6. Proof of payment of the principal amount and lost earnings or restoration of profits.

   3. Penalty of Perjury statement signed and dated by a plan fiduciary with knowledge of the transaction. In addition, each applicant must sign and date the Penalty of Perjury statement. (Figure 3) The statement must also accompany any subsequent additions to the application.

5. Eligible Transactions and Corrections under the VFCP. Any plan official may correct any of the eligible transactions in accordance with the applicable correction method. In addition, an amendment to the Class Exemption to Permit Certain Transactions Identified in the Voluntary Fiduciary Correction Program grants relief from the excise tax on prohibited transactions imposed by IRC Section 4975(a). See Federal Register Volume 71, Number 75, pages 20135-20139, dated April 19, 2006 for a full description of the transactions eligible for this relief.

6. Filing. Applicants should send their applications to the appropriate RO.

7. Tracking. EBSA will track VFCP applications from date of receipt in the RO, through its current databases under Program 15. Within five working days of receipt, the RO sends a post card or letter to the applicant to acknowledge receipt of the application.

8. Custody of Applications. Each office must maintain physical custody of properly submitted applications, and forward to the appropriate RO any misdirected applications. Field office staff should treat applications as confidential and restrict access to the reviewer, his or her supervisor, and other EBSA staff assigned to such matters. Offices should maintain application files together in sequential order in a secure area.

9. Review of Applications. EBSA reviews each application to ensure that it is complete and eligible for the program. Then, EBSA reviews each application to ensure the applicant provided proper documentation.

10. Inadequate Correction. If the correction set forth in the application is incomplete or unacceptable under the VFCP, EBSA may reject the application and pursue enforcement action.

11. Issuance of No-Action Letter. If the application is complete and all breaches fully corrected, then EBSA issues a no-action letter to the applicant.

12. Disposition. The RO must maintain the disposition of the application in EBSA’s current database, including a signed and dated copy of the no-action letter, signed by the RD or his/her designee.

13. Coordination with IRS. EBSA’s voluntary correction program is separate from the IRS. Corrections made under the IRS’ Employee Plans Compliance Resolution System do not grant corrective action under EBSA’s VFCP. The applicant must file a separate application with EBSA for relief under the VFCP.⁽¹⁾

¹ The VFCP does require applicants to correct participant loan problems under the Voluntary Correction Program of the IRS’ Employee Plans Compliance Resolution System (EPCRS) and receive their approval before applying under the program.

(Figure 1)
No Action Letter

Applicant
Address

RE: VFCP Application No. xx-xxxxxxx

Dear Applicant:

The Department of Labor, Employee Benefits Security Administration (EBSA), has responsibility for administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). EBSA has established a Voluntary Fiduciary Correction Program (VFCP) to encourage the correction of breaches of fiduciary responsibility and the restoration of losses to the plan participants and beneficiaries.

In accordance with the requirements of the VFCP, you have identified the following transactions as breaches, or potential breaches, of part 4 of Title I of ERISA, and you have submitted documentation to EBSA that demonstrates that you have taken the corrective action indicated.

[Briefly recap the violation and correction. Example: Failure to deposit participant contributions to XYZ Corp. 401(k) plan within the time frames required by ERISA, from (date) to (date). All participant contributions were deposited by (date) and lost earnings on the delinquent contributions were deposited and allocated to participants' plan accounts on (date).]

Because you have taken the above-described corrective action that is consistent with the requirements of the VFCP, EBSA will take no civil enforcement action against you with respect to this breach. Specifically, EBSA will not recommend that the Solicitor of Labor initiate legal action against you, and EBSA will not impose the penalty in section 502(l) [or section 502(i)](1) of ERISA on the amount you have repaid to the plan.

EBSA's decision to take no further action is conditioned on the completeness and accuracy of the representations made in your application. You should note that this decision will not preclude EBSA from conducting an investigation of any potential violations of criminal law in connection with the transaction identified in the application or investigating the transaction identified in the application with a view toward seeking appropriate relief from any other person.

[If the transaction is a prohibited transaction for which no exemptive relief is available, add the following language: Please also be advised that pursuant to section 3003(c) of ERISA, 29 U.S.C. Section 1203(c), the Secretary of Labor is required to transmit to the Secretary of Treasury information indicating that a prohibited transaction has occurred. Accordingly, this matter will be referred to the Internal Revenue Service.]

In addition, you are cautioned that EBSA's decision to take no further action is binding on EBSA only. Any other governmental agency, and participants and beneficiaries, remain free to take whatever action they deem necessary.

We are pleased you have taken the opportunity to correct the identified transactions, and encourage you to review all of your employee benefit plans to determine if there are any other violations you should correct. We have enclosed a list of all eligible transactions for your benefit.

If you have any questions about this letter, you may contact the Regional VFCP Coordinator at applicable address and telephone number.

Sincerely,
Regional Director (or designated person)

Enclosure

Covered Transactions in the Voluntary Fiduciary Correction Program

• Delinquent Participant Contributions and Participant Loan Repayments to Pension Plans
• Delinquent Participant Contributions to Insured Welfare Plans
• Delinquent Participant Contributions to Welfare Plan Trusts
• Fair Market Interest Rate Loans With Parties in Interest
• Below Market Interest Rate Loans With Parties in Interest
• Below Market Interest Rate Loans With Non-Parties in Interest
• Below Market Interest Rate Loans Due to Delay in Perfecting Security Interest
• Participant Loans Failing to Comply with Plan Provisions for Amount, Duration, or Level Amortization
• Defaulted Participant Loans
• Purchase of Assets by Plans from Parties in Interest
• Sale of Assets by Plans to Parties in Interest
• Sale and Leaseback of Property to Sponsoring Employers
• Purchase of Assets from Non-Parties in Interest at More Than Fair Market Value
• Sale of Assets to Non-Parties in Interest at Less Than Fair Market Value
• Holding of an Illiquid Asset Previously Purchased by Plan
• Benefit Payments Based on Improper Valuation of Plan Assets
• Payment of Duplicate, Excessive, or Unnecessary Compensation
• Improper Payment of Expenses by Plan
• Payment of Dual Compensation to Plan Fiduciaries

(Figure 2)
VFCP Checksheet

Use this checklist to ensure that you are submitting a complete application. The applicant must sign and date the checklist and include it with the application. Indicate "Yes", "No" or "N/A" next to each item. A "No" answer or the failure to include a completed checklist will delay review of the application until all required items are received.

1. ______ 1. Have you reviewed the eligibility, definitions, transaction and correction, and documentation sections of the VFCP?

2. ______ 2. Have you included the name, address and telephone number of a contact person familiar with the contents of the application?

3. ______ 3. Have you provided the EIN, Plan Number, and address of the plan sponsor and plan administrator?

4. ______ 4. Have you provided the date that the most recent Form 5500 was filed by the plan?

5. ______ 5. Have you enclosed a signed and dated certification under penalty of perjury for the plan fiduciary with knowledge of the transactions and for each applicant and the applicant's representative, if any?

6. ______ 6. Have you enclosed relevant portions of the plan document and any other pertinent documents (such as the adoption agreement, trust agreement, or insurance contract) with the relevant sections identified?

7. ______ 7. If applicable, have you provided written notification to EBSA of any current investigation or examination of the plan, or of the applicant or plan sponsor in connection with an act or transaction directly related to the plan by the PBGC, any state attorney general, or any state insurance commissioner?

8. ______ 8. Where applicable, have you enclosed a copy of an appraiser's report?

9. ______ 9. Have you enclosed supporting documentation, including:

   1. ______ a. A detailed narrative of the Breach, including the date it occurred;

   2. ______ b. Documentation that supports the narrative description of the transaction;

   3. ______ c. An explanation of how the Breach was corrected, by whom and when, with supporting documentation;

   4. ______ d. A list of all persons materially involved in the Breach and its correction (e.g., fiduciaries, service providers, borrowers, lenders);

   5. ______ e. Specific calculations demonstrating how Principal Amount and Lost Earnings or Restoration of Profits were computed, or, if the Online Calculator was used, a copy of the "Print Viewable Results" page(s) after completing use of the Online Calculator;

   6. ______ f. Proof of payment of Principal Amount and Lost Earnings or Restoration of Profits; and

   7. ______ g. If application concerns delinquent employee contributions or loan repayments, a statement from a Plan Official identifying the earliest date on which participant contributions/loan repayments reasonably could have been segregated from the employer's general assets and supporting documentation on which the Plan Official relied?

10. ______ 10. If you are an eligible applicant and wish to avail yourself of excise tax relief under the VFCP Class Exemption:

    1. _______a. Have you made proper arrangements to provide within 60 calendar days after submission of this application a copy of the Class Exemption notice to all interested persons and to the EBSA Regional Office to which the application is filed; or

    2. _______b. If you are relying on the exception to the notice requirement in section IV.C. of the Class Exemption because the amount of the excise tax otherwise due would be less than or equal to $100.00, have you provided to the appropriate EBSA Regional Office a copy of a completed IRS Form 5330 or other written documentation containing the information required by IRS Form 5330 and proof of payment?

11. ______ 11. In calculating Lost Earnings, have you elected to use:

    1. ______ a. The Online Calculator; or

    2. ______ b. A manual calculation performed in accordance with Section 5(b)?

12. ______ 12. Where applicable, have you enclosed a description demonstrating proof of payment to participants and beneficiaries whose current location is known to the plan and/or applicant, and for individuals who need to be located, have you demonstrated how adequate funds have been segregated to pay missing individuals and commenced the process of locating the missing individuals using either the IRS and SSA locator services, or other comparable means?

13. ______ 13. For purposes of the three transactions covered under Section 7.1 has the plan implemented measures to ensure that such transactions do not recur?

Signature of Applicant and Date Signed: _____________________________________________

Name of Applicant: ______________________________________________________________

Title/Relationship to the Plan: ______________________________________________________

Name of Plan, EIN and Plan Number: ________________________________________________
______________________________________________________________________________

(Figure 3)
Penalty of Perjury Statement

"Under penalties of perjury I certify that I am not Under Investigation (as defined in VFCP Section 3(b)(3)) and that I have reviewed this application, including all supporting documentation, and to the best of my knowledge and belief the contents are true, correct, and complete."

_______________________________________________________________________________
Name and Title

Signature ___________________________________________________________________

Date ___________________

_______________________________________________________________________________
Name and Title

Signature ___________________________________________________________________

Date ___________________

Footnotes

1. The VFCP does require applicants to correct participant loan problems under the Voluntary Correction Program of the IRS’ Employee Plans Compliance Resolution System (EPCRS) and receive their approval before applying under the program.

1. Release of Information to News Media and the Public.

   1. The Department's Office of Public Affairs writes all news releases. Regional public affairs staff will prepare news announcements for decentralized litigation with the respective field office and the Regional Solicitor's Office. EBSA field offices are responsible for coordinating the release of information concerning criminal prosecutions with the U.S. Attorney's Office(s) in their jurisdiction. The field office is responsible for forwarding copies of the relevant court documents and the issued news release to the National Office. Public affairs staff will handle follow-up inquiries on news announcements.

   2. In the case of questions from news media or the public concerning open investigations, employees should not confirm or deny the existence or consideration of an investigation unless special circumstances warrant otherwise. If the RO is satisfied that knowledge of an open investigation is in the public domain, the Regional Director (RD) or Deputy Regional Director may confirm the existence of an investigation; however, no EBSA staff should comment on the investigation. A RO should direct requests for a variance from this policy to the Director of Enforcement.

2. Release of Information Pursuant to ERISA §504.

   1. The Secretary can provide information concerning a matter that may be the subject of an investigation to any person actually affected by that matter, and to any federal department or agency. However, any information obtained by the Secretary pursuant to IRC § 6103 is available only in accordance with regulations prescribed by the Secretary of the Treasury.⁽¹⁾ (See paragraph 7 for treatment of IRS information.)

   2. EBSA may not disclose any information concerning any matter under an open investigation without RD approval. Information concerning any matter that is the subject of a closed investigation may be disclosed pursuant to ERISA §504, subject to the restrictions imposed by various statutes and rules. These statutes and rules include: the Freedom of Information Act (see paragraph 4), the Right to Financial Privacy Act (see paragraph 5), the Privacy Act (see paragraph 6), the Internal Revenue Code (see paragraph 7), Rule 6(e) of the Federal Rules of Criminal Procedure (see paragraph 8), and 18 U.S.C. §1905 prohibiting disclosure of confidential information (Figure 1).

3. Release of Information Pursuant to Subpoena.

   The Department's regulations set forth at 29 CFR Part 2, Subpart C concern responses to subpoenas, orders, or other demands which call for the production or disclosure of material contained in Departmental files, or information relating to material contained in such files, in connection with proceedings to which the Department is not a party. An employee who receives a subpoena to produce material or disclose information must immediately notify the appropriate Associate or Regional Solicitor's Office by forwarding a copy of the subpoena, order, or other demand calling for the production or disclosure of material for evaluation. In addition, the RO should notify OE when it receives a third-party subpoena.

   Investigators/Auditors shall not comply with a subpoena except upon approval of the Deputy Solicitor of Labor. Even in the face of a court order directing immediate compliance with a subpoena, there is no disclosure of information without authorization from the Deputy Solicitor. The Solicitor's Office will represent any employee ordered by a court to comply with a subpoena.

4. Release of Information Pursuant to the Freedom of Information Act.

   1. The Freedom of Information Act (FOIA), 5 U.S.C. §552, requires federal agencies to make records promptly available to any person whose request reasonably describes the records sought and who complies with procedures for making such requests. Departmental regulations on FOIA are at 29 C.F.R. Part 70.

      Normally an agency must respond to a request within 20 business days. If an agency cannot respond within 20 business days, the agency should get an extension of the deadline from the requester by phone, then confirm in writing.

   2. Federal agencies are not required to disclose material that falls within the nine exemptions set forth in FOIA. These exemptions are for material concerning:

      1. National security or foreign policy;

      2. Internal agency personnel rules and practices;

      3. Specific exemptions provided for by statute;

      4. Trade secrets and privileged or confidential commercial and financial information;

      5. Inter-agency and intra-agency memoranda and letters not available by law to a party in litigation with the agency;

      6. Personnel and medical files;

      7. Law enforcement records or information;

      8. Financial regulatory matters; and

      9. Technical information about wells.

      Exemptions most relevant to Investigators/Auditors are 4 through 8. See paragraph 5 for a discussion of the exemption dealing with information from financial regulatory agencies.

   3. By Executive Order 12600 and Departmental regulations 29 CFR 70.26, Exemption 4 of the FOIA establishes procedures required before deciding to release certain categories of records. When the Department receives a claim of confidential commercial information from a party providing information to the Department, the RO must include a copy of the request in the case file. In addition, the RO should forward a copy of the request to OE.

      The Department should coordinate with appropriate RSOL when responding to FOIA requests involving information protected by Exemption 4.

   4. The RD and DS, by regulation, are designated FOIA Disclosure Officers, with signatory authority for FOIA responses.

5. Release of Information Obtained from Financial Regulatory Agencies

   1. Exemption 8 of FOIA permits officials to withhold materials related to examination, operations, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions. Under Departmental regulations, officials must refuse to disclose information from financial regulatory agencies unless there is express authority permitting it.

   2. The Right to Financial Privacy Act (RFPA), 12 U.S.C. §3401 et seq., prohibits any agency or department of the United States from obtaining financial records of a customer from a financial institution unless the records are reasonably described, and the disclosure is authorized by the customer, or the records are disclosed in response to an administrative subpoena that meets specific requirements as set forth in the Act. (See paragraph 14 of the Subpoenas section for a more complete explanation of the RFPA.) Once a government agency obtains such financial information, it may transfer the financial records to another federal agency only if an official of the transferring agency certifies in writing that there is reason to believe that the records are relevant to a legitimate law enforcement inquiry of the receiving agency. In addition, within 14 days after any transfer, the agency must notify the customer of the transfer unless the government has obtained a court order delaying notice. See Figure 2 for a model notice letter.

      Transfer restrictions do not apply to intra-departmental transfers or to transfers from state or local government agencies to federal agencies or from federal to state agencies.

6. Release of Information Subject to the Privacy Act.

   1. The Privacy Act, 5 U.S.C. §552a, provides that, with certain exceptions, an agency must not disclose any record contained in a system of records from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual unless it has permission of the individual to whom the record pertains. The Privacy Act sets forth criminal penalties for officials who willfully disclose such material to a person or agency not entitled to receive it. Departmental regulations concerning the Privacy Act are at 29 C.F.R. Part 70a.

   2. The Privacy Act also provides that any agency that maintain a system of records containing personal information that retrieves by name, social security number, or some other identifying number, symbol, or identifying particular, must ensure that administration of the file complies with Privacy Act requirements. The Department has taken the position that Privacy Act provisions exempt its investigatory files from these requirements because the Department compiles the investigatory material for law enforcement purposes. In addition, Departmental regulations deny disclosure to anyone, including the individual subject of the record, of information compiled in reasonable anticipation of a civil action or proceeding.

   3. RDs or DSs have primary responsibility for Privacy Act compliance.

7. Release of Information Obtained from the IRS.

   1. IRC § 6103 generally prohibits the IRS from disclosing federal tax returns and return information (Federal Tax Information). However, exceptions to the general prohibition allow the IRS to furnish tax returns and return information to the Department for the enforcement of Title I of ERISA. As a condition of receiving federal tax returns and return information, the Department must establish and maintain, to the satisfaction of the IRS, certain safeguards designed to prevent unauthorized uses of the information and to protect the confidentiality of that information.

   2. Any Department employee who illegally discloses tax information received from the IRS may be subject to criminal penalties under IRC section 7213 (a $5,000 fine, five years imprisonment, or both), as well as civil damages under IRC section 7431 (Figure 3). These civil and criminal penalties apply even for unauthorized disclosures made after ending employment with the Department.

      All employees should ensure that they do not disclose tax information to unauthorized persons or use such information for unauthorized purposes. Employees may disclose tax returns and return information only to the extent necessary to conduct an investigation or prepare for litigation. Among those persons to whom returns and return information may be disclosed for such purposes are other Department employees, employees of other federal agencies, and court reporters. In addition, any Department employee who performs an unauthorized inspection of tax information received from the IRS may be subject to criminal penalties under IRC section 7213A (a $1,000 fine, one year imprisonment, or both).

   3. If during any investigation, the RD or DS believes that information in the possession of the IRS will help in carrying out the provisions of Title I, they can send a written request to the IRS using the format in Figure 4. Copies of the requests should be retained a minimum of five years.

   4. Access to federal tax information must be strictly on a need-to-know basis. A variety of internal safeguards can accomplish restricted access, including:

      1. Keep federal tax information separate from other information as much as possible. If impractical, clearly label files to indicate that federal tax information is included.

      2. Set up and maintain any files containing federal tax information (including the IRS Form 6212-B Checksheet) in a secured area. Each office holding IRS 6103 information must maintain an EBSA Form 534 (IRS Safeguard Inventory and Destruction Log). The files should only be accessible by authorized individuals and all areas where federal tax information is present should be locked during non-duty hours.

      3. Do not mix federal tax information with other information in a way that could inadvertently compromise its confidentiality. For example, do not include any federal tax information when giving documents to a clerk/typist, unless it is essential to their duties.

      Employees must maintain all federal tax returns and tax information in accordance with the procedures set forth in the Release of Information section.

   5. After using federal tax information, either return the information (including any copies made) to the office from where originally obtained or destroy the information by burning, mulching, pulping, shredding, or disintegrating.

      These safeguards cease to apply to any return or return information disclosed in the course of any judicial or administrative proceeding and made a part of the public record thereof.

8. Documents Obtained from a Grand Jury.

   1. Rule 6(e) of the Federal Rules of Criminal Procedure prohibits the disclosure of matters occurring before a grand jury. A knowing violation of the rule may be punished as contempt of court. A violation of the rule can jeopardize an investigation to the extent that civil litigation may become impossible.

   2. Employees must maintain in a secure manner all documents or transcripts of a grand jury obtained during an investigation. Employees may not disclose such information to anyone, including other Department employees, unless the court authorizes that person to have access to the material. See section on Criminal Investigations.

9. Release of Documents to Other Government Agencies.

   At times, another government agency may request documents from EBSA. If there is a Memorandum of Understanding (MOU) with that agency, it should follow the procedures identified in the MOU. If there is no MOU, the other agency should submit an access request letter to EBSA. If appropriate, the agency and EBSA should execute a common interest agreement.

(Figure 1)
18 U.S.C. 1905. Disclosure of Confidential Information Generally

Whoever, being an officer or employee of the United States or of any department or agency thereof, any person acting on behalf of the Federal Housing Finance Agency, or agent of the Department of Justice as defined in the Antitrust Civil Process Act (15 U.S.C. 1311-1314), or being an employee of a private sector organization who is or was assigned to an agency under chapter 37 of title 5, publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigation made by, or return, report or record made to or filed with, such department or agency or officer or employee thereof, which information concerns or relates to the trade secrets, processes, operations, style of work, or apparatus, or to the identity, confidential statistical data, amount or source of any income, profits, losses, or expenditures of any person, firm, partnership, corporation, or association; or permits any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; shall be fined under this title, or imprisoned not more than one year, or both; and shall be removed from office or employment.

(Figure 2)
Notice of Transfer of Financial Records

Dear (Name of Customer):

Copies of, or information contained in, your financial records lawfully in the possession of the Employee Benefits Security Administration, U.S. Department of Labor, have been furnished to ____________________________ (Government Agency) pursuant to the Right to Financial Privacy Act of 1978 for the following purpose(s):

If you believe that this transfer has not been made to further a legitimate law enforcement inquiry, you may have legal rights under the Right to Financial Privacy Act of 1978 or the Privacy Act of 1974.

Sincerely,
Regional Director

(Figure 3)
Unauthorized Disclosure of Information

Sec. 7213(a)(1) [Internal Revenue Code of 1986]

Federal employees and other persons -- It shall be unlawful for any officer or employee of the United States or any person described in section 6103(n) (or an officer or employee of any such person), or any former officer or employee, willfully to disclose to any person, except as authorized in this title, any return or return information (as defined in section 6103(b)). Any violation of this paragraph shall be a felony punishable upon conviction by a fine in an amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution, and if such offense is committed by any officer or employee of the United States, he shall, in addition to any other punishment, be dismissed from office or discharged from employment upon conviction for such offense.

Civil Damages for Unauthorized Inspection or Disclosure of Returns and Return Information

Sec.7431(a)(1) [Internal Revenue Code of 1986]

Inspection or disclosure by employee of United States -- If any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.

(Figure 4)

Internal Revenue Service
Manager, EP Classification
31 Hopkins Plaza
Room 1550
Baltimore, MD 21201

RE: Name and address of plan
EIN/PN
EBSA Case No.

Dear _____________________:

In connection with the administration of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), and a current investigation conducted by the Employee Benefits Security Administration (EBSA) it is requested that you make the documents listed in the attached available to this office, pursuant to section 6103(l)(2) of the Internal Revenue Code.

I would appreciate your furnishing the requested documents and, if necessary, discussing their contents with the following individuals of the Department of Labor (select as appropriate and state proper names):

Regional Office, EBSA

Regional Director
Deputy Regional Director
District Supervisor
Supervisory Investigator
Investigator/Auditor

National Office, EBSA

Director of Enforcement
Chief, Division of Field Operations and Support, Office of Enforcement
Chief, Division of Criminal Investigations, Office of Enforcement
Investigator/Auditor

Office of the Solicitor

Solicitor
Associate Solicitor, Plan Benefits Security Division (PBSD)
Deputy Associate Solicitor, PBSD
Counsel for Regulations, PBSD
Counsel for General Litigation, PBSD
Counsel for Fiduciary Litigation, PBSD
Counsel for Appellate and/or RSOL Decentralized Litigation, PBSD
Staff Attorney, PBSD
Regional Solicitor
Staff Attorney, RSOL

This information is necessary and is being requested for the purpose of the administration of Title I of ERISA. It is understood that the information furnished by the Internal Revenue Service will be used strictly in accordance with, and subject to the limitations of, the disclosure provisions of the Internal Revenue Code pertaining to confidentiality and taxpayer rights to privacy. The Department of Labor representatives are also aware of the penalty provisions of section 7213 of the Internal Revenue Code and section 1905 of Title 18 of the United States Code with respect to their use of this information.

Sincerely,
Regional Director/District Supervisor

cc: Director of Enforcement

Attachment to Request for Federal Tax Returns

1. At this time, a request is hereby made for IRS transcripts of the tax information/forms listed below.

   Or

   A request is hereby made for copies of the tax information/forms listed below. These copies are being requested rather than transcripts because of (Investigators should enter court proceedings, other imminent events and related dates).

   Taxpayer Name:

   Taxpayer Address:

   Taxpayer TIN (SSN or EIN):

   Federal Tax Information/Form Requested:

   Plan/Tax Year(s) Requested:

   Taxpayer Name:

   Taxpayer Address:

   Taxpayer TIN (SSN or EIN):

   Federal Tax Information/Form Requested:

   Plan/Tax Year(s) Requested:

   Taxpayer Name:

   Taxpayer Address:

   Taxpayer TIN (SSN or EIN):

   Federal Tax Information/Form Requested:

   Plan/Tax Year(s) Requested:

Attachment to Request for IRS Reports, Correspondences & Documents

2. A request is hereby made for copies of the following reports and/or correspondences for the plan/sponsor/fiduciary listed below: [Choose from below as applicable.] (Investigators should provide as much detail as known, such as IRS agent name, and IRS division or group.)

   1. Any reports, reports of investigation or interview, or memoranda related to the below-referenced plan, its sponsor or fiduciaries and any work papers related thereto or related to any audit of the above-referenced plan or its sponsors, including, but not limited to, any conclusive findings developed by the IRS Office as a result of its investigation and review. The reports of investigation, interviews or memoranda requested include information relating to any exclusive benefit rule/fiduciary disqualification of the plan.

   2. Any correspondence or memoranda reflecting communications between the IRS and the below-referenced plan, its sponsors or its fiduciaries in regard to any of the above, including, but not limited to, any tax exempt status and IRS responses.

   3. Reports or documents of any nature, plus attachments, filed by or obtained from the below-referenced plan, its sponsors, its fiduciaries, and any other persons affiliated with the above-referenced plan.

   [Complete the appropriate items below.]

   Plan/Sponsor/Fiduciary Name:

   Address:

   Taxpayer TIN (SSN or EIN):

   Plan/Tax Year(s) Requested (if known):

   Plan/Sponsor/Fiduciary Name:

   Address:

   Taxpayer TIN (SSN or EIN):

   Plan/Tax Year(s) Requested (if known):

   Plan/Sponsor/Fiduciary Name:

   Address:

   Taxpayer TIN (SSN or EIN):

   Plan/Tax Year(s) Requested (if known):

   Plan/Sponsor/Fiduciary Name:

   Address:

   Taxpayer TIN (SSN or EIN):

   Plan/Tax Year(s) Requested (if known):

   Plan/Sponsor/Fiduciary Name:

   Address:

   Taxpayer TIN (SSN or EIN):

   Plan/Tax Year(s) Requested (if known):

Footnotes

1. ERISA §504

1. Introduction. This section provides procedures and guidance for maintaining investigative files. There are special rules required for maintaining investigative files obtained through the grand jury (see Criminal Investigations section, paragraph 14). EBSA maintains an electronic database known as the Enforcement Management System to record certain case activity.⁽¹⁾

2. Maintaining Investigative Files.

   1. Opening and Retaining Files. Investigators/Auditors (I/A) must open a case file each time they begin an EBSA investigation. Case files receive a sequential case number. EBSA maintains electronic case files. I/A may use hardcopies of case records during their investigations. Each RO shall establish guidelines under which I/A can retain these hard copies in their offices while working on the cases.

   2. Maintaining Investigative Files. All material received during the investigation including, but not limited to, interview reports, statements, documentary evidence, memoranda, and correspondence, will be placed in the electronic case file as soon as possible and maintained there at all times. I/A may make copies of documents needed to continue the investigation.

   3. Electronic Information. All electronic material received during the investigation will be uploaded to the electronic case file as soon as possible and maintained there to ensure authentication and prevent alteration.

   4. Use and Maintenance of Case Record Copies. I/A may download electronic copies of records to their hard drive, or print hard copies from an open case. Each RO will have a procedure for ensuring secure maintenance during the investigation and appropriate disposal after.

3. Case Assignment and Control. Each RO shall have a system for case assignment and control. If the RO maintains an inventory of opened, but unassigned cases, the RO's system shall list the case as assigned to the Group Supervisor, District Supervisor, or RD Designee.

   1. I/A Assignment File. EBSA will maintain a record of case assignments by Investigator/Auditor name with a further breakdown between active and completed assignments.

   2. I/A Assignments. As a case is assigned, the I/A will be advised of the assignment and provided with a copy of the case opening documents. Investigative activity should begin no later than 30 days after assignment to I/A.

Footnotes

1. Database instructions are contained in a separate manual.

1. Complaints. A complaint refers to claims that a violation of the law has occurred or is about to occur. Complaints may be specific or nonspecific, written or oral, within or outside EBSA's jurisdiction. Complaints may come from numerous sources, such as individuals, news media, and other enforcement agencies.

2. Complaints from Individuals. EBSA's Benefits Advisors generally handle inquiries and complaints from members of the public following procedures established by the Office of Outreach, Education and Assistance. When appropriate, Benefit Advisors may refer a participant complaint to the enforcement unit as an investigative lead for possible case opening. When a case is opened based upon a participant complaint, the assigned Investigator/Auditor will notify the participant of the complaint disposition. EBSA Investigator/Auditor should notify the participant quarterly on the progress of the investigation, and document final notification of the outcome in the case file.

3. Nonspecific Complaints. EBSA generally will not investigate if the information is indefinite, general, grounded in rumor or conjecture, or alleges activity that does not constitute a violation of law, or the complaint is "nonspecific". However, if EBSA receives multiple complaints relating to the same person, entity, or subject matter over a period of time, the cumulative effect of such complaints may form the basis for conducting an investigation.

4. Confidentiality of Complaints. If the complainant requests confidentiality, the complainant is a "Confidential Source". The complainant may be described in terms of his/her degree of reliability, such as "who has furnished accurate information in the past" or "of unknown reliability" in a memorandum for the case file. The complainant's name will only appear in the original written complaint or an original memorandum relating to an oral complaint, and kept in a secure location. EBSA cannot guarantee confidentiality to complainants, particularly when the complaint concerns a benefit dispute. The most that EBSA should state is that EBSA will attempt to keep their identity confidential unless required to disclose by law. Similar protection will be afforded to government agencies that request it, making reference to "Confidential Source A, a U.S. government agency" or "Source D, a municipal agency," etc.

5. Identification of Source. Law enforcement agencies are not designated as confidential information sources except in instances when the agency involved, or its employee, specifically requests anonymity as a condition precedent to the release of such information. Such instances usually occur when the information involves "raw, unevaluated" matters and a possible source of embarrassment to the contributor.

6. Information from Other Agencies. Some agencies, such as the FBI, may release information only upon the condition it is not released to other agencies without prior permission of the contributing agency. The IRS, by law, is compelled to consider tax return information to be confidential (IRC section 6103). Any information obtained from the IRS, as authorized by IRC section 6103, must be kept confidential and not released outside EBSA or the Solicitor's Office without the Commissioner of Internal Revenue's permission. IRC section 7213 provides severe penalties, including criminal sanctions, for unauthorized disclosure. Information obtained from the IRS should not be discussed with anyone, even within the Department, other than on a need-to-know basis (see sections on Relationship with IRS and Release of Information).

7. Anonymity of Complainant. Even if a complainant does not request confidential informant treatment, it is EBSA policy not to disclose the complainant's identity during the course of an investigation unless the law requires such disclosure. This does not apply to an individual who is requesting help from EBSA in obtaining an individual benefit.

8. Documenting Oral Complaints. When appropriate, Benefit Advisors document complaints in accordance with the procedures established by the Office of Outreach, Education and Assistance. In other situations, the nature of the complaint will determine if a written memorialization should be prepared. If the individual receiving the complaint determines that further action will be required, an RI will be prepared. If the matter is of interest to the NO, another RO, or a DO, copies are furnished to each interested office.

9. Complaints of Violations of Other Laws. ROs or DOs who receive information pertaining to potential violations of laws enforced by other agencies, federal or state, will refer such matters to the appropriate agency. ROs should only refer complaints to other agencies that do not involve potential plan violations. If a potential plan violation, as well as some other violation, is involved, and the RD is uncertain how to proceed, contact OE for appropriate action. ROs or DOs should refer matters directly to PBGC, copying OE.

10. Complaints Concerning Subjects outside a RO Jurisdiction. RO/DO should forward complaints concerning an individual or organization from another RO/DO’s geographic jurisdiction to the appropriate office. The referring RO/DO should first confirm with the recipient RO/DO that a referral is appropriate.

1. Purpose. This section outlines EBSA's guidelines for conducting and documenting interviews, and includes information to help develop interviewing skills.

2. Objectives. Interviews can develop credible information that is relevant to the investigation and establishes the interviewee's version of the facts.

   Interviews can:

   1. Verify the accuracy of records and reports filed with the Department;

   2. Obtain information not recorded in records, and reports;

   3. Secure explanations for recorded entries;

   4. Secure details and explanations for unrecorded transactions and events;

   5. Secure admissions regarding violations from potential defendants;

   6. Obtain evidence of specific transactions and/or actions of individuals dealing with the plan(s); and

   7. Assess the desirability of the interviewee as a witness at trial.

3. Definition of Interview.

   An interview is the questioning of a person who may or does possess information relevant to the matter under investigation. An interview conducted on a subject of a criminal investigation, especially when in governmental custody, is referred to as an interrogation.

   Interview subjects may include, but are not limited to:

   1. Individuals who know about a single document or transaction;

   2. Custodians of systems of regularly kept records;

   3. Fiduciaries of employee benefit plans;

   4. Service providers to employee benefit plans;

   5. Participants and beneficiaries of employee benefit plans; and

   6. Subjects of criminal investigations.

4. Establish a Goal. The interviewer should establish a clear goal or objective for the interview. To determine the interview's objective, the interviewer should consider:

   1. The requirements of the law or investigative assignment; and

   2. The material facts that need to be addressed.

   The interviewer should determine the facts that this interviewee likely knows based on the interviewee's position and relation to the events and persons involved in the investigation, and should ask questions that elicit facts pertinent to the investigation.

5. Aids.

   Aids are documents and/or statements, oral or written, shared with the interviewee during the course of the interview.

   Some typical aids are:

   1. Written or recorded statements of other interviewees;

   2. Reports filed with EBSA or other agencies;

   3. Background information such as credit reports, financial statements, insurance claims, etc.;

   4. Information from other sources to be verified;

   5. Previous statement(s) of the same interviewee; and

   6. Copies of checks, plan records, bank records, medical records, official records of ownership, hotel records, etc.

6. How to Ask Questions. Investigators/Auditors will conduct interviews:

   1. Politely;

   2. Without personal prejudice or preconceived notions as to the interviewee's culpability; and

   3. Without making any threats or promises to elicit any information.

   Questions should be clear, and designed to elicit information. Investigators/Auditors should ask questions in a language the interviewee understands.

7. Preparing to Write Questions. Questions should be designed to obtain information directly related to the matter under discussion.

   1. To prepare focused questions, the interviewer should understand:

      1. The nature of the investigation;

      2. The purpose of the interview; and

      3. The information needed.

   2. The interviewer should prepare for each interview by:

      1. Reviewing the available evidence;

      2. Analyzing the evidence and organizing it logically based on its relationship or effect on the allegations; and

      3. Outlining the interview based upon a "theory of the case."

8. Characteristics of Good Questions. Good questions are:

   1. Straightforward;

   2. Understandable;

   3. Focused on relevant information; and

   4. Free of accusatory/intimidating language.

9. Question Development.

   1. Most questions can be based on:

      1. "What?" (what happened);

      2. "When?" (when did it happen);

      3. "Where?" (where did it happen);

      4. "Why?" (why did it happen);

      5. "How?" (how did it happen); and

      6. "Who?" (who was involved).

      The questions "why?" and "why not?" are particularly valuable.

   2. Free Narrative as a Means of Obtaining the Interviewee's General Description of Facts. Investigator/Auditors can usually initiate a free narrative by requesting the interviewee to tell what he/she knows about the specific matter. This open-ended method should elicit a free-flowing account of facts the interviewee can and will provide without questioning, and can be a useful initial technique in an interview. When using this technique, the interviewer should not generalize about the subject matter of the discussion, but should specifically clarify what subject is being discussed. The interviewer should ask specific follow-up questions about the interviewee’s factual narrative and about material facts not addressed in the narrative answer.

   3. Leading Questions. Leading questions are those that suggest the answer, generally stating a fact and requiring a simple "yes" or "no" answer. Accordingly, they may limit the information obtained from the interview. When initially asking for information, the interviewer should ask open-ended rather than leading questions. However, leading questions will likely be necessary to follow-up on an interviewee's answers, and may be necessary to elicit relevant information.

10. Questioning Strategies.

    1. General to Specific. An efficient way to resolve an issue is to ask questions from general to specific. Ask general questions designed to develop information on the setting of an event before exploring the details. Determine first what "was done" before exploring how or why it was done. Place a person at a scene before exploring his/her actions while there.

    2. Initial Questioning. Initial questioning is systematic and designed to bring out a connected story of an event or incident. Its purpose is to elicit new information or fill in details omitted by the interviewee. How to conduct initial questioning:

       1. Begin with questions not likely to cause hostility.

       2. Ask questions that will develop facts in the order of their occurrence or in some other systematic manner.

       3. Ask only one question at a time and compose it so that only one answer to the question is required.

       4. Ask straightforward and frank questions.

       5. Give the interviewee ample time to answer.

       6. Help him/her to remember with documents, if possible.

       7. Repeat or rephrase questions, if necessary, to get the desired facts.

       8. Be sure there is a full understanding of the answers and, if not perfectly clear, request an explanation.

       9. Give the interviewee an opportunity to explain his/her answers.

       10. Separate the interviewee's statement of facts from his/her inferences.

       11. Get all the facts. Almost every subject/ interviewee possesses more information than he/she initially provides.

       12. After receiving a narrative account, ask questions about every significant item discussed. Ask questions about little things; the answers will frequently contain clues to previously unreported information of interest.

    3. Follow-up Questions. Interviewers should listen very carefully to the interviewee's answers and should discern whether an answer is fully responsive to the question asked. If not, the interviewer should ask follow-up questions. After receiving answers, it may be helpful for the interviewer to confirm the interviewer understood the response by paraphrasing the interviewee's response. The interviewer should adjust their questions, if the prepared script is not relevant based on the interviewee's responses. Follow-up questions are also needed to fully understand an interviewee's answer, or to pursue other relevant information based on the content of the answer.

11. Introduction by Investigator/Auditor and Initial Notifications/Warnings Preliminary to Interview

    1. Civil Cases. Investigators/Auditors must:

       1. Clearly identify themselves to interviewees.

       2. Inform the interviewee that the interview is pursuant to an official investigation by EBSA under the authority of ERISA.

       3. Request the interviewee's voluntary cooperation.

       4. Inform the interviewee that any information involving violations of other laws will be referred to the U.S. Department of Justice or other appropriate agency (See Figure 1). See EBSA Form 202.

          If a civil investigator is asked by a witness as to whether there is a criminal investigation (or asked by the witness whether the witness is the subject of a criminal investigation), the civil investigator shall clearly state that it is the agency’s policy to neither confirm nor deny the existence of any criminal investigation. The civil investigator shall (re)state to the witness the advisory that any information obtained from the witness concerning potential criminal violations may be referred to the U.S. Department of Justice or other appropriate authority. (See Criminal Investigations Program ⁋8.d).

       Investigators/Auditors are required to carry credentials. Investigator/Auditors should display their credentials or badges when introducing themselves, as appropriate, and must present them if the interviewee requests. Investigators/Auditors must not misplace or copy their credentials or badges.

    2. Criminal Cases. In criminal case interviews, Investigators/Auditors must also clearly identify themselves. When introducing themselves, they should display their credentials or badges, as appropriate. Investigators/Auditors should always maintain adequate control of their credentials and badges. (See Criminal Investigations Program ⁋8.a-d and ⁋19.a-c).

       1. Investigators/Auditors should:

          1. Ask for the interviewee's voluntary cooperation, and

          2. Advise that he/she is conducting a criminal investigation pursuant to ERISA, and any information obtained may be referred to the U.S. Department of Justice or other appropriate agency (See Figure 2). See Tab [B] for EBSA Form 202A.

          Investigators/Auditors are not required to advise interviewees of their rights in non-custodial situations unless requested to do so by the U.S. Attorney's Office. However, in those circumstances where a person is in governmental custody or reasonably believes himself/herself to be in such custody, he/she must be advised of his/her rights. See EBSA Form 202B.

       2. Advisement of Right, Custodial Interviews. When interviewing, or otherwise substantively questioning a "Witness"⁽¹⁾ in custody, the investigator must advise the Witness of their rights as follows:

          1. You must understand your rights before we ask you any questions.

          2. You do not have to make any statement or answer any questions.

          3. Any statement you make or any answers you give may be used against you in a court of law or other proceedings.

          4. You have the right to talk to a lawyer for advice before you answer any questions and you have the right to have a lawyer present during the interview.

          5. If you decide to answer questions now without a lawyer present, you still have the right to stop the interview at any time.

          If the above-described advisory is given, the Report of Interview along with the Witness's acknowledgement (if any) should reflect it. In recorded interviews, the audio recording should capture the advisory and the Witness's acknowledgement (if any). (See Criminal Investigations Program Paragraph 20.b.1-8. See also Paragraph 22 below for guidance concerning the recording of interviews).

       3. Waiver of Rights. If a Witness in custody verbally acknowledges their rights and indicates a willingness to proceed with the interview, the Investigator/Auditor should immediately attempt to obtain a "Waiver of Rights" from the Witness. (See Criminal Investigations Program Paragraph 20.b.1-8.)

          The Investigator/Auditor should read the "waiver of rights" language to the Witness and ask them to sign the document. (See Figure 3).)

          If the Witness agrees to an interview but does not agree to sign the "Waiver of Rights" form, the interview should continue.

       4. Deemed to be in Custody. A Witness is "in custody" in any circumstance in which a reasonable person might conclude that they are not free to leave. If a Witness is not in custody, an investigator may advise the Witness that they are not in custody and that he or she is free to leave at any time. (See Criminal Investigations Program Paragraph 20.b.1-2.)

       5. Documentation of Advisories and Acknowledgement by Witness. The Report of Interview should list any advisories given along with the Witness's acknowledgement (if any). In recorded interviews, the advisory and the Witness's acknowledgement (if any) should be captured on the audio recording. (See Criminal Investigations Program Paragraph 20.b.3-9.)

       6. Discontinuing the Interview. If at any point, a custodial Witness indicates that he or she wants to consult with an attorney, or wants an attorney present before answering any further questions, the interview must immediately stop and cannot resume until the custodial Witness has the opportunity to consult with an attorney. (See Criminal Investigations Program Paragraph 20.b.9.)

       7. Interview Under Direction of a Law Enforcement Officer or Prosecutor. If a law enforcement officer or other law enforcement agency is leading the interview (or attempted interview), the Investigator/Auditor should generally follow the lead agency's interview procedures. If the investigation is under the direction of a prosecutor, the Investigator/Auditor should consult with and follow the prosecutor's instructions. (See Criminal Investigations Program Paragraph 19.c.)

12. Third Parties Present During an Interview. EBSA investigations are not public. Only interviewees and their representatives may be present. Third parties, other than attorneys who represent the witness, do not have the right to attend interviews conducted by an EBSA Investigator/Auditor during the course of an investigation. However, at the Investigator/Auditors discretion, third parties may be present in certain circumstances in order to provide information related to the case. If an Investigator/Auditor asks a third party to leave the room at the beginning of the interview, and the third party refuses, the Investigator/Auditor should consider terminating the interview, and issuing a subpoena of the witness for an administrative deposition.

13. Summarize Interview. After the interview is completed, the Investigator/Auditor should summarize the interview by stating all the important details in order. The Investigator/Auditor should stop after each part of the summary and ask the interviewee to verify his/her interpretations. If the interviewee disagrees with any segment of the summary, the Investigator /Auditor should correct the discrepancy before proceeding.

14. Ending the Interview. After the interview, the Investigator/Auditor should politely end the interview. The Investigator/Auditor should explain that more interviews may become necessary.

15. EBSA Form 202, "Report of Interview". Investigator/Auditors will record oral information in detail obtained from an interview on EBSA Form 202, "Report of Interview" (RI). Investigator/Auditors will use the interviewee's actual language as much as possible.

    1. Figure 1: Outline for Civil RI

    2. Figure 2: Outline for Criminal RIs; Witness or Non-Custodial Subject

    3. Figure 3: Advisement of Rights

    4. Figure 4: Outline for Criminal RIs; Custodial Subject

    1. The text of the RI should clearly identify:

       1. The interviewee's full name;

       2. Address - work and home;

       3. Telephone numbers;

       4. Any documents shown to the interviewee or provided by the interviewee during the interview; and

       5. Interviewee's age, education, and employment history, where appropriate.

    2. RIs must be prepared to record all interviews. When the interviewee provides a signed, written statement, the RI should reflect only the appropriate preface comments, the fact that a signed, written statement of the interviewee is attached, and the circumstances of the statement's execution as known to the Investigator/Auditor receiving it.

       Figure 5: Civil RI with Signed Statement

       Figure 6: Format for Criminal RIs; Witness or Non-Custodial Subject

       Figure 7: Format for Criminal RIs; Custodial Subject with Signed Statement

    3. There is no requirement for RIs when testimony is from administrative depositions.

    4. RI basics:

       1. Use plain bond paper when additional pages are required.

       2. Use separate EBSA Form 202 to report each interview.

       3. Investigator/Auditors should write RIs as soon as possible after the interview to ensure accuracy and completeness.

       4. Investigator/Auditors should sign the original RI above the typewritten names of the Investigators/Auditors who conducted or were present at the interview.

16. Maintenance of Report of Interview. Original RIs will be preserved as original evidence in the case file in order to ensure availability if production is required. Include copies of RIs as exhibits in ROIs.

17. Investigator/Auditor Notes Taken During Interview.

    1. Civil Investigations. Keep notes taken during interviews.

    2. Criminal Investigations. Keep interview notes in all criminal investigations, unless instructed otherwise by the USAO. The Investigator/Auditor should consult with the USAO early in the investigation concerning the retention of notes or rough drafts of RIs. See Criminal Investigations Program section 20.a.1-4.

18. Disclosure of Notes. Investigators/Auditors should not show interview notes to the interviewee. Treat notes like work papers and secure them whenever you leave the work area.

19. Signed Statements. Investigators/auditors may get a signed, written statement from an interviewee.

    1. The preface of the statement must:

       1. Include identifying information about the interviewee;

       2. Note that EBSA gave appropriate notifications or warnings; and

       3. Indicate that the statement is voluntary.

       Figure 8: Format and Guide for a Signed Statement

    2. The body of the signed statement need not follow a prescribed form, but it should contain a complete account of all the pertinent information known to the maker relevant to the alleged violation.

    3. The statement can be:

       1. Written or dictated by the maker, or

       2. Written by the Investigator/Auditor, keeping to the maker's own words.

    4. The maker should:

       1. Review the completed statement,

       2. Initial any corrections/deletions⁽²⁾,

       3. Number and initial each page, and

       4. Include and sign a paragraph attesting that he/she has read, or has had read to him/her, the statement which consists of a certain number of pages, that each page (which has been numbered) and each correction has been initialed by him/her and that the statement is complete and true to the best of his/her knowledge.

    5. Each person who witnessed the statement's creation should sign and date it.

    6. Investigator/Auditor should not voluntarily provide a copy of the signed statement to the person furnishing the statement. However, if the person or his/her attorney requests a copy of the statement, a copy is furnished. Investigator/Auditor maintains these signed statements in the same manner as RIs.

20. Personal Observations.

    1. "Evaluation of Witnesses" is a memorandum to the file that records observations as to the:

       1. Credibility,

       2. Dependability, or

       3. Availability of potential witnesses.

    2. The observations may help SOL and others evaluate the litigation potential of cases. Investigator/Auditors should keep observations to a minimum and expressed in the most objective manner possible; they must never appear in an RI or the body of an ROI.

    3. Investigator/Auditor should also observe and report any information related to the inquiry, such as the disorder of records, books, the contents of a safe deposit box, and so on. Such evidence is direct testimony, about which the Investigator/Auditors may later testify. Accordingly, Investigator/Auditors should report such information in a separate memorandum to the file.

21. Attorneys-at-Law

    1. Civil Cases. Investigators/Auditors should not object to the presence of an attorney representing the interviewee during the interview of a civil case witness or subject. He/she should keep in mind that in an interview of a person represented by counsel, the attorney may also represent a potential defendant. Under these circumstances, Investigators/Auditors should avoid disclosure of EBSA's case.

       1. In interviews conducted in the presence of attorneys, Investigators/Auditors should not engage in arguments as to:

          1. Interpretations of the law,

          2. The facts of the case, or

          3. Matters of procedure.

       2. Attorneys may advise their clients, but may not reply for them. If, in isolated cases, an attorney does reply for his/her client, the interviewer should ask interviewee for his/her own answer. If significant, the RI should also reflect the attorney's answer.

       3. If the attorney seeks to control the scope and progress of the investigation, the Investigator/Auditor courteously discontinues the interview, and tells his/her supervisor at the earliest opportunity.

    2. Criminal Cases. Witnesses and both custodial and non-custodial subjects in criminal investigations have a right to representation during an interview. Considerations similar to those in paragraph 21.a. still pertain in such interviews, particularly with respect to having the interviewee answer for him/herself.

22. Recording, Transcribing, and Monitoring of Conversations and Statements

    1. Policy. DOL policy is that all internal and external business must be transacted in an atmosphere of complete candor. Accordingly, statements or conversations made in person or over the telephone must not be secretly recorded, transcribed, or monitored.

    2. Restrictions. In accordance with the above policy, the following restrictions apply:

       1. Unless otherwise authorized by a court, the policy prohibits the use of electronic or mechanical recording and monitoring devices in conjunction with two-way telephone conversations. Telephone recording devices must not be used except for purposes of receiving messages on automatic answering equipment or, where Voice Over Internet Protocol (VOIP) is used, for purposes of administering communications devices or filtering and logging certain types of traffic to mitigate potential security vulnerabilities.

       2. Interviewers may use electronic recording devices, if all parties consent to such use, and the interview is in person and conducted in accordance with approved procedures.

       3. The Investigator/Auditor should not permit a Witness or any other person in attendance to record the interview (other than a law enforcement officer or investigative partner).

       4. Interviews should not be conducted if a Witness or their representative insists on recording the interview. If the Investigator/Auditor discovers that an interview is being recorded by the Witness or another party in attendance (other than a law enforcement officer), they should immediately stop the interview and (in a criminal case) consult the prosecutor (or SOL in a civil case) as soon as practicable (as any third party recordings may represent potential additional evidence that must be collected).

       5. If an EBSA investigator, conducting a criminal case, has reason to believe that a witness is in custody (i.e., is incarcerated at the time of the interview or otherwise being detained), then the investigator should consult with the prosecutor prior to engaging in the interview to determine whether recording of the interview may be necessary in order to fulfill the requirements imposed by DOJ policy or other authority.

       6. Secretaries or other personnel may monitor telephone conversations to confirm appointments, make arrangements, assist with commitments, and assure adequate follow-ups only after notifying callers that such monitoring is taking place.

23. Administrative Depositions. Court stenographers record administrative depositions and witnesses are under oath. The use of RIs or signed statements is not required. In some instances, an Investigator/Auditor may take an administrative deposition without a government attorney present. They should first consult with SOL. In these circumstances, Investigators/Auditors should take special care to employ good interviewing techniques to insure a sound transcript. (See Subpoenas section).

24. Disclosure of Criminal Investigation. See Criminal investigations Program section paragraph 8.a.d.

(Figure 1)
Outline for Civil Investigation Report of Interview
(See EBSA Form 202)

[Date of Interview]

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name]. (Include if applicable) Also present during the interview was [names, titles].

[Interviewee or Attendees ] was/were advised that the writer is conducting an official investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted under the Employee Retirement Income Security Act of 1974.

[Interviewee] was further advised that the writer was requesting his/her voluntary cooperation, and that any information obtained during this official investigation which might involve violations of other laws, civil or criminal, would be referred to the U.S. Department of Justice or other appropriate agency.

In response to questioning, [Interviewee] provided the following information.

1. The first paragraph should contain background information regarding the interviewee, which may bear upon his/her credibility, such as: address, social security number, title, duties and responsibilities, and length of service in the current position.

2. Organize subsequent paragraphs chronologically or topically, and must be written, as much as possible, in the words of the interviewee. Avoid words or terminology that are unfamiliar to the interviewee. Use section headings when appropriate to identify discussion topics.

3. Clearly identify sources of all information. Make clear whether (or not) the interviewee has first-hand knowledge of the information he/she is providing. If the information comes from another source, identify the other source.

4. Clearly identify any document shown to, or provided by, the witness during the interview. If there is any possibility of confusion, attach copies of the relevant documents to the RI.

5. If applicable, identify any other Investigator/Auditor or counsel present at the interview.

(Figure 2)
Outline for Criminal Investigation Report of Interview
Witness or Non-Custodial Subject
(See EBSA Form 202A)

Date of Interview

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name]. (Include if applicable) Also present during the interview was [names, titles].

[Interviewee or Attendees] was/were advised that the writer is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted in the Employee Retirement Income Security Act of 1974, as amended.

[Interviewee] was further advised that the writer was requesting his/her voluntary cooperation, and that any information obtained during this official criminal investigation may be referred to the U.S. Department of Justice or other appropriate agency for consideration.

In response to questioning, [Interviewee] provided the following information.

1. The first paragraph should contain background information regarding the interviewee that may bear upon his/her credibility, such as address, social security number, title, duties and responsibilities, and length of service in the current position.

2. Organize subsequent paragraphs either chronologically or topically and must be written, as much as possible, in the words of the interviewee. Avoid words or terminology that are unfamiliar to the interviewee.

3. Clearly identify sources of all information. Make clear whether (or not) the interviewee has first-hand knowledge of the information he/she is providing. If information comes from another source, identify the other source.

4. Clearly identify any document shown to, or provided by, the witness during the interview. If there is any possibility of confusion, attach copies of the relevant documents to the RI.

5. If applicable, identify any other Investigator/Auditor or counsel present at the interview.

(Figure 3)
Advisement of Rights

Place ____________________

Date ____________________

Time ____________________

You must understand your rights before we ask you any questions.

You do not have to make any statement or answer any questions.

Any statement you make or answers you give may be used against you in a court of law or other proceedings.

You have the right to talk to a lawyer for advice before you answer any questions and you have the right to have a lawyer present during the interview.

If you decide to answer questions now without a lawyer present, you still have the right to stop the interview at any time.

Waiver of Rights

I have read this statement of my rights and it has been read to me, and I understand what my rights are. I am willing to make a statement and answer questions. I do not want a lawyer present at this time. I understand and know what I am doing. No promises or threats have been made to me and no pressure or coercion of any kind has been used against me. I hereby voluntarily and intentionally waive my rights.

Date ____________________

Signature ____________________

Time ____________________

Certification

I hereby certify that the foregoing Warning and Waiver of Rights were read by me to the above signatory, and that he/she also read it and has affixed his/her signature hereto in my presence.

Signature ____________________

Witness ____________________

(Figure 4)
Outline for Criminal Report of Interview
Custodial Subject
(See EBSA Form 202B)

Date of Interview

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name]. (Include if applicable) Also present during the interview was [names, titles].

[Interviewee or Attendees] was/were advised that the writer is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted in the Employee Retirement Income Security Act of 1974, as amended. [Interviewee] was further advised that the writer was requesting his/her voluntary cooperation. [Interviewee] was warned that he/she must understand his/her rights before any questions were asked. [Interviewee] was told that he/she does not have to make any statement or answer any questions; that any statement he/she makes or any answers he/she gives may be used against him/her in a court of law or other proceedings; that he/she has the right to talk to a lawyer for advice before he/she answers any questions and that he/she has the right to have a lawyer present during the interview; further, [Interviewee] was told that if he/she decides to answer questions without a lawyer present, that he/she still has the right to stop the interview at any time. After being warned, [Interviewee] agreed to being interviewed. [Interviewee] signed the waiver of rights/refused to sign the waiver of rights (circle one).

In response to questioning, [Interviewee] provided the following information.

1. The first paragraph(s) should contain background information regarding the interviewee, which would tend to bear upon his/her credibility, such as title, duties and responsibilities, and length of service in current position.

2. Organize subsequent paragraphs either chronologically or topically and must be written, as much as possible, in the words of the interviewee. Avoid words or terminology that are unfamiliar to the witness.

3. Clearly identify all sources of all information. Make clear whether (or not) the witness has first-hand knowledge of the information he/she is providing. If the information comes from another source, identify the other source.

4. Clearly identify any document shown to, or provided by, the witness during the interview. If there is any possibility of confusion, attach copies of the relevant documents to the RI.

5. If applicable, identify any other Investigator/Auditor or counsel present at the interview.

(Figure 5)
Civil Investigation Report of Interview with Signed Statement

Date of Interview

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name] was advised that the writer is conducting an official investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted in the Employee Retirement Income Security Act of 1974, as amended.

[Interviewee] was further advised that the writer was requesting his/her voluntary cooperation, and that any information obtained during this official investigation which might involve violations of other laws, civil or criminal, would be referred to the U.S. Department of Justice or other appropriate agency.

[Interviewee] agreed to cooperate and provide the attached signed statement.

[Any information obtained that is not in the signed statement, should be included in the RI. If the interviewee refuses to sign a prepared statement, ask him/her to read it orally, acknowledge whether it is true or correct, and record his/her comments in the RI.]

(Figure 6)
Format for Criminal Investigation Report of Interview Witness or Non-Custodial Subject

Date of Interview

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name].

[Interviewee] was advised that the writer is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted in the Employee Retirement Income Security Act of 1974, as amended.

[Interviewee] was further advised that the writer was requesting his/her voluntary cooperation, and that any information obtained during this official criminal investigation may be referred to the U.S. Department of Justice or other appropriate agency for consideration.

[Interviewee] agreed to cooperate and provided the attached signed statement.

[Any information obtained that is not in the signed statement, should be included in the RI. If the interviewee refuses to sign a prepared statement, ask him/her to read it orally, acknowledge whether it is true or correct, and record his/her comments in the RI.]

(Figure 7)
Format for Criminal Investigation Report of Interview
Custodial Subject with Signed Statement

Date of Interview

[Interviewee] was interviewed at [interview location] on the above date at [time] am/pm by Investigator/Auditor [Inv/Aud Name]. [Interviewee] was advised that the writer is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the authority granted in the Employee Retirement Income Security Act of 1974, as amended.

[Interviewee] was further advised that the writer was requesting his/her voluntary cooperation. [Interviewee] was warned that he/she must understand his/her rights before any questions were asked. [Interviewee] was told that he/she does not have to make any statement or answer any questions; that any statement he/she makes or any answers he/she gives might be used against him/her in a court of law or other proceedings; that he/she has the right to talk to a lawyer for advice before he/she answers any questions and that he/she has the right to have a lawyer present during the interview; further, was told that if he/she decides to answer questions without a lawyer present that he/she still has the right to stop the interview at any time. After being warned, [Interviewee] agreed to being interviewed. [Interviewee] signed the waiver of rights/refused to sign the waiver of rights (circle one).

[Interviewee] agreed to cooperate and provided the attached signed statement.

[Any information obtained that is not in the signed statement, should be included in the RI. If the interviewee refuses to sign a prepared statement, ask him/her to read it orally, acknowledge whether it is true or correct, and record his/her comments in the RI.]

(Figure 8)
Format and Guide For A Signed Statement

(Preface for Civil Program Witness or Subject)

I, [full name of interviewee, home and work addresses and telephone numbers], make the following voluntary statement to Investigator/Auditor ____________________. I was advised that Investigator/Auditor____________________ is conducting an official investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to the Employee Retirement Income Security Act of 1974, as amended. I was further advised that Investigator/Auditor was requesting my voluntary cooperation and that any information obtained during this official investigation that may involve violations of other laws may be referred to the U.S. Department of Justice or other appropriate agency for consideration.

(Preface for Criminal Investigation Witness or Non-Custodial Subject)

I, [full name of interviewee, home and work addresses and telephone numbers], make the following voluntary statement to Investigator/Auditor ____________________. I was advised that Investigator/Auditor____________________ is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to authority granted in the Employee Retirement Income Security Act of 1974, as amended. I was further advised that Investigator/Auditor ____________________ was requesting my voluntary cooperation and that information obtained during his/her official criminal investigation will be referred to the U.S. Department of Justice or other appropriate agency for consideration.

(Preface for Criminal Investigation Custodial Subject)

I, [full name of interviewee, home and work addresses and telephone numbers], make the following voluntary statement to Investigator/Auditor ____________________. I was advised that Investigator/Auditor ____________________________ is conducting an official criminal investigation for the Employee Benefits Security Administration, U.S. Department of Labor, pursuant to authority granted in the Employee Retirement Income Security Act of 1974, as amended. I was further advised that Investigator/Auditor ____________________ was requesting my voluntary cooperation. I was told that I do not have to make any statement or answer any question; that any statement I make or any answer I give may be used against me in a court of law or other proceedings; that I have the right to talk to a lawyer for advice before I answer any question and that I have the right to have a lawyer present during the interview; further, I was told that if I decide to answer questions without a lawyer present, that I still have the right to stop the interview at any time.

(Body of the Statement)

1. The first paragraph(s) should contain background information regarding the witness/subject that will tend to establish his/her credibility. This should include, under certain circumstances, the date and place of the witness's/subject's birth and highest educational level he/she attained.

2. Organize subsequent paragraphs either chronologically or topically and must be, as much as possible, in the words of the interviewee.

3. Clearly identify the sources of all information. It should be clear from the signed statement whether (or not) the interviewee has first-hand knowledge of the information he/she is providing. If the information comes from a source other than what the interviewee saw and/or heard him/herself, identify that source.

4. Interviewee must make and initial all additions and deletions in the body of the report.

5. All pages must be numbered. The interviewee must place his/her initials next to the last word in the last line of the last paragraph on each page.

6. Do not leave any space between paragraphs.

(Attestation)

I have read the above statement consisting of ____________________ pages. Each page is numbered, and I have initialed each correction. I declare (or certify, verify, or state) under penalty of perjury that the statement is true and correct.

/s/ ____________________ Date ____________________

Witnessed:

____________________ Investigator/Auditor Date ____________________

____________________ Investigator/Auditor Date ____________________

1. If possible, have the interviewee write out the attestation in his/her own hand.

2. The signature of the maker should be the same as the name identifying him/her in the heading of the statement.

Footnotes

1. "Witness" includes the Subject in a criminal case.
2. This is to prevent subsequent insertions or deletions. Additionally, if the statement is hand-written, there should be no space left between paragraphs nor in the width of each page.

1. General Evidentiary Considerations.

   1. Accountability for Electronic and Physical Evidence. EBSA investigations require the collection and preservation of evidence including plan records, company and union records, bank records, reports of interview (RIs), signed statements, and related work papers.

      To assure that the value of electronic and physical evidence is not impaired or destroyed, the Investigator/Auditor (I/A) must ensure that the evidence meets the test of admissibility. To pass this test, the evidence must be authentic, relevant, unaltered, and untampered with. In short, the I/A must be able to testify, under oath, that the particular document is the one obtained from a reliable source in the investigation; that it has since been in the I/As personal or accountable custody; and has not been altered. The I/As should save electronic case documents in the electronic case evidence folder using Department approved methods to ensure cyber security.

   2. Federal Rules of Evidence. All I/As should be generally familiar with the Federal Rules of Evidence, which appear in Public Law 93-595. Special attention should be devoted to Article VIII, "Hearsay," Article IX, "Authentication and Identification," and Article X, "Contents of Writings, Records and Photographs." I/As should address questions concerning evidentiary matters to SOL.

   3. Admissibility of Duplicates. Rule 1003 of the Federal Rules of Evidence provides:

      "A duplicate is admissible to the same extent as an original unless: (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original."

      Based on this rule, in most situations, a copy of a document is sufficient if the I/A can testify the origin of the document is a reliable source, that the document has remained unaltered while in his/her possession, and that the duplicate is an accurate copy of the original. During interviews where exhibits are used, I/As should verify authenticity of the documents with the witness. In the Report of Interview, I/As should clearly identify any documents shown to the interviewee or provided by the interviewee to the I/A during the interview.

   4. Receipts for Original Books, Records, and Documents Obtained. When it is necessary to take possession of original documentary evidence or property, the I/A must give the organization or individual a signed, itemized, and correctly dated EBSA Form 220A, "Document Receipt," for the material. Such original documentary evidence or property includes books, records, canceled checks, bank statements, receipt books, invoices, vouchers, letters, memoranda, or other materials either provided pursuant to subpoena or furnished voluntarily by an organization or individual (even if only to photocopy and immediately return). The I/A will retain a copy of the Document Receipt signed by the individual who provided the materials.

      Upon returning the described documents to the owner or responsible individual, the I/A will ask for the original EBSA Form 220A, "Document Receipt" and have the party receiving the documents acknowledge in writing on EBSA Form 220B, "Return of Documents" that they received them. Both Forms should be retained in the case file.

   5. Custody of Evidence. In order to maintain a clear chain of custody of documentary evidence, original materials and duplicates described in (c) must be preserved in their original state in the RO/DO electronic evidence file. See Subpoenas, paragraph 13, for guidance related to subpoenaed documents.

      Under the following circumstances, documents received during an investigation require additional safekeeping.

      1. Documents Obtained from the IRS. Tax returns and return information received from the IRS pursuant to IRC section 6103 must be maintained in accordance with IRS Publication 1075 requirements. When EBSA-requested Federal Taxpayer Information (FTI) is received via the IRS Secure Data Transfer (SDT) tool (an IRS developed and approved secure file transfer methodology), the EBSA Help Desk will store the FTI in the appropriate office-specific secure FTI network folder and inform the office's IRC 6103 Custodian of receipt and FTI location. A sub-folder named for the Case Number associated with the FTI request will be created and access will be granted to personnel identified by the IRC 6103 Custodian in the FTI Request Letter submitted to the IRS. The IRC 6103 Custodian will inform the I/As of FTI availability for online review. If the need arises to print these files, they should be secured following existing paper-based FTI documentation and handling requirements until they are no longer needed. At that time, they should be given to the Regional IRS 6103 Custodian to be destroyed using the paper shredder meeting IRS 1075 specifications provided to each EBSA office. For additional guidance on how to handle tax returns and return information obtained from the IRS, see Relationship with IRS, paragraph 31.d, and EBSA Notice NO 19-005 Security of Federal Tax Information.

      2. Tax returns and return information received from the IRS pursuant to IRC section 6103 must be maintained in a secured manner. When these documents are received via secure file transfer, I/As should view these documents online. If the need arises to print these files, they should be secured until they are no longer needed. At that time, they should be given to the Regional IRS 6103 Custodian to be destroyed. See Release of Information, paragraph 7, for a discussion of how to handle tax returns and return information obtained from the IRS. See Relationship with IRS, paragraph 31.d, and EBSA Notice 19-005.

      3. Documents Covered by the Right to Financial Privacy Act. The Right to Financial Privacy Act (RFPA), 12 U.S.C. §3401 et seq., preserves the confidentiality of financial records while allowing access for legitimate law enforcement activities. Because there are certain prohibitions against giving the documents to others, including other government agencies, documents obtained pursuant to the RFPA should be segregated from other documents produced during the investigation. See Subpoenas, paragraph 14, for guidance on obtaining documents pursuant to the RFPA.

      4. Documents and Information Obtained from the Grand Jury or During a Criminal Investigation. I/As must exercise caution when handling parallel civil/criminal investigations. Documents related to a Grand Jury investigation should remain in a secure place and not disclosed to anyone who is not entitled to access to the evidence under Rule 6(e) of the Federal Rules of Criminal Procedure (the 6(e) order). Electronic case documents should be saved in the electronic case evidence folder using Department approved methods to ensure cyber security. Grand Jury documents should only be accessed from the EBSA network while teleworking. Hard copies should not be removed from the RO for use at a remote location. See Release of Information, paragraph 8.b.; Subpoenas, paragraph 17; and Criminal Investigations.

         Personal devices may not be used during the course of an investigation. If a device is required, one should be requested from the EBSA Help Desk.

      5. Materials under an FOIA Exemption Claim for Commercial Confidential Information. The I/A should identify materials provided with a submitter's request for FOIA Exemption 4 protection. The case file must keep such materials in a manner to maintain their identity and confidentiality. In addition, the case file should be clearly marked that there is an Exemption 4 claim. See Release of Information, paragraph 4.

      6. Confidential Complaints. Special procedures are necessary when a RO receives a confidential complaint. See Complaints, paragraph 4.

      7. Working Documents. During the course of the investigation, the I/A may keep a set of "working documents," that is, a duplicate set of documents that can be written on and rearranged in any order. I/As should destroy these working documents when the investigation is completed and the ROI written, unless there is a compelling reason, such as a legal requirement, to keep them. Any draft electronic working documents should be maintained in the electronic working papers folder. All drafts should be deleted once the working papers are approved.

   6. Transmission of Evidence. All documents and other material that are or may become evidence will transmit between offices in a secure manner, which will maintain a clear chain of custody. The cover memorandum will identify in detail the documents or other material so transmitted. Physical evidence (e.g., paper evidence, removable media, CD/DVD, USB drives) must be logged and tracked via policy and processes established by EBSA/OTIS. Any passwords associated with the materials transmitted should be sent to the recipient via email.

   7. Storage of Evidence and Documentation. I/As shall save all civil/criminal evidence and related documentation to an internal EBSA shared network. EBSA shall limit access to these materials to active enforcement staff. The lead I/A and/or case supervisor may limit and control access to records for their own cases, though the RD, DRD and ARD will have access to all civil case files in their RO.

      1. Once the RO closes a civil case not subject to a litigation hold, the I/A shall shred all physical documentation (paper files, CD/DVDs, USB Drives, external hard drives, etc.) that has been verified as saved to EBSA’s network, if there is no parallel criminal case. ROs can securely ship external drives to OTIS for destruction. The I/A shall record destruction of these materials according to established EBSA/OTIS policy and processes.

      2. Once the RO closes a criminal case that has never been referred for prosecution, the I/A shall shred all physical documentation (paper files, CD/DVDs, USB Drives, etc.) that has been verified as saved to EBSA’s network, if there is no parallel civil case and after consultation with the RO’s Senior Advisor to Criminal Investigations (SACI). The I/A shall record destruction of these materials according to established EBSA/OTIS policy and processes.

      3. Once the RO closes a criminal case that has been referred for prosecution, the I/A shall shred all physical documentation (paper files, CD/DVDs, USB Drives, etc.) that has been verified as saved to EBSA’s network, if there is no parallel civil case, after consultation with the RO’s SACI and only with the approval of the prosecutor. The I/A shall record destruction of these materials according to established EBSA/OTIS policy and processes.

   8. Investigative Documentation. This consists of the use and accumulation of completed or otherwise indexed and identified forms, ROI, RIs, signed statements, exhibits, and other related documents as prescribed in other sections of this manual. I/As record all on-site record examinations on Report of Records Examination, EBSA Form 202C. As noted above, original documents should not be altered in any way. Upon receipt of electronic documents, or hardcopies of original records, the I/A shall note in the case file table of contents the date they obtained those documents, and identify the source. The I/A shall also record the receipt of these electronic or hardcopy documents according to established EBSA/OTIS policies and processes.

   9. Administrative Documentation. Administrative documentation generally consists of written communications drafted by EBSA enforcement personnel for internal or external distribution—e.g., memoranda, letters, or spreadsheets. I/As shall save all memoranda, letters, and other written communications to their respective electronic case files maintained on the EBSA shared drive. Emails will be saved to the electronic case files in accordance with OTIS policies. All final documents should be saved in PDF format. Any other instructions or administrative data received personally or by telephone, recorded via a handwritten notation will be scanned to the electronic case files. I/As shall record any action orally requested in a case by another EBSA Office, the NO, SOL, or other office.

   10. Confidentiality of Information. Active case investigative information will be discussed with or made available only to EBSA personnel, the Department, or under proper circumstances, to other governmental agencies. The Release of Information section describes circumstances under which material will be made available to other agencies.

   11. Recording the Dissemination of Investigative File Information. If the RD authorizes, orally or in writing, providing any information in an investigative file to any recipient outside the RO, the I/A will prepare a memorandum to that effect, including specific information and/or documents released, date of release and the initials of the employee releasing the data, and place the memo in the file.

   12. Multiple Copies of Investigative File Material. While I/As may make and use copies of documents, memoranda, exhibits, workpapers, or other related materials during the course of an investigation, these documents should generally be destroyed at the conclusion of the investigation unless there are compelling reasons, such as a legal requirement to retain them. See Conducting and Documenting Interviews, and Subpoenas.

2. Workpapers. From time to time, the I/A may need to testify in court or at a deposition concerning certain facts obtained during the investigation. When this occurs and to refresh his or her recollection, the I/A may need to use work papers and other documents compiled during the investigation. Recollection refreshed by written material produced at or near the time an event occurred (such as books, papers, accounts, letters, affidavits, notes, workpapers, spreadsheets, and similar writings) can be more persuasive than a witness’s testimony unrefreshed long after an event has occurred. For review, operational, and management purposes, the I/A must maintain uniformity in the systematic presentation or storing of records and financial data examined during the investigation. This applies to all materials that form the basis of reports produced by the I/A.

   1. Basic Role of Workpapers. The investigative workpapers serve as a connecting link between the I/As report and the underlying financial and other data which led to the findings contained in that report.

   2. Purposes of Workpapers. The investigative workpapers serve a number of necessary purposes such as:

      1. Preservation of Significant Facts and Relationships. Unless these matters are set down in writing when observed, they are likely to be forgotten before they can be properly appraised in the light of information disclosed by other phases of the investigation. As each phase is completed, the workpapers are filed, expanded, and supplemented as additional information is obtained.

      2. Preparation and Verification of the Report of Investigation. The workpapers should substantiate and explain the facts and recommendations included as well as justify the findings in the report.

   3. Design of Workpaper. There are any number of workpapers including schedules and spreadsheets used by an I/A. When establishing the design of the workpaper or schedule, the I/A should determine its adequacy by testing it to see if it will accomplish the desired purpose. Otherwise, much time can be lost through "false starts" resulting from hasty use of untested workpapers or schedules.

   4. Types of Workpapers. Figure 1 is a listing of some categories of workpapers, illustrating the natural flow of the investigation and the sequence of indexing/referencing of workpapers.

   5. Workpaper Preparation.

      1. Workpapers should be neat, legible, and orderly in appearance. It is best to use only commonly understood abbreviations. Avoid generalities and unsupported conclusions, and keep all comments and exceptions factual. State the final disposition of all exceptions and questions.

      2. For each workpaper, the I/A that prepared the workpaper should initial and indicate the date of the work. This is important to fix the responsibility for work, to show the sequence in which work was done, and the completion date in case questions arise later. In addition, the I/A should catalog the source for each workpaper. Including the source allows the reviewer to follow the investigative trail to the original source documents.

      3. All workpapers and schedules should be indexed, and related workpapers and schedules should be carefully cross-referenced. Unless the supervisor gives directions to the contrary, each I/A will select the method of indexing so long as the method is consistent throughout the workpapers. The purpose of indexing is to make the finding of data in the workpapers easy and to show the interrelationship of related workpapers.

      4. The following rules must be observed in the preparation of workpaper schedules:

         1. Each workpaper schedule should provide for an analysis or summary of the data making up the item and should describe the audit steps performed in determining the reliability of the information.

         2. Each workpaper schedule should be complete and understandable in itself. This rule is to save the reviewer time and ensure schedules contain sufficient information to constitute effective evidence of the work done. To be complete and understandable, the schedule should have a complete title of the information analyzed, or application of the test, the source of the data used, and the date or period covered by the test. If other documents were used as sources for the workpapers, hyperlinks to these documents should be used to the extent possible. Describe any test procedures applied in terms of their nature and extent, including methodology employed.

         3. The following example demonstrates the interrelationship between workpaper schedules: In preparing an analysis of the balance in an accounts receivable account, the I/A might first calculate the amount that must be written off as uncollectible and charged against the "reserve for bad debts." The I/A should cross-reference related schedules so that the reviewer can follow the analysis. Likewise, the I/A should note on the reserve for bad debts analysis that some entries tie into the accounts receivable schedule. The reviewer has a complete explanation of the adjustment and an identification of the related schedule to examine to confirm the analysis.

   6. Control of Workpapers. I/As should secure Workpapers and supporting documentation when he/she leaves the work area at all times and maintain such documentation in accordance with EBSA/OTIS policies and procedures.

   7. Screening and Storage of Notes and Workpapers. After ROI completion and approval, all relevant original workpapers prepared by the I/A during the course of the investigation should be retained with the case file in accordance with established EBSA/OTIS policies and processes. (This workpaper file may be used later to refresh the I/As recollection as a trial witness). The I/A should exercise care to ensure that no personal memoranda or other extraneous notations are included among the workpapers.

3. Case File Arrangement. File evidence collected in an orderly, retrievable fashion and in accordance with EBSA’s case file procedures.

(Figure 1)
Listing of Some Categories of Workpapers

Employee Health and Welfare Benefit Funds

1. Contributions
2. Payroll Audits
3. Bonding
4. Premium Deposits and Refunds
5. Insurance Premium and Related Liabilities
6. Claim Payments
7. Liability for Claims
8. Liability for Accumulated Eligibility Credits
9. Actuarial Reports
10. Restrictions on Fund Balance and Contingencies
11. Administrative Expenses
12. Other Audit Considerations
    1. Review of tax returns
    2. Collective bargaining agreements

Pension Funds

1. Contributions
   1. Multiemployer Funds
   2. Single Employer Funds
2. Payroll Audits
3. Bonding
4. Investments
5. Assets held by an Insurance Company
6. Actuarially Determined Present Value of Accrued Benefits
7. Benefit Payments
8. Administrative Expenses
9. Other Audit Considerations
   1. Review of tax returns
   2. Collective bargaining agreements

The list illustrates how easily the program may be expanded or contracted as deemed necessary in the judgment of the I/A.

1. Statutory Authority - ERISA Section 504(c). The Secretary has the following authority:

   1. To administer oaths,

   2. To compel the attendance of witnesses, and

   3. To access and copy documentary evidence.

2. Subpoena Duces Tecum. This subpoena requires a person or organization to appear at a specified time and place to produce requested documents and testify as to their authenticity.

3. Subpoena Ad Testificandum. This subpoena requires a named individual or corporation to appear at a specified time and place to testify under oath. There is a transcript of this testimony.

4. Accommodation Subpoena. This subpoena is issued at the request of a person or entity willing to testify or produce documents. The subject requests the subpoena to protect them from the consequences of cooperating without a legal requirement.

5. Subpoena Request - EBSA Form 207. Generally, EBSA seeks to obtain documents through voluntary production of records. However, EBSA has the discretion to issue a subpoena to obtain document production even before attempting to obtain records voluntarily through a document request letter. PBSD or the appropriate RSOL reviews and approves subpoena requests and subpoenas issued by the designated issuing official. Each subpoena requires a separate request. The subpoena request should include a copy of the subpoena. To request a subpoena, complete Form 207:

   The ad testificandum subpoena justification should contain:

   1. The individual's relationship to the plan and the reason the testimony is necessary to the investigation;

   2. The estimated number of days stenographic services are required;

   3. The name of the individual taking the testimony or the Investigator/Auditor assigned to the case, if different; and

   4. Whether there is any reason to rush the preparation of the transcript.

6. Review, Approval, and Distribution of the Subpoena Request.

   1. Review by the Office of Enforcement or Regional Office. The Director of Enforcement and Regional Directors are delegated the authority to execute and issue administrative subpoenas, subject to direction and guidance.

   2. In their absence or in the event of potential conflict of interest or other compelling reason, Regional Directors may delegate authority to execute and issue administrative subpoenas to the following:

      1. Deputy Regional Director;

      2. Associate Regional Director;

      3. Regional Senior Advisor for Criminal Investigations (in connection with criminal investigations); or

      4. Other staff designated by written notice.

   3. The Director of Enforcement and Regional Directors shall review the subpoena request initiated by their offices, initial and date the bottom of the page, and forward the subpoena request form, along with the subpoena, to the appropriate SOL Office for review and approval.

   4. The Director of Enforcement and Regional Directors may issue accommodation subpoenas directed to individuals or entities not covered by the Right to Financial Privacy Act without PBSD or RSOL approval.

   5. SOL must approve all subpoenas, including accommodation subpoenas, when signed by someone other than the Director of Enforcement, Regional Director or the Deputy Regional Director.

   6. Review by PBSD or the RSOL. PBSD or the RSOL will review each subpoena submitted for legal sufficiency. SOL must approve each subpoena to ensure it can judicially enforce the subpoena if the subpoenaed subject fails to comply with the subpoena.

7. Preparation of the Subpoena EBSA Form 200. EBSA uses one subpoena format for both subpoenas ad testificandum and subpoenas duces tecum.

   1. EBSA serves the original subpoena, EBSA Form 200 on the subpoena subject (Subject Copy). The Subject Copy, which requests specific records, should not include the Return of Service and Certification of Compliance sections on the back. The Subject Copy should be completed as follows:

      1. Subject. At the top to the right of the printed word "To," enter the subject's name and address. If service is on a legal entity other than an individual, such as an employee benefit plan or corporation, immediately above the name of the entity insert the words "Custodian of Records."

      2. Investigator/Auditor. The next sentence of the printed form, "You are hereby required to appear before" should include the name of the person, usually the Investigator/Auditor, who will receive the documents or testimony pursuant to the subpoena.

      3. Place of Production. On the third line of the form, enter the room number and street address at which production of documents and/or testimony is required. The fourth line should contain the city, state, and zip code. If the subpoena is an accommodation and no contest is expected, the place of production should be mutually convenient to the person providing the evidence and the Investigator/Auditor. If a contest is likely, the Office of Enforcement or Regional Office should be the place of production to assure proper control of the production and evidence if protested. If the subpoena specifies the Office of Enforcement or Regional Office as the place of production but it becomes evident after service of the subpoena that no contest is likely, the Investigator/Auditor may accept a more convenient place for inspecting the documents or taking testimony.

      4. Date and Time. On the fifth line of the form, enter the day, month, year, and time at which production of documents or testimony is required. If the time for production changes after the subpoena is signed, but before being served, the Office of Enforcement or Regional Office issues the subpoena as prepared with a cover letter noting the new time, or a new subpoena must be prepared. Never make changes on the face of the subpoena.

      5. Subject of Investigation. The sixth line should contain the case name identified on the EBSA case opening form.

      6. Description of Documents. If the subpoena requests three or more documents, enter "See attachment" and describe the documents on a separate sheet of paper.

         1. Draft all descriptions of documents to fit the case as well as the subpoenaed subject.

         2. If the subpoena is for testimony only and no documents are required, write "None" for the description of documents. In most circumstances, however, documents will also be required to provide reference material in order to help the witness remember names, dates, places, and events.

         3. All civil subpoenas must include an authentication form along with the subpoena (Figure 14). By signing the authentication form, the person producing the records can certify that the records being produced comply with Federal Rules of Evidence, 803(6), 902(11), and 902(13). If the records are properly authenticated by executing the authentication form, the producer of the records may not have to appear in court or at a deposition to testify as to the records' authenticity.

      7. Signature Block. The first line of the signature block will identify where the subpoena is signed, followed by the day, month, and year of signature. Below that, the subpoena will be signed on the signature line immediately below which will be typed the name and title of the person signing the subpoena.

   2. A copy of the subpoena, EBSA Form 200B (Office Copy), which includes the Return of Service section, is retained in the Office of Enforcement or Regional Office case file. The Office Copy should be completed as follows:

      1. Subpoena. Duplicate the information provided in the Subject Copy (Subject, Place of Production, Date and Time, Subject of Investigation, Description of Documents, Signature Block, etc.).

      2. Return of Service. Complete this section with the service of the subpoena completed. The person serving the subpoena will check the block certifying the manner of subpoena service. This person will also provide the date of service for the subpoena, his or her name, and official title.

8. Serving the Subpoena.

   1. Service by Mail. EBSA should serve subpoenas by certified or registered mail, return receipt requested. Delivery should be restricted to that subject. However, the Office of Enforcement or Regional Office may send the subpoena to the subject's legal counsel, if counsel agreed in advance to receive the subpoena on behalf of their client. In such cases, the subpoena cover letter should memorialize that the subject's legal counsel has agreed to accept service. If possible, arrange service in advance by phone or through the subject's counsel.

      A letter should accompany a subpoena. (See Figure 1, Figure 2, Figure 3, Figure 4, and Figure 5 for model letters.) The letter should include the specific number of the certified or registered letter for evidence that it related to the specific subpoena.

      When service is complete, check the second box of the return of service and keep a copy of the return receipt with the copy of the subpoena.

   2. Service in Person. EBSA may serve a subpoena in person when it is impractical to serve an individual by mail or where proof of receipt is not received. Personal service is complete when the subpoena is:

      1. Delivered directly to the subject,

      2. Left at the subject's residence with a person of suitable age and discretion residing there fulltime, such as a spouse, or

      3. Left with the person in charge at the office or place of business of the subject.

9. Altering the Subpoena after Service. The Investigator/Auditor should confirm in writing any agreements to alter any significant requirement in the subpoena after the subpoena has been served. Such requirements may include date and time testimony will be taken or the categories of documents to be produced.

10. Voided Subpoenas. If a subpoena becomes void or not served within 45 days of the issuance date, it shall be returned to the issuing office with an explanation. The Office of Enforcement or Regional Office shall destroys the subpoena and record in a memo to the file that the subpoena was destroyed.

11. Subpoena Enforcement. If a subject fails to respond properly to a subpoena, PBSD or RSOL should judicially enforce the subpoena. The Office of Enforcement or Regional Office should send the subpoena and a request for enforcement to PBSD or the appropriate RSOL. The attorney will assist the Investigator/Auditor with preparing an affidavit to be filed in the proceeding.

    PBSD or RSOL may not enforce a subpoena when:

    1. The subpoena was improperly served;

    2. The subpoena was altered or in some other way voided;

    3. Approval and signature were based on erroneous information; or

    4. The subpoenaed party fails or refuses to execute the authentication of documents form; or

    5. Circumstances changed, making enforcement inappropriate.

12. Administrative Depositions.

    1. Uses. Sworn testimony may be useful if:

       1. A matter is likely to be referred for litigation;

       2. Testimony is the only evidence available to establish a necessary element of proof;

       3. There is a need to obtain a clear and definite statement from a witness;

       4. An important witness may be unavailable at the time of discovery or trial;

       5. A critical witness refuses to voluntarily speak to an Investigator/Auditor; or

       6. A clear explanation of a complex factual or technical matter is needed.

    2. Witness Fees and Mileage Reimbursement. EBSA pays deposition witnesses the same fees and mileage paid to witnesses called to testify in federal court. The witness' claim for reimbursement shall be listed on the Claims for Witness Attendance Fees, Travel and Miscellaneous Expenses, Form SF-1156. If it is necessary to stay overnight, EBSA may authorize per diem expenses in advance.

    3. Arrangements. The site for depositions should be the Regional Office unless the witness and the Investigator/Auditor agree upon another location. The deposition should occur in a private room large enough to accommodate multiple people. The Investigator/Auditor must arrange for a court reporter and for an attorney from PBSD or the RSOL. In some instances, an administrative deposition may be taken by an Investigator/Auditor without a government attorney being present. Prior consultation with PBSD or RSOL is required in such instances. In these circumstances special care should be taken to employ good interviewing techniques to insure a clear and useful deposition transcript.

    4. Format. The court reporter should use the deposition format in Figure 6. The court reporter generally swears in the witness, but an Investigator/Auditor may administer the oath, if appropriate.

       Figure 7 contains introductory language. The language:

       1. Identifies the witness;

       2. Advises the witness of his/her right to counsel;

       3. Introduces the witness' counsel, if present;

       4. Advises the witness his/her testimony is being given under penalty of perjury;

       5. Advises the witness that he/she can assert his/her Fifth Amendment privilege to any answer he/she believes may incriminate him/her.

       6. Confirms no threats or promises were made in exchange for his/her testimony; and

       7. Informs the witness he/she may order a copy of the deposition transcript from the court reporter.

    5. Immunity. No Department employee has the authority to grant either express or implied immunity to a witness.

13. Custody of Documents. When you receive documents, carefully note the documents received and safeguard the records in case they become necessary for potential legal or administrative action. Use EBSA's internal systems to process electronic information. See Collection and Preservation of Evidence for additional guidance on preservation of evidence.

    1. Copies of Documents. Copies are acceptable if the individual is willing to provide the copies and/or pay copying costs.

    2. On Site Inspection of Documents. If the subpoena calls for a large number of documents and production of documents interferes with the normal functioning of the subpoenaed subject, make less burdensome arrangements for access to subpoenaed documents. (See Figure 5). For example, the originals may remain in the subject's office with a written agreement that the Investigator/Auditor can have access to the documents at a particular place during specified hours, and with no interference. The written agreement should also allow access to the documents in the future. Prepare an index of all the documents produced if inspected on site.

    3. Receipts for Original Books, Records, and Documents. It may be necessary to take possession of the originals of documentary evidence or property such as books, records, canceled checks, bank statements, receipt books, invoices, vouchers, letters, memoranda, or other materials provided pursuant to a subpoena or furnished voluntarily by an organization or individual. In such cases, the Investigator/Auditor provides a signed, dated, and itemized Document Receipt, EBSA Form 220A, for the material and retains a receipt copy in the case file.

    4. Return of Original Documents. Upon return of the described documents to the owner or responsible individual, ask for the return of the original receipt and have the party receiving the documents acknowledge the return in writing. See EBSA Form 220B, Return of Documents.

    5. Record of Documents Examined. Complete a Report of Records Examination, EBSA Form 202C, if you review, but do not copy materials produced.

14. Documents Covered by the Right to Financial Privacy Act. The Right to Financial Privacy Act (RFPA)⁽¹⁾ preserves the confidentiality of financial records while allowing access for legitimate law enforcement activities.

    1. Permitted Disclosure. The RFPA permits a financial institution⁽²⁾ to disclose financial records to EBSA where EBSA reasonably describes the requested records, and, if the specific requirements of the RFPA are met, either:

       1. The customer authorizes such disclosure;

       2. The records are disclosed in response to an administrative subpoena that complies with the RFPA; or

       3. The records are disclosed in response to judicial subpoena that complies with the RFPA.

    2. Coverage. The RFPA applies only to financial records of individuals or partnerships of five or fewer individuals. The RFPA does not protect corporations, associations, limited liability companies, larger partnerships, employee benefit plans, or other legal entities. When requesting documents not protected by the RFPA, it is good practice to enclose a cover letter to the financial institution explaining why the RFPA does not apply (See Figure 8).

    3. Certification of Compliance Requirement. The Director of Enforcement or Regional Director must certify to the financial institution that EBSA complied with all applicable provisions of the RFPA (See Figure 9).

       Good faith reliance by the employees and agents of the financial institution upon this certification of compliance absolves the institution, its employees, and its agents of civil liability for any improper disclosure of records.

    4. Customer Authorization. Where EBSA uses a customer's authorization for disclosure of financial records under the RFPA, the customer must write, sign, and date that authorization. That authorization must:

       1. Authorize disclosure within no more than three months;

       2. Permit the customer to revoke the authorization before disclosure;

       3. Identify the records in question;

       4. Specify EBSA's authority to obtain the records in question;

       5. Specify EBSA's purpose for seeking records in question; and

       6. State the customer's rights under the Right to Financial Privacy Act.

       See Figure 10.

    5. Customer Notice Requirements. Where EBSA seeks financial records from a financial institution under the RFPA through either an administrative subpoena or a judicial subpoena, EBSA must send a notice to the customer.

       1. This notice must reasonably specify the purpose, under ERISA, of the investigation.

       2. This notice also must contain the following quoted language:

          "Records or information concerning your transactions held by the financial institution named in the attached subpena or summons are being sought by this (agency or department) in accordance with the Right to Financial Privacy Act of 1978 [12 U.S.C.A. § 3401 et seq.] for the following purpose:"

          [Here, describe the purpose of the investigation.]

          "If you desire that such records or information not be made available, you must:"

          1. "Fill out the accompanying motion paper and sworn statement or write one of your own, stating that you are the customer whose records are being requested by the Government and either giving the reasons you believe that the records are not relevant to the legitimate law enforcement inquiry stated in this notice or any other legal basis for objecting to the release of the records."

          2. "File the motion and statement by mailing or delivering them to the clerk of any one of the following United States district courts" in these locations:

             • the location of the financial institution;
             • the residence of the customer;
             • the District of Columbia; or
             • the location of the employee benefit plan.

          3. "Serve the Government authority requesting the records by mailing or delivering a copy of your motion and statement to":

             [Director of Enforcement/Regional Director, address]

          4. "Be prepared to come to court and present your position in further detail."

          5. "You do not need to have a lawyer, although you may wish to employ one to represent you and protect your rights."

          "If you do not follow the above procedures, upon the expiration of ten days from the date of service or fourteen days from the date of mailing of this notice, the records or information requested therein will be made available. These records may be transferred to other Government authorities for legitimate law enforcement inquiries, in which event you will be notified after the transfer."

       3. Along with the notice, provide the customer a copy of the subpoena and blank motion and affidavit forms suitable for filing in court if properly completed (See Figures 11a-e). The customer may then move to quash the subpoena. If notice to the customer will seriously jeopardize the investigation, a court order can delay the required notice to the customer up to 90 days.

    6. Costs. The RFPA provides that the government must pay the financial institution any reasonable costs directly incurred in searching for, reproducing, or transporting the records requested.

    7. Civil Penalties. RFPA violations may result in a $100 penalty, actual damages, punitive damages for willful or intentional violations, court costs, and attorney's fees. Additionally, OPM may investigate and impose disciplinary action against the responsible government official.

    8. Custody of Documents. Keep documents obtained pursuant to the RFPA segregated, since there are certain prohibitions against giving the documents to others, including other government agencies. (See Release of Information, paragraph 5 and Collection and Preservation of Evidence, paragraph 1.e.2).

15. Administrative Subpoenas Used in Criminal Investigations. Before issuing an administrative subpoena in a criminal investigation, Investigators/Auditors should arrange with the Senior Advisor for Criminal Investigations to review the civil case file for the desired material (See Criminal Investigations Program, paragraph 18).

    1. Criminal administrative subpoenas should be reviewed by the Senior Advisor for Criminal Investigations and do not need review by SOL.

    2. Subpoenas issued in criminal investigations follow the same procedures as civil investigations, including the RFPA procedures at paragraph 14, above. Differences in criminal investigations are:

       1. EBSA does not issue subpoena ad testificandum in criminal cases.
       2. U.S. Attorney's Office (USAO) must enforce subpoenas.
       3. In criminal cases, EBSA may only issue a subpoena duces tecum for documents or things.
       4. All criminal subpoenas must include an authentication form along with the subpoena (Figure 14). By signing the authentication form, the person producing the records can certify the records being produced comply with Federal Rules of Evidence, 803(6), 902(11), and 902(13). If the records are properly authenticated by executing the authentication form, the producer of the records may not have to appear in court or at a deposition to testify as to the records’ authenticity.

    3. Accommodation Subpoena. This subpoena is issued at the request of a person or entity willing to testify or produce documents. The subject requests the subpoena to protect them from consequences of cooperating without a legal requirement.

    4. Authority to Execute Subpoena. Every RD has the authority to execute and issue administrative subpoenas. RDs may delegate this authority as described in paragraph 6.a. and b.i-iv above.

    5. Serving the Subpoena. EBSA serves subpoenas by certified or registered mail, return receipt requested. Subpoenas issued in criminal investigations should include a cover letter that specifically identifies the criminal investigation.

    6. Subpoena Enforcement. EBSA should only issue non-accommodation administrative subpoenas in criminal investigations if the USAO for the district where the investigation subject resides indicates they will take appropriate action to ensure compliance. While SOL has legal authority to seek to enforce all administrative subpoenas, it is their general policy to defer to the U.S. Department of Justice concerning the enforcement of administrative subpoenas issued in criminal cases.

16. Parallel Investigations. Exercise caution when handling parallel civil/criminal investigations. See Criminal Investigations Program, paragraph 4.

17. Obtaining Documents in the Possession of a Grand Jury⁽³⁾. In order to obtain documents from a grand jury, you must issue a subpoena duces tecum to the custodian of the documents you seek. The custodian must respond that the requested material is in the possession of the grand jury.

    1. It is important that the subpoena describe the documents with as much specificity as possible. Upon receipt of response, take the following steps:

       1. Ask the custodian (or the custodian's attorney, if appropriate) to give written authorization to the U.S. Attorney in charge of the grand jury, to grant Investigators/Auditors access to the documents asked for in the subpoena.

       2. If the custodian refuses to voluntarily permit access to the documents, refer the subpoena to PBSD or the RSOL, with a request that a "non-6(e) Order"⁽⁴⁾ be obtained.

       3. Access to the documents by this method avoids the restrictions imposed if disclosure is made pursuant to Rule 6(e) of the Federal Rules of Criminal Procedure. This is because a "non-6(e) Order" preserves the Secretary's independent right of access to such documents.

    2. If a "non-6(e) Order" is unsuccessful, EBSA may refer the subpoena to PBSD or the RSOL with a request to obtain release of the material pursuant to Rule 6(e) of the Federal Rules of Criminal Procedure.

       1. This rule prohibits disclosure of any matters occurring before the grand jury, except when a court directs preliminarily to or in connection with a judicial proceeding.

       2. A strong showing must be made of a particular need or compelling necessity. If EBSA obtains disclosure of the subpoenaed documents pursuant to this rule, there may be restrictions placed upon the use of information obtained.

(Figure 1)
Model Letter Accompanying Subpoena
Where Only Production of Records Is Required

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation of _________________________
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation pursuant to §504(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA). Enclosed is a subpoena that requires you to produce identified documents.

Your personal appearance as requested by the subpoena is not required if the documents are produced by _____. We will inform you at a later date if you will be required to testify.

Please provide the required documents with a cover letter identifying the documents you are producing. In the letter, you should also state whether you conducted a diligent search for the subpoenaed documents and whether the documents you are producing include all of the requested documents. If any identified documents are not furnished, please list those documents and your reason for not producing them.

The subpoena requests that you produce documents in electronic form (Electronically Stored Information (ESI)) if you maintain those documents in electronic form.⁽⁵⁾

You should not construe this inquiry as an indication that any violations of law have occurred or as a reflection upon any person involved in this matter.

If you have any questions concerning your rights and duties, you may wish to consult counsel. If you have any questions concerning the subpoena or the documents required to be produced, including the production of ESI and the appropriate format and media, please call (name of investigator/auditor) at (telephone number).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 2)
Model Letter Accompanying Subpoena to Testify Only

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation of _________________________
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation pursuant to §504(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA). Enclosed is a subpoena that requires you to appear to give sworn testimony in connection with that investigation. You are entitled to be accompanied by an attorney if you so desire.

If you have any questions concerning your rights and duties, you may wish to consult counsel. If you have any questions concerning the subpoena, please call (name of Investigator/Auditor) at (telephone number).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 3)
Model Letter Accompanying Subpoena for Appearance to Produce Records And Testify

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation of _________________________
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation pursuant to §504(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA). Enclosed is a subpoena that requires you to produce certain documents and to appear to give sworn testimony in connection with that investigation. You are entitled to be accompanied by an attorney if you so desire.

The subpoena requests that you produce documents in electronic form (Electronically Stored Information (ESI)) if you maintain those documents in electronic form.⁽⁶⁾ If any documents called for are not furnished, please list those documents and your reason for not producing them.

If you have any questions concerning your rights and duties, you may wish to consult counsel. If you have any questions concerning the subpoena or the documents required to be produced, including the production of ESI and the appropriate format and media, please call (name of investigator/auditor) at (telephone number).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 4)
Model Letter Accompanying Subpoena Where Attorney Has Agreed To Accept Service

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation of _________________________
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation pursuant to §504(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA). As we discussed on (date), you agreed to accept service for your client, _________________, of the enclosed subpoena, which requires the production of certain documents in connection with that investigation.

A personal appearance pursuant to this subpoena is not required provided your client produces the requested documents by _____. Please include a cover letter identifying the documents that your client is producing. In the letter, you should also state whether your client has conducted a diligent search for the subpoenaed documents, and whether the documents produced include all of the required documents. If any documents called for are not furnished, please list such documents and indicate their location and the reason for not producing them.

The subpoena requests that your client produce documents in electronic form (Electronically Stored Information (ESI)), if your client maintain those documents in electronic form.⁽⁷⁾

If you have any questions concerning the subpoena or the documents required to be produced, including the production of ESI and the appropriate format and media, please call (name of investigator/auditor) at (telephone number).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 5)
Model Accommodation Letter Accompanying Subpoena

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation of _________________________
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation pursuant to §504(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA). Enclosed is a subpoena that requires you to produce identified documents in connection with that investigation. Your personal appearance pursuant to this subpoena will not be required provided you produce the requested documents.

We can discuss arrangements to minimize the time and interference with normal day-to-day operations. Instead of producing all of the requested documents at the time and place specified in the subpoena, we can inspect the documents at their present location, pursuant to a written agreement with procedure for access, inspection and copying. We are willing to consider your suggestions to reduce the impact of compliance with our subpoena.

To discuss arrangements for subpoena production, please contact (name of Investigator/Auditor) at (telephone number) by (date). In the absence of an agreement, we will expect full compliance with the subpoena by (date).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 6)
United States of America
Department of Labor
Employee Benefits Security Administration

In the Matter of:

XYZ Health and Welfare Fund

)
)
)
)
)

Philadelphia, Pennsylvania
Friday, August 31, 2002

Deposition of Richard R. Roe taken on behalf of the Employee Benefits Security Administration in the above-entitled matter, at the offices of the Department of Labor, Employee Benefits Security Administration, Room M-300, 3535 Market Street, Philadelphia, Pennsylvania, pursuant to notice, beginning at 9:13 a.m., before Janet Jones, a notary public in and for the State of Pennsylvania, when were present on behalf of the respective parties:

For the Department of Labor:

Samantha Smith, Esquire
Office of the Solicitor
Plan Benefits Security Division
200 Constitution Avenue, N.W.
Room N-4611
Washington, D.C. 20210

For Richard R. Roe:

Stephen Johnson, Esquire
Johnson and Martinez
123 Fourth Street
Philadelphia, Pennsylvania 19102

(Figure 7)
Format for Taking Sworn Testimony

This sworn testimony is being taken in the matter of [ case name ] involving an investigation undertaken pursuant to section 504 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. section 1134, to determine whether any person has violated, or is about to violate, any provision of Title I of ERISA or any regulation or order issued thereunder . ERISA section 504(c), 29 U.S.C. section 1134(c), expressly incorporates Sections 9 and 10 of the Federal Trade Commission Act, 15 U.S.C. sections 49 and 50. A copy of this subpoena will be attached to the transcript as Exhibit _________________________.

At this time, I would like to call the witness, and have him/her sworn.

Could you, for the record, please state your name and home address?

Mr./Mrs./Ms./Miss _________________________, are you represented by counsel today?

(If so) Could counsel please identify himself/herself for the record?

(If not) I wish to advise you at this time that you have a right to be accompanied, represented, and advised by counsel. This means that you may have an attorney present and that your attorney can advise you before, during, and after your examination here today. Do you understand that?

Mr./Mrs./Ms./Miss _________________________, are you appearing here today in response to a subpoena issued by the Employee Benefits Administration of the United States Department of Labor?

Mr./Mrs./Ms./Miss _________________________, is that subpoena the document that I have marked as Exhibit __ to this deposition?

[If necessary, describe the subpoena briefly by date, witness, investigation subjects, and examples of any documents sought.]

The principal purpose of your testimony is fact finding, to determine whether violations of ERISA have occurred or may be occurring. However, information that you give may be referred to other governmental agencies if the facts developed constitute violations of other laws.

Mr./Mrs./Ms./Miss _________________________, at this time I would expressly advise you that any evidence or testimony you give may be used against you. You may refuse to answer any question asked you if your answer might tend to incriminate you or subject you to fine, penalty, or forfeiture. This right is guaranteed you by the Fifth Amendment to the Constitution of the United States.

Do you understand what I have just said?

I would like to advise you of the penalty for perjury contained in 18 U.S.C. section 1621, which provides that a person who violates this provision shall be fined as provided under Title 18 or imprisoned for not more than 5 years, or both. An individual is guilty of perjury if, contrary to an oath such as you have just taken, he/she willfully states or subscribes any material matter which he/she does not believe to be true. I also wish to advise you of the penalty contained in 18 U.S.C. section 1001, which provides that anyone who knowingly and willfully makes any materially false statements or representations in any matter within the jurisdiction of any department or agency of the United States shall be fined as provided under Title 18 or imprisoned for not more than 5 years, or both.

Do you understand what I have just said?

I would like to have the record clear that you are appearing here today pursuant to subpoena and that no threats have been made nor have any promises been offered by me or any other official of the Department of Labor to secure your testimony and that no immunity of any kind, either express or implied, can or is being offered in connection with your testimony today. Is that correct?

You or your attorney may purchase a copy of the transcript of your testimony from the court reporter. The court reporter is instructed that the transcript of your testimony shall not be made available to anyone other than the parties here present without the express consent of the Department of Labor.

(Figure 8)

Name of Financial Institution
Address

Re: Name of Investigation
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting an investigation of (subject) pursuant to Title I of the Employee Retirement Income Security Act of 1974. We are sending you the enclosed subpoena, which requires (Name of Financial Institution) to produce the identified documents for our investigation.

We do not believe that the material requested concerns an account maintained in the name of an individual or a partnership of five or fewer individuals. Therefore, the notice requirements of the Right to Financial Privacy Act⁽⁸⁾ do not apply.

If legal counsel for (the Financial Institution) believes that the requirements of the Right to Financial Privacy Act are applicable, we would request immediate identification of the customer to whom we must provide notice.

We are willing to discuss alternative arrangements for production of the requested documents in order to minimize interference with (the Financial Institution's) normal operations. Please contact us with any questions regarding this subpoena.

Thank you for your cooperation in this matter.

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 9)
United States Department of Labor
Employee Benefits Security Administration
Address Certificate of Compliance with the Right to Financial Privacy Act

To:

Name and Address of Financial Institution

From:

Director of Enforcement/Regional Director
U.S. Department of Labor
Employee Benefits Security Administration
Address

I hereby certify that the applicable provisions of the Right to Financial Privacy Act of 1978, 12 U.S.C. §§3401-3422, have been complied with as to the subpoena presented on (date) for the following financial records of (name):

_________________________
Date

_________________________
Director of Enforcement/Regional Director
U.S. Department of Labor
Employee Benefits Security Administration
Address
Telephone Number

Pursuant to the Right to Financial Privacy Act of 1978, good faith reliance upon this certificate relieves your institution and its employees and agents of any possible liability to the customer in connection with the disclosure of these financial records.

(Figure 10)
United States Department of Labor
Employee Benefits Security Administration
Address Customer Consent and Authorization for Access to Financial Records

I, (Name of Customer), having read the explanation of my rights, which are described below the signature line below in this form, hereby authorize the (Name and Address of Financial Institution) to disclose these financial records:

to (Name of Investigator(s)/Auditor(s)) for the following purpose(s):

I understand that this authorization may be revoked by me in writing at any time before my records, as described above, are disclosed, and that this authorization is valid for no more than three months from the date of my signature.

_________________________
Date

_________________________
(Signature of Customer)

_________________________
(Address of Customer)

Statement of Customer Rights Under the Right to Financial Privacy Act of 1978 Federal law protects the privacy of your financial records. Before banks, savings and loans associations, credit unions, credit card issuers, or other financial institutions may give financial information about you to a federal agency, certain procedures must be followed. The basic elements of these protections and procedures are summarized below.

Consent to Disclosure

You may be asked to consent to a financial institution making your financial records available to the government. You may withhold your consent, and your consent is not required as a condition of doing business with any financial institution. If you give your consent, it can be revoked in writing at any time before your records are disclosed. Furthermore, any authorization you provide is effective for only three months, and your financial institution must keep a record of the instances in which it disclosed your financial information.

Disclosure Without Your Consent

Without your consent, a federal agency that wants to see your financial records may do so ordinarily only by means of a lawful subpoena, summons, search warrant, or formal written request for that purpose.

Generally the federal agency must give you advance notice of its request for your records explaining why the information is being sought and telling you how to object in court. The federal agency must also send you copies of court documents to be prepared by you with instructions for filling them out, if you elect to go to court to challenge such a subpoena, summons, or formal written request. While these procedures will be kept as simple as possible, you may want to consult an attorney before making a challenge to a federal agency request.

Exceptions

In some circumstances, a federal agency may obtain financial information about you without sending advance notice to you as well as without your consent. In most of these cases, the federal agency will be required to go to court for permission to obtain your records without giving you notice beforehand. In these instances, the court will make the government show that its investigation and request for your records are proper. When the reason for the delay of notice no longer exists, you will be notified that your records were obtained.

Transfer of Information

Generally, a federal agency which obtains your financial records is prohibited from transferring them to another federal agency unless it certifies in writing that the transfer is proper and sends a notice to you that your records have been sent to another agency.

Penalties

If a federal agency or financial institution violated the Right to Financial Privacy Act, you may sue for damages or to seek compliance with the law. If you win, you may be repaid your attorney's fees and costs.

Additional Information

If you have any questions about your rights under this law or how to consent to the release of your financial records, you may contact [name] at [regional office phone number].

(Figure 11a)

Name
Address

Dear (customer name):

We are seeking records or information concerning transactions from your accounts held by the financial institution named in the attached subpoena in accordance with the Right to Financial Privacy Act⁽⁹⁾. We are seeking the information for an investigation pursuant to Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Below, this letter notifies you of the purpose of the investigation and of steps that you must take if you want to seek to prevent that financial institution's disclosure to the U.S. Department of Labor of the requested financial records in response to the attached subpoena.

Records or information concerning your transactions held by the financial institution named in the attached subpena or summons are being sought by this (agency or department) in accordance with the Right to Financial Privacy Act of 1978 [12 U.S.C.A. § 3401 et seq.] for the following purpose:

[Here, describe the purpose of the investigation.]

If you want to prevent the requested disclosure of financial records, you must:

1. Fill out the accompanying motion paper and sworn statement or write one of your own, stating that you are the customer whose records are being requested by the Government and either giving the reasons you believe that the records are not relevant to the legitimate law enforcement inquiry stated in this notice or any other legal basis for objecting to the release of the records.

2. File the motion and statement by mailing or delivering them to the clerk of any one of the following United States district courts.

3. Serve the Government authority requesting the records by mailing or delivering a copy of your motion and statement to any of the following United States District Courts:

   • the location of the financial institution;
   • the residence of the customer;
   • the District of Columbia;
   • or the location of the employee benefit plan

4. Be prepared to come to court and present your position in further detail.

5. You do not need to have a lawyer, although you may wish to employ one to represent you and protect your rights.

If you do not follow the above procedures, upon the expiration of ten days from the date of service or fourteen days from the date of mailing of this notice, the records or information requested therein will be made available. These records may be transferred to other Government authorities for legitimate law enforcement inquiries, in which event you will be notified after the transfer.

If you do not follow the above procedures, upon the expiration of ten days from the date of service or fourteen days from the date of mailing of this notice, the records or information requested therein may be made available. These records may be transferred to other government authorities for legitimate law enforcement inquiries, in which event you will be notified after the transfer.

Very truly yours,

Director of Enforcement/Regional Director
U.S. Department of Labor
Employee Benefits Security Administration
Address
Telephone Number

Enclosures:

Subpoena
Motion Form
Sworn Statement Form

(Figure 11b)
Instructions for Completing and Filing the Motion and Sworn Statement

1. Type or print in ink the indicated information in the spaces provided on the enclosed motion and sworn statement forms (except where signatures are required).⁽¹⁰⁾

2. Provide the reasons that the financial records sought are not relevant to the legitimate law enforcement inquiry. You may also challenge the Department of Labor's access to the financial records if there has not been substantial compliance with the Right to Financial Privacy Act, or for any other reasons allowed under the law. You should state the facts that are the basis for your challenge as specifically as you can.

3. To file your challenge with the Court, either mail or deliver the original and one copy of your motion and sworn statement with payment of the Court's filing fee.⁽¹¹⁾

4. You must also deliver one copy of your motion and sworn statement to the government official whose name appears on the Customer Notice.⁽¹²⁾

5. Contact the government official whose name and telephone number appear on the Customer Notice if you have questions.

(Figure 11c)
Customer's Motion to Challenge Government's Access To Financial Records

In The United States District Court For The _________________________ District Of (Name of District)
(State in which Court is located)

_________________________ (Your Name) hereby moves this Court, pursuant to section 1110 of the Right to Financial Privacy Act of 1978, 12 U.S.C. §3410, for an order preventing the government from obtaining access to my financial records. The agency seeking access is the U.S. Department of Labor, Employee Benefits Security Administration. My financial records are held by

_________________________
Name of Financial Institution

In support of this motion, the Court is respectfully referred to my sworn statement filed with this motion.

Respectfully submitted,

________________________________________
(Your Signature)

________________________________________
(Your Name)

________________________________________
(Your Address)

________________________________________
(Your Telephone Number)

(Figure 11c)
Customer's Motion to Challenge Government's Access To Financial Records

In The United States District Court For The _________________________ District Of (Name of District)
(State in which Court is located)

_________________________ (Your Name) hereby moves this Court, pursuant to section 1110 of the Right to Financial Privacy Act of 1978, 12 U.S.C. §3410, for an order preventing the government from obtaining access to my financial records. The agency seeking access is the U.S. Department of Labor, Employee Benefits Security Administration. My financial records are held by

_________________________
Name of Financial Institution

In support of this motion, the Court is respectfully referred to my sworn statement filed with this motion.

Respectfully submitted,

________________________________________
(Your Signature)

________________________________________
(Your Name)

________________________________________
(Your Address)

________________________________________
(Your Telephone Number)

(Figure 11e)
Customer's Sworn Statement For Filing A Challenge

In The United States District Court For The __________________ District of (Name of District)
(State in which Court is located)

I, _________________________ (Your Name) _________________________, am presently/was previously a customer of _________________________ (Name of Financial Institution) _________________________, and I am the customer whose records are being requested by the Government.

The financial records sought by the U.S. Department of Labor, Employee Benefits Security Administration:

are not relevant to the legitimate law enforcement inquiry stated in the Customer Notice that was sent to me because

Or

should not be disclosed because there has not been substantial compliance with the Right to Financial Privacy Act of 1978, as shown by the following facts

Or

should not be disclosed on the following other legal basis

I declare under penalty of perjury that the foregoing is true and correct.

_________________________
Date

_________________________
(Your Signature)

(Figure 12)
Model Accommodation Letter
Accompanying Subpoena in a Criminal Case

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation Involving ___ (name of plan)___
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting a criminal investigation of the above referenced matter pursuant to Section 504(a) and 506(b) of the Employee Retirement Income Security Act of 1974 (ERISA) or other related Federal laws, including Title 18 of the United States Code.

The enclosed subpoena requires you to produce identified documents in connection with that investigation. Your personal appearance pursuant to this subpoena is not required provided you produce the requested documents.

We can discuss arrangements to minimize the time and interference with normal day-day to operations. Instead of producing all of the requested documents at the time and place specified in the subpoena, we can inspect the documents at their present location, pursuant to a written agreement with procedures for access, inspection and copying. We are willing to consider your suggestions to reduce the impact of compliance with our subpoena.

To discuss arrangements for subpoena production, please con¬tact (name of Investigator/Auditor) at (telephone number) on or before (date). In the absence of an agreement, we will expect full compliance with the subpoena by (date).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 13)
United States Department of Labor
Employee Benefits Security Administration
Model Letter Accompanying Criminal Subpoena Duces Tecum

Certified Mail - Return Receipt Requested

Name
Address

Re: Investigation Involving __(name of plan)____
EBSA Case No. XX-XXXXXX

Dear: _________________________

We are conducting a criminal investigation of the above referenced matter pursuant to Section 504(a) and 506(b) of the Employee Retirement Income Security Act of 1974 (ERISA) and other related Federal laws, including Title 18 of the United States Code.

The enclosed subpoena requires you to produce identified documents in connection with that investigation. Your personal appearance pursuant to this subpoena is not required provided you produce the documents.

Please provide the required documents with a cover letter identifying the documents you are producing. In the letter, you should also state whether you conducted a diligent search for the subpoenaed documents and whether the documents you are producing include all of the requested documents. If any documents called for are not furnished, please list those documents and your reason for not producing them.

The subpoena requests that you produce documents in electronic form (Electronically Stored Information (ESI)) if you maintain those documents in electronic form.⁽¹³⁾

If you have any questions concerning your rights and duties, you may wish to consult counsel. If you have any questions concerning the subpoena or the documents required to be produced, including the production of ESI and the appropriate format and media, please call (name of investigator/auditor) at (telephone number).

Sincerely,

Director of Enforcement/Regional Director
Enclosure

(Figure 14)
Authentication Form Pursuant to FRE

Certification Under Federal Rules of Evidence
803(6), 902(11), and 902(13)

I hereby certify that I am a records custodian / employee at ___________________ (name of business⁽¹⁴⁾), hereafter "the business." I further certify that:

1. The attached records, consisting of, ____ are true and correct copies/original records of the business, and I am familiar with how the records were created, managed, stored, and retrieved;

2. It is the regular practice of the business to make and maintain such records;

3. The records were made at or near the time of the events reflected in the records;

4. The records were made by, or from information transmitted by, a person with knowledge of the events reflected in the records, or the records were generated by an electronic process or system that produces an accurate result.

5. I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct.⁽¹⁵⁾

Footnotes

1. 12 U.S.C. §§3401 et seq.
2. Such as a bank, savings and loan, credit union, consumer finance institution, or a credit card company.
3. Obtaining actual grand jury material, such as transcripts, is very difficult. This section addresses situations where the custodian of records has given its original records to the grand jury and does not have another copy to produce pursuant to a civil subpoena.
4. A "non 6(e) Order" is a court order, which grants permission to Investigators/Auditors to examine and copy those documents in the possession of the grand jury, asked for in the subpoena.
5. The subpoena lists formats in which EBSA can accept ESI. When producing ESI, please produce the material as maintained on your computer system. For example, produce ESI with all files, folders and sub-folders intact, and emails with all attachments intact.
6. The subpoena lists the formats in which EBSA can accept ESI. When producing ESI, please produce the material as maintained on your computer system. For example, produce ESI with all files, folders and sub-folders intact, and emails with all attachments intact.
7. The subpoena lists the formats in which EBSA can accept ESI. When producing ESI, please produce the material as maintained on your computer system. For example, produce ESI with all files, folders and sub-folders intact, and emails with all attachments intact.
8. 12 U.S.C. §3401 et seq.
9. 12 U.S.C. §3401-3422
10. The information required for each space is described in parentheses under each space.
11. You may pay the court with cash, certified check, or money order.
12. You may mail the documents by registered or certified mail.
13. The subpoena lists formats in which EBSA can accept ESI. When producing ESI, please produce the material as maintained on your computer system. For example, produce ESI with all files, folders and sub-folders intact, and emails with all attachments intact.
14. The term "business" includes businesses, institutions, organizations, associations, professions, occupations, and callings of every kind, whether or not conducted for profit.
15. See 28 U.S.C. § 1746.

1. Purpose. EBSA field offices should use these guidelines to promote voluntary compliance (VC) with ERISA.

   These guidelines describe situations where it is appropriate to attempt VC without OE approval. They also detail a procedure for securing OE approval for VC efforts and describe acceptable terms of settlement in cases where the RO pursues VC.

2. Review of Guidelines. The field should consult with OE if it is not clear whether VC efforts are appropriate. Please note: OE will periodically review suggestions from the field regarding when VC is appropriate, and update these guidelines accordingly.

3. Delegation of Authority to the Field.

   1. RDs have the authority to permit Investigators/Auditors to discuss their findings with plan officials during an investigation, provided that the officials are advised that the matters discussed:

      1. Represent only the views of the Investigator/Auditor;

      2. Are subject to review by higher authority; and

      3. EBSA will confirm in writing. While it will be useful to discuss with plan officials their position and intentions to voluntarily correct violations, RO personnel, other than the RD, generally should not propose corrective actions or discuss tentative settlement terms.

   2. After consultation with the RD, Investigators/Auditors may discuss with plan Officials a proposal for corrective actions and the civil penalty process at the conclusion of the investigation. The Investigator/Auditor, however, may not discuss specific dollar amounts related to the proposed corrective action or any possible civil penalty. All discussions with plan officials that relate to findings or proposed corrections must be memorialized in writing by the Investigator/Auditor as soon after the discussion as possible. The memorandum should be included in the case file.

   3. RDs have the authority to issue all VC notice letters and to close cases if they meet the guidelines in this section.

4. Types of Cases that are Appropriate for VC. Many issues are suitable for VC, although a few exceptions exist as described in paragraphs 5 and 6. Benefit disputes, bonding, reporting, and disclosure issues are generally always suitable for VC.

5. Types of Cases that are NOT Appropriate for VC. For enforcement policy purposes, certain types of cases are not suitable for VC. These include:

   1. Cases in which the time for proposed correction of violations will exceed one year, unless approved in advance by OE.

   2. Civil cases in which the violations involve potential fraud or criminal misconduct by a person or entity with respect to dealings with a plan. An exception to this general rule is that the RO may pursue VC if the appropriate USA agrees in writing to a civil settlement. If the RD does not have a written agreement from the USA, he or she should confirm the agreement in a letter to the USA.

   3. Cases which may warrant removing a fiduciary or a related entity. Such cases will generally require legal action. If appropriate, other issues other than removal may settle through VC.

6. Types of Cases in Which VC May Not Be Appropriate. VC may also not be suitable in cases involving:

   1. Novel or interpretive legal issues;

   2. Complex fiduciary violations or complex part 7 violations; or

   3. Individuals previously determined to have violated ERISA or other federal statutes.

   It is important to remember that these are general guidelines. In selecting a course of correction, the RD should weigh the presence or absence of each of the factors as well as the applicable civil penalties and make a case-by-case determination. ROs should consult with OE when in doubt.

7. Regional Office Action before Pursuing VC. The RD is responsible for ensuring that matters pursued through VC meet the guidelines in this section. Further, the RD must ensure fully documented violations and that the positions taken in the VC notice letter is appropriate. RDs have the discretion to decide on the method to accomplishing these guidelines.

   If the RO needs help in determining the proper disposition of a case, it should refer the matter to OE. The RD may choose to make these referrals via telephone consultation or a detailed memorandum. In the latter case, the memorandum should include a proposed VC letter.

8. VC Notice Letter.

   1. VC Notice Letter - General. A VC notice letter advises plan fiduciaries or others of the results of an investigation, including the ERISA violations, and requests corrective action. The letter does not threaten litigation (Figure 1).

      1. 502(i). If the RD believes that VC is possible, and a 502(i) civil penalty is assessable, the RD should discuss the case with OE before issuing a VC notice letter. Figure 1 provides language to preserve the Department's ability to assess the 502(i) civil penalty in cases where a VC notice letter precedes the assessment of the penalty. OE issues 502(i) assessment letters. See Penalties, Figure 1 for an example of a 502(i) assessment letter.

      2. 502(l). RO should add ERISA section 502(l) language to any VC notice letter which: (1) is addressed to a fiduciary with respect to the plan or to a knowing participant in a fiduciary breach, (2) involves a violation of part 4 of Title I of ERISA, and (3) contemplates a monetary recovery to the plan (Figure 1).

   2. VC Notice Letter – Part 7 Violations. VC letters and modified closing letters should advise fiduciaries in writing of findings of part 7 violations. RO should discuss exceptions to this practice with OE.

   3. Interim Correspondence. All VC notice letters issued containing ERISA section 502(i) or 502(l) language, and interim correspondence should include language that preserves the Department's ability to assess the civil penalties. Figure 1 provides sample language to preserve the penalty.

9. Acceptable VC Settlement Terms.

   1. The RO may confer with OE before accepting terms requiring that:

      1. Repayment to the plan must be made over a period of no longer than one year.⁽¹⁾ In instances in which the statute of limitations will toll before the terms of the settlement agreement are completed, the RO must obtain a tolling agreement, which expires six months after the repayment period terminates;

      2. Interest on repayments should be at appropriate rates;

      3. All notes must be adequately secured; and

      4. ROs should seek some form of commitment for future compliance. If future compliance is not part of the settlement terms, the RO will determine if further action is appropriate, and may include discussions with OE and SOL.

   2. Recovery, for VC and 502(l) purposes, includes amounts paid to the plan that represent losses incurred by the plan, disgorged profits, and amounts required to achieve correction. This amount will be determined as a part of the "settlement agreement" with the party.

   3. At the RD's discretion, the RO can consult with OE in cases involving a final written settlement agreement, including the monetary settlement of a 502(l) civil penalty, prior to signature by the Department representative. When the RO seeks guidance from OE related to the assessment of a 502(l) penalty, the following documentation should be included:

      1. A copy of the draft 502(l) assessment letter. The RO should use the Penalties Figure 2 as a model for 502(l) civil penalty assessment letters. In situations where consent decrees have been executed, the RO can issue a modified assessment letter (See Penalties Figure 3);

      2. A worksheet indicating how the RO determined the applicable recovery amount and the 502(l) penalty computed;

      3. Proof that payment of the applicable recovery amount was actually made to the plan;

      4. A copy of the Settlement Agreement; and

      5. A copy of the VC notice letter and all subsequent correspondence.

10. Prohibited Transaction Class Exemption 94-71. Prohibited Transaction Class Exemption 94-71 (PTE 94-71) [59 FR 51216 (October 7, 1994)] (Figure 2) applies to certain prospective transactions involving employee benefit plans and parties in interest where such transactions are specifically authorized by the Department pursuant to a settlement agreement. The exemption provides relief for a prohibited transaction entered into by plan fiduciaries as part of voluntary action taken to avoid litigation with the Department following an investigation. The exemption covers transactions that would otherwise violate ERISA §§406(a)(1)(A) – (D), 406(a)(2), 406(b)(1) and 406(b)(2). The Department must describe in a written settlement agreement, the transactions or activities which resulted from an investigation of a plan. EBSA must give affected participants and beneficiaries advance notice of the proposed transaction at least 30 days prior to the execution of the settlement agreement. PTE 94-71 does not serve as a retroactive exemption for transactions that are in progress or have already occurred at the time of settlement with the Department.

    PTE 94-71 is similar in form and purpose to PTE 79-15 that provides exemptive relief in certain transactions authorized or required by judicial order or by a judicially approved settlement decree where the Department or the Internal Revenue Service has been a party to the litigation. The underlying reason for both exemptions is to facilitate the settlement process by eliminating the need for an individual exemption. The exemption does not provide exemptive relief for the underlying violation, but only for the corrective action. Accordingly, ERISA section 502 penalties and IRS excise taxes remain applicable.

    1. Relief Provided. PTE 94-71 provides relief for prospective prohibited transactions or activities involving employee benefit plans which are:

       1. Specifically authorized by the Department, after conducting an investigation, in accordance with the VC guidelines found in this section of the Manual;⁽²⁾

       2. Described in a written settlement agreement which specifically details the nature of the transaction to be entered into, and to which the Department is a party, following the Department's investigation; and,

       3. Described in notices which must be given to the affected participants and beneficiaries by the party who will be engaging in the transaction or activity, at least 30 days prior to the execution of the settlement agreement.

    2. Types of Prospective Transactions Covered Without OE Approval. PTE 94-71 contemplates certain transactions for exemptive relief, typically transactions that involve sales of property (real or personal) between a plan and a party in interest.

    3. Types of Prospective Transactions Requiring OE Approval. Authorization for the following sale and loan transactions require prior OE approval:

       1. Any transaction described in the VC Guidelines of this Manual section, which requires approval of OE.

       2. Any transaction that by amount or the type of non-cash assets does not have a clear relationship to the transaction that the RO has determined violates Title I of ERISA.

       3. All transactions or activities that will exceed one year before completion.

    4. Safeguards and Conditions. In negotiating the terms of an otherwise prohibited transaction or activity to be authorized by EBSA, you must meet the following conditions.

       1. For transactions that involve the sale of property (real or personal), securities, promissory notes, or interest in limited partnerships between a plan and a party in interest, a relevant, third party source independent of all parties who have an interest in the settlement agreement, must determine the value of the asset to be sold. Without prior approval from OE, any parties who are the subject of an EBSA investigation or a defendant in a current ERISA-related legal action taken by the Secretary should not determine valuations.

       2. The plan may not pay any fees or commissions in connection with the transaction.

       3. For transactions involving the sale of a promissory note to a party in interest, the plan should receive the greater of: (1) the fair market value of the note; or (2) the outstanding balance of the note plus accrued interest.

       4. In the case of a sale or transaction involving the extension of credit to a party in interest, the plan should receive a rate of interest reflecting market rates for similar transactions. In addition, an adequately secured promissory note should guarantee such repayment.

       5. The RO authorizing the transaction or activity will monitor the transaction or activity to ensure the transaction terms met.

       6. The RO must determine that the transaction or activity is in the interest of the participants and beneficiaries of the plan, and is otherwise appropriate as part of the settlement of issues raised by the investigation.

    5. Settlement Agreement. The settlement agreement pursuant to PTE 94-71 (Figure 3), is an agreement between the Department and a party or parties which addresses the transactions or activities. The exemption provides relief for corrective transactions specifically described in the settlement agreement which would otherwise violate sections 406(a)(1)(A) through (D), 406(a)(2), 406(b)(1) and 406(b)(2) of ERISA for transactions that are in the interest of the plan but would be prohibited. The Department must specifically agree to these transactions as part of a settlement of the issues raised in the VC letter. The settlement agreement shall contain language to protect the Department's right to pursue other issues raised in the VC letters, including the imposition of civil penalties assessed on the underlying transaction addressed in the settlement agreement.

    6. Notice to Participants/Beneficiaries. The notice requirements to participants/beneficiaries specifically provide that EBSA must give affected participants and beneficiaries notice of the proposed transaction(s) and the opportunity to comment on the proposed transaction(s) (Figure 4).

       The written notice must meet the following conditions:

       1. The RO that negotiated the settlement agreement must approve the written notice and the method of distribution in advance.

       2. The written notice must contain an objective description of the transaction or activity; the approximate date on which the transaction or activity will occur; the address of the RO which negotiated the settlement agreement; and a statement apprising participants and beneficiaries of their right to forward their comments to the field office. The notice to participants and beneficiaries should include a statement that the Department will keep the identity of commenters confidential, as permitted by law. Commenters, however, may elect to submit information anonymously.

       3. The Department must use a method, to furnish notice to interested persons that would reasonably ensure that interested persons will receive the notice. In all cases, delivery in person and delivery by first class mail to the party's last known address will be considered reasonable methods of furnishing notice.⁽³⁾

       4. Affected participants and beneficiaries must receive the written notice at least 30 days prior to the execution of the settlement agreement by the applicant seeking the prospective exemptive relief.

    7. ERISA Section 502 Civil Penalties and Excise Tax. Granting an exemption will not affect the liability of any persons for the payment of any civil penalties imposed on applicable recovery amounts under ERISA section 502 attributing to the underlying violation (see Penalties). The parties to the alleged violation(s) will also remain liable for any excise taxes owing under section 4975(a) and (b) of the Internal Revenue Code with respect to transactions or activities cited in the VC letter as prohibited under section 406 of ERISA.

11. 502(l) Settlement Agreements. A settlement agreement, pursuant to the Department's proposed regulation 29 CFR 2560.502l-1(e), is defined as an agreement between the Secretary and a person who the Secretary alleges to have committed a breach of fiduciary responsibility under, or other violation of any provision of, part 4 of Title I of ERISA pursuant to which a claim for such breach or violation is to be released by the Secretary in return for cash or other property being tendered to a plan, any participant or beneficiary of a plan, or the legal representative(s) of a plan or plan participant or beneficiary.

    Settlement Agreement No. 1 (Figure 5) provides a written acknowledgement of both the agreed-upon correction amount and the amount of the 502(l) penalty assessment Settlement Agreement. No. 2 (Figure 6) also sets forth the agreed-upon correction amount, but preserves the right of the violator to contest the assessment of the 502(l) penalty and to petition the Secretary for a waiver or reduction of the civil penalty.

12. Procedures for Assessing the 502(l) Penalty. When the RO effects a settlement agreement, the RO should prepare and issue a 502(l) assessment letter.

    The regulations require that the assessment letter contain the following information:

    1. A brief factual description of the violation for which the assessment is being made;

    2. The identity of the person being assessed;

    3. The amount of the assessment; and

    4. The basis for assessing that particular person that particular penalty amount. (See Penalties)

13. Types of Closing Letters. When the RO determines that there is no further action with regard to a case, it should issue a closing letter. In instances when the Regional Director determines that it is not advisable to send a closing letter, there is a file note explaining the reason for the decision. The RO also notifies OE of the decision not to issue a closing letter. The following are types of closing letters issued in the instances described.

    1. Closing Letter – No ERISA Violation Detected. RO should issue a pattern-closing letter in all cases in which there are not detected violations (Figure 7).

    2. Closing Letter - No Action Warranted. In some instances, it will be appropriate to issue a closing letter other than the pattern-closing letter (Figure 8). This letter would be appropriate and would be authorized only if there is no evidence of willful misconduct and one of the following criteria is satisfied:

       1. The violations are de minimis; or

       2. There are no actual or potential monetary damages to the plan.

       This letter is appropriate when, e.g., an investigation identifies a corrected prohibited transaction reversed with no harm to the plan, or a plan failed to submit an accountant's opinion for a particular year but submitted one for all subsequent years. The closing letter should reflect unresolved reporting matters and the referral to OCA.

    3. Closing Letter - Compliance Achieved. The RO will issue a closing letter (Figure 9) after issuing a VC notice letter, corrective action confirmed, and applicable penalties paid or the payment period has expired. In addition, RO may adapt (Figure 8) for use in situations where violations (1) previously discussed with plan officials at the conclusion of an investigation; (2) confirmed by the RD; and (3) corrected by the plan officials pursuant to the discussions. Because there is not a prior notice letter under these circumstances, the closing letter must detail the violations as well as the specific corrective actions agreed to by the plan officials including 502(l) and 502(i) matters. Also RO may further modify (Figure 6) and use in instances where penalties assessed have not been paid by the end of the payment period.

    4. Closing Letter - Referral to the IRS. In certain situations where there is no attempt at VC, and when the facts and issues do not appear to justify the commitment of EBSA resources, it may be appropriate to refer a case to the IRS for possible imposition of excise taxes. In cases where the RO determines that such a referral is appropriate, the RO will notify the plan by a closing letter (Figure 10). Closing letters should reflect unresolved reporting matters and their referral to OCA.

    5. Closing Letter - Compliance Not Achieved. This closing letter will be issued after a VC notice letter has been sent to plan fiduciaries and those fiduciaries have denied the facts disclosed in the investigation, have admitted the facts but deny the facts constitute a violation of ERISA, or have otherwise failed to comply with the terms of our notice letter (Figure 11). RO will use this letter only in situations in which the RO contemplates no further enforcement action, and after consideration of all possible courses of action. Closing letters should reflect unresolved reporting matters and their referral to OCA.

    6. Modified Closing Letters. While RO generally issue VC letters prior to correction, sometimes plan officials may correct a violation prior to receiving such a letter. In this situation, it is important that the closing letter (Closing Letter – Compliance Achieved) include the same information that is normally included in the VC letter. The Modified Closing Letter should set forth the facts gathered during the investigation, including the plan fiduciaries and parties in interest involved (if any), and identify the ERISA provisions violated.

14. Action to be Taken When VC Attempts Prove Unsuccessful in Whole or in Part.

    1. In all cases where VC attempts prove unsuccessful in whole or in part, the RO must consider all possible courses of action within its delegated authority for resolving or closing the case. In the event the RO believes that the case merits litigation, the RO should refer the case to OE or to the RSOL, as appropriate.

    2. ROs may also send cases to OE for guidance on appropriate action to pursue, which may include referral to SOL, referral to DOJ, referral to the IRS for the imposition of an excise tax, assessment of the 502(i) civil penalty, or closing. In cases where there is partial compliance and the 502(l) civil penalty is applicable, the RO shall assess the penalty on the applicable recovery amount.

    3. In appropriate cases where VC is not achieved, consideration should be given to disclosing the results of the investigation to affected parties, e.g., by sending them a copy of the closing letter. If the case was opened predicated on a participant, beneficiary or fiduciary complaint with respect to the plan, disclosure may be made to that person, unless the information to be disclosed was obtained pursuant to Rule 6(e), Federal Rules of Criminal Procedure, section 6103 of the IRC, the Department's agreement with the Federal Financial Institution Regulatory Agencies, or from some other source requiring confidentiality (see Release of Information).

    4. In instances when reporting violations pursuant to part 1 of ERISA remain non-compliant, the RO refers those issues to OCA (see item 13.b. of this section). If the RO refers issues to OCA prior to closing the investigation, the RO should indicate the status of the investigation at the time of the referral so that OCA can coordinate its review with other enforcement actions. It is particularly important to notify OCA when an independent fiduciary is appointed, and the identification of a possible reporting violation.

15. Duration of VC Negotiations. RO should conduct VC negotiations within a reasonable period. While the length of the process will vary according to the circumstances of the particular investigation and the parties involved, generally there should be no lengthy lapses between initiation of VC efforts and conclusion of any negotiations regarding compliance (although the corrective action may occur over a more extended period). RO should exercise special care to avoid undue delay when the investigation is likely a referral for litigation if the VC process proves unsuccessful.

16. SBREFA Notice. In accordance with the provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), the Small Business Administration has established a National Small Business and Agriculture Regulatory Ombudsman and 10 Regional Small Business Regulatory Fairness Boards to receive comments from small businesses about federal agency enforcement actions. The Ombudsman annually evaluates enforcement activities and rates each agency's responsiveness to small businesses. If a small business wishes to comment on the enforcement actions of EBSA, it may call 1.888.REG-FAIR (1.888.734.3247) or write to the Ombudsman at 409 3rd Street SW, MC 2120, Washington, DC 20416.

    Notice of the right to comment to the SBREFA Ombudsman will be provided by copy of the EBSA Customer Service Standards pamphlet to all plan sponsors, plans, or plan service providers with fewer than 100 participants or employees during the course of ERISA Title I civil investigations. EBSA RDs have discretion regarding the timing of the delivery of the pamphlet/notice on a case-by-case basis. The case file must reflect appropriate documentation of the SBREFA notice.

    The right to file a comment with the Ombudsman does not affect EBSA's authority to enforce or otherwise seek compliance with ERISA. The filing of a comment by a small business with the Ombudsman is not a substitute for complying with an EBSA subpoena or addressing EBSA's proposed corrective action in a timely manner to protect business' interests.

(Figure 1)
Sample VC Notice Letter

Date

Recipient
1111 ABC St.
City, ST 00000

Re: Name of Plan
Case Number 00-000000 (00)

You may have violated provisions of the Employee Retirement Income Security Act by loaning money to a party in interest. You will remain in violation until you:

• Restore the money loaned to the Plan, and
• Send us documentation to confirm that you have done so.

Please contact the U.S. Department of Labor by DATEOFLETTER+10 to discuss how you plan to correct these violations, restore losses to the NAME OF PLAN, and ensure future compliance. You may contact us using the information above, or email INVESTIGATOR at last.first@dol.gov.

Dear ___________:

The Department of Labor has conducted its investigation of the XYZ Plan and of your activities as its trustee. Based on the information reviewed so far, we have concluded that, as trustee, you may have violated several provisions of the Employee Retirement Income Security Act (ERISA). The purpose of this letter is to advise you of our findings and to give you an opportunity to comment before the Department determines whether and how to proceed.

What We Found

As we understand the facts, Mr. Smith is a trustee and participant in the Plan. As a trustee and participant in the Plan, Mr. Smith is a fiduciary and party in interest to the Plan.⁽⁴⁾

On December 1, 2005, the Plan loaned $25,000 to Mr. Smith. This loan is unsecured and bears an interest rate of 5 percent. It is our view that this loan violates ERISA sections 406(a)(1)(B) and 406(b)(1), which prohibit fiduciaries from self-dealing.⁽⁵⁾

In addition, our investigation has disclosed that (outline additional facts and violations as above).

Additional information may lead us to revise our views, but for the reasons cited above, we have concluded that you are in violation of ERISA and will remain so as long as the loan in question remains outstanding.

Next Steps

We are providing this information to help you evaluate your obligations as a fiduciary within the meaning of ERISA. Please contact us by DATEOFLETTER+10 to discuss how you plan to correct these violations, restore losses to the Plan, and achieve future compliance.

Additional Notes

The Secretary of Labor must assess a civil penalty (equal to 20 percent of the amount recovered under a settlement agreement or court order) against a fiduciary that breaches a fiduciary responsibility or otherwise violates ERISA Title I part 4.⁽⁶⁾ If you correct these actions based on a settlement agreement with the Department, we will close the investigation without further action except for the civil penalty described above, and will not file suit with regard to these issues.

If you do not correct these actions, we may refer the matter to the Office of the Solicitor of Labor for possible legal action. Please note that even if the Secretary of Labor decided not to take legal action, other parties – including plan fiduciaries, participants, and beneficiaries – could still do so. The Secretary is authorized to furnish information to "any person actually affected by any matter which the subject "of an ERISA investigation.⁽⁷⁾ If you take corrective action that is not pursuant to a settlement agreement with the Department, it will not grant, expressly or by implication, a release of any claims that the Secretary still might assert in the future.

The Department is speaking only for itself and only with regard to the issues discussed above. We have no authority to restrain any third party or any other governmental agency from taking further action.

Sincerely,

Name

(Figure 2)

Department Of Labor

Employee Benefits Security Administration
[Prohibited Transaction Exemption 94-71; Application No. D-9484]

Grant of Class Exemption to Permit Certain Transactions Authorized Pursuant to Settlement Agreements between the U.S. Department of Labor and Plans

Agency: Employee Benefits Security Administration

Action: Grant of Class Exemption

Summary: This document contains a final exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (the Code). The class exemption applies to certain prospective transactions involving employee benefit plans where such transactions are specifically authorized by the Department pursuant to a settlement agreement. The exemption affects plans, participants and beneficiaries of such plans, and certain individuals engaging in such transactions or activities.

For further information contact: [Insert Office Point of Contact], Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor 202.693.XXXX (not a toll-free number); or [Insert Office Point of Contact], Plan Benefits Security Division, Office of the Solicitor, U.S. Department of Labor 202.693.XXXX (not a toll-free number).⁽⁸⁾

Supplementary Information: On May 27, 1994, the Department of Labor (the Department) published a notice in the Federal Register (59 FR 27581) of the pendency of a proposed class exemption from the restrictions of section 406(a)(1)(A) through (D), 406(a)(2), 406(b)(1) and 406(b)(2) of ERISA and from the taxes imposed by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code.

The Department proposed the class exemption on its own motion pursuant to section 408(a) of ERISA and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990).

The Notice gave interested persons an opportunity to submit written comments or requests for a hearing on the proposed exemption to the Department. No public comments and no requests for a public hearing with respect to the proposed class exemption were received by the Department. Upon consideration of the record as a whole, the Department had determined to grant the class exemption as proposed.

General Information

The attention of interested persons is directed to the following:

1. The fact that a transaction is the subject of an exemption under section 408(a) of ERISA and section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person with respect to a plan from certain other provisions of ERISA and the Code, including any prohibited transaction provisions to which the exemption does not expressly apply and the general fiduciary responsibility provisions of section 404 of ERISA. Section 404 requires, in part, that a fiduciary discharge his or her duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of ERISA. This exemption does not affect the requirement of section 401(a) of the Code that a plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries.

2. The exemption will not extend to transactions prohibited under section 406(b)(3) of ERISA and section 4975(c)(1)(F) of the Code.

3. In accordance with section 408(a) of the Act and section 4975(c)(2) of the Code, and based upon the entire record, the Department finds that the exemption is administratively feasible, in the interest of plans and of their participants and beneficiaries and protective of the rights of the participants and beneficiaries of such plans.

4. The exemption is supplemental to, and not in derogation of other provisions of ERISA and the Code, including statutory or administrative exemptions and transitional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction.

5. The exemption is applicable to a transaction only if the conditions specified in the class exemption are satisfied.

Exemption

Accordingly, the following exemption is granted under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990).

Effective as of October 7, 1994, the restrictions of section 406(a)(1)(A) through (D), 406(a)(2), 406(b)(1) and 40b(b)(2) of ERISA and the taxes imposed by section 4975(a) and 4975(b) of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall not apply to a transaction or activity which is authorized, prior to the occurrence of such transaction or activity, by a settlement agreement resulting from an investigation of an employee benefit plan conducted by the Department under the authority of section 504(a) of ERISA provided that:

1. The nature of such transaction or activity is specifically described in writing, by the terms of such settlement agreement.

2. The Department of Labor is party to the settlement agreement.

3. A party who will be engaging in the transaction or activity has provided written notice to the affected participants and beneficiaries in a manner that is reasonably calculated to result in the receipt of such notice at least 30 days prior to entry into the settlement agreement.

4. A copy of the notice and the method of distribution is approved in advance by the area or district office of the Department which negotiated the settlement.

5. The notice includes an objective description of the transaction or activity, the approximate date on which the transaction will occur, the address of the area or district office of the Department which negotiated the settlement agreement, and a statement apprising the participants and beneficiaries of their right to forward their comments to such office.

Signed at Washington, DC, this 30th day of September 1994.

Alan D. Lebowitz
Deputy Assistant Secretary of Program Operations
Employee Benefits Security Administration
U.S. Department of Labor

(Figure 3)
Settlement Agreement

This Agreement, entered into by and between the United States Department of Labor, Employee Benefits Security Administration (EBSA) and the [Trustee ("the Trustee")] of the ____________________ ("the Plan") shall fully resolve and settle between these parties the following issues:

[Description of Transaction]

No other issues or violations cited in the [date] letter to the Trustee are subject to the terms of this agreement.

Having received the [date] letter, the Trustee has entered into negotiations with EBSA, and the parties have made the following representations:

1. EBSA continues to believe that the above-described transaction(s) violate ERISA Sections [provide relevant sections].

2. The Plan continues to [state violative actions].

3. ____________________ is a party in interest to the plan under section 3(14) of ERISA.

4. The Trustee proposes to correct this violation(s) by [state corrective action], hereinafter referred to as "the Correction."

5. The Plan will pay no fees or commissions incurred in connection with the Correction.

6. _____________________ is willing to [state activity].

7. The Correction would constitute a prohibited transaction under Section 406 or 407 of ERISA.

8. Written notice of the Correction was provided to the Plans' participants and beneficiaries by [describe the method of delivery]. This notice advised the affected plan participants and beneficiaries of their right to forward comments on the Correction to EBSA. This Agreement as Exhibit ____________________incorporates a copy of such written notice. (Figure 6)

9. EBSA is required to assess a civil penalty of twenty percent (20%) on amounts recovered pursuant to a settlement agreement or court order ("applicable recovery amount"), pursuant to ERISA section 502(l)(2), 29 U.S.C. Section 1132(1)(2).

10. The Trustee reserves all rights to contest the assessment and calculation of the civil penalty under ERISA Section 502(l), 29 U.S.C. Section 1132(l), and to petition the Secretary of Labor for a waiver or reduction of such civil penalty.

11. This Agreement is not binding on any governmental agency other than the U.S. Department of Labor.

12. This settlement agreement is limited to the transactions corrected by the previously described Correction. This agreement shall not affect, in any manner, or for any purpose, the Secretary's claims with respect to any other issues, nor shall it affect the relief obtainable by the Secretary on these issues. Further, the Department notes that this settlement agreement does not provide relief from any penalties that the Department or the Internal Revenue Service may impose on the underlying transactions or activities cited as violations by the Department.

Now, in consideration of such representations [the Trustees] and EBSA agree as follows:

1. ____________________ will [describe activity].

2. The Trustees shall provide to EBSA evidence of the Correction deemed sufficient by EBSA to ensure that the terms of this Agreement have been fulfilled.

3. EBSA will take no further enforcement action with respect to the Plan's underlying violation which is the subject of this settlement agreement other than the imposition of any relevant civil penalties under ERISA section 502(l), 29 U.S.C. Section 1132(l). In the event that the representations made by the trustees in paragraphs 2, 4, 6, and 8 of this Agreement are not true and correct, then this Agreement is voidable at the election of the Department of Labor.

4. The Correction is provided exemptive relief under PTE 94-71.

5. Each of the signatories below hereby represents that he or she is authorized and entitled to sign on behalf of the parties hereto.

Dated this ____________________ day of ____________________, 20____________________.

For: ____________________

By:____________________

For: The United States Department of Labor, Employee Benefits Security Administration

By: ____________________
Regional Director

(Figure 4)
Sample PTE 94-71 Notice to Affected Parties

You are hereby notified that the United States Department of Labor plans to enter into a settlement with [insert name of parties]. The settlement contemplates a proposed [insert description of transaction requiring exemptive relief under PTE 94-71]. As a participant or beneficiary of the plan, you are hereby provided the following information with respect to the proposed transaction (the Proposed Transaction).

1. In order to resolve this matter, [insert case-specific information relating to corrected transaction];

2. As a person who may be affected by the Proposed Transaction, you have the right to submit comments on the Proposed Transaction to the U.S. Department of Labor. Comments concerning the Proposed Transaction, which may be sent anonymously, should be addressed to: United States Department of Labor, Employee Benefits Security Administration, [insert Regional Office Address].

3. If the settlement agreement is finalized, the Proposed Transaction will occur on or about [insert approximate date].

(Figure 5)
Settlement Agreement No. 1

This Agreement, entered into by and between the United States Department of Labor, Employee Benefits Security Administration (EBSA) and ____________________, shall fully and finally resolve and settle the issues between the parties that were raised by EBSA in its letter to ____________________ dated ____________________ and which are set forth as follows:

(Briefly describe issues.)

Whereas, in connection with this Agreement, ____________________ has agreed to pay $X to the ____________________ Plan (the plan);

Whereas, EBSA is required to assess a civil penalty of twenty percent (20%) on amounts recovered under a settlement agreement or court order ("applicable recovery amount"), pursuant to ERISA section 502(l)(2), 29 U.S.C. section 1132(l)(2);

Whereas, EBSA has determined that the applicable recovery amount within the meaning of ERISA section 502(l), 29 U.S.C. section 1132(l) is $Y;

Whereas, this Agreement is not binding on any governmental agency other than the United States Department of Labor.

Therefore, in consideration of these mutual undertakings and understandings, EBSA and ____________________ agree as follows:

1. ____________________ shall, within ____________________ days of the signing of this Agreement, pay $X to the Plan.

2. Upon payment of $X to the Plan pursuant to this Agreement EBSA will assess a penalty of twenty percent (20%) of the applicable recovery amount, pursuant to ERISA section 502(l)(2), 29 U.S.C. section 1132(l)(2); said penalty amount to be paid will be $Y, which represents 20% of the portion of the applicable recovery amount.

3. Within ten (10) days of receipt of EBSA's assessment letter, ____________________ shall pay said penalty as directed in the letter from EBSA's authorized representative.

4. (Other relief, if any, agreed to between the parties.)

5. Each of the signatories below hereby represents that he or she is authorized and entitled to sign on behalf of each of the parties hereto.

Dated this ____________________ day of ____________________, 20____________________.

For:

By:

For: The United States Department of Labor, Employee Benefits Security Administration

By:
Regional Director

(Figure 6)
Settlement Agreement No. 2

This Agreement, entered into by and between the United States Department of Labor, Employee Benefits Security Administration (EBSA), and ____________________, with the exception of issues concerning the assessment of a civil penalty under ERISA section 502(l), 29 U.S.C. section 1132(l), shall fully and finally resolve and settle the issues between the parties that were raised by EBSA in its letter to ____________________, dated ____________________, and which are set forth as follows:

(Briefly describe issues.)

Whereas, in connection with this Agreement, ____________________ has agreed to pay $X to the ____________________ Plan (the Plan);

Whereas, EBSA maintains that it is required to assess a civil penalty of twenty percent (20%) on amounts recovered under a settlement agreement or court order ("applicable recovery amount"), pursuant to ERISA section 502(l)(2), 29 U.S.C. section 1132(l)(2);

Whereas, ____________________ reserves all rights to contest the assessment and calculation of the civil penalty under ERISA section 502(l), 29 U.S.C. section 1132(l), and to petition the Secretary of Labor for a waiver or reduction of the civil penalty;

Whereas, this Agreement is not binding on any governmental agency other than the United States Department of Labor.

Therefore, in consideration of these mutual undertakings and understandings, EBSA and ____________________ agree as follows:

1. ____________________ shall, within ____________________ days of the signing of this Agreement, pay $X to the Plan.

2. Each of the signatories below hereby represents that he or she is authorized and entitled to sign on behalf of each of the parties hereto.

Dated this ____________________ day of , 20 ____________________.

For: ____________________

By:

For: The United States Department of Labor, Employee Benefit Security Administration

By:
Regional Director

(Figure 7)
Sample Pattern Closing Letter
No ERISA Violations Detected

Date

Recipient
1111 ABC St.
City, ST 00000

Re: Name of Plan
Case Number 00-000000 (00)

Dear (Plan Administrator/Fiduciary):

We have concluded our limited investigation of (name of plan) under the Employee Retirement Income Security Act (ERISA). We plan to take no further action at this time.

Please note that the Department's findings or absence of findings, including the absence of findings regarding any specific provision of the Plan, do not bind the Department in:

• reviewing or investigating any other employee benefit plan, service provider, or
• a subsequent or further review of the Plan regarding issues not raised by this investigation.

Our decision is binding on the Department only. It does not prevent another individual or governmental agency from taking action.

Thanks for your cooperation.

Sincerely,

Regional Director

Enclosure: SBREFA Notice⁽⁹⁾
cc: OE
File

(Figure 8)
Sample Closing Letter
No Action Warranted
This closing letter should not be used in a 502(l) or 502(i) situation

[heading]

Dear:

The Department of Labor (the Department) has responsibility for administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Title I establishes standards governing the operation of employee benefit plans such as XYZ Plan (Plan).

This office has concluded its investigation of the Plan and of your activities as its trustee. Based on the facts gathered during this investigation, and subject to the possibility that additional information may lead us to revise our views, it appears that, as trustee, you may have breached your fiduciary obligations to the Plan and have violated several provisions of ERISA. The purpose of this letter is to advise you of our findings.

As we understand the facts, many of which you provided to this office during the course of our investigation, on December 1, 2005, the Plan loaned $500 to the XYZ Company, which is the plan sponsor and thus a party in interest to the Plan within the meaning of ERISA section 3(14). This loan was repaid on December 15, 2005. It is our view that this loan violates ERISA section 406(a)(1)(B), which provides:

406(a)(1)

A fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect-

(B) lending of money or other extension of credit between the plan and a party in interest;

In addition our investigation has disclosed that (outline additional violations as above).

[With the exception of the reporting violations noted above,]⁽¹⁰⁾ We have concluded that further action is not warranted at this time. You are cautioned, however, to refrain from such conduct in the future.

Please be further advised that the resolution of this matter is limited to the specific issues reviewed in the current investigation of the Plan. The Department's findings or absence of findings, including the absence of findings regarding any specific provision of the Plan, shall not bind the Department in the review or investigation of any other employee benefit plan, any service provider, or a subsequent review of the Plan regarding issues not raised by this investigation. You are further cautioned that this notice addresses only the issues described above. You must also be aware that the responsibility for the acceptance or rejection of any Annual Report (Form 5500) or any part thereof is delegated to the EBSA Office of the Chief Accountant (OCA). [The final decision whether the reporting violations described above have been adequately corrected will be made by the OCA pursuant to the federal regulations set forth at 29 C.F.R. 2570.61 et seq. Accordingly, the reporting issues will be referred to the OCA for whatever action they deem appropriate.]

You must understand that the Department's decision is binding on the Department only and only concerns the matters discussed above. Any other individual or governmental agency remains free to take whatever action it may deem appropriate.

[In addition, there is an excise tax on disqualified people (generally, the same as parties in interest under Title I of ERISA) who engage in prohibited transactions with employee retirement benefit plans. In general, this excise tax, which the Internal Revenue Service administers and enforces, applies in two steps:

1. a first level tax equal to 15 percent of the amount involved in the transaction for each taxable year during which the transaction is outstanding, and

2. a second level tax, equal to 100 percent of the amount involved if the transaction is not corrected.

You must pay the excise tax when you file Form 5330 with the Internal Revenue Service.

Please also note that ERISA requires the Secretary of Labor to transmit to the Secretary of the Treasury information indicating that a prohibited transaction has occurred.⁽¹¹⁾ Accordingly, we will refer this matter to the Internal Revenue Service.]

We hope this letter will be helpful to you in the execution of your fiduciary duties.

Sincerely,

Regional Director

Enclosures:
Filing information on the Form 5330
SBREFA Notice⁽⁹⁾

(Figure 9)
Sample Closing Letter Corrective Action Taken

[heading]

Dear :

We have received your letter dated ____________________ concerning the ____________________ Plan which was in response to our letter dated ____________________.

We have concluded our investigation of the XYZ Plan and of your activities as its trustee. Based on the facts reviewed to date, we have concluded that, as a trustee, you breached your fiduciary obligations to the Plan and violated several provisions of the Employee Retirement Income Security Act (ERISA).

Our previous letter detailed the specific actions you took which we believe violated ERISA. In your letter dated ____________________, you confirm those facts. It is our understanding that you have taken corrective actions with respect to the specific violations detailed in my DATE letter. Specifically, you:

• (detail actions taken)
• etc.

Because you have taken the corrective action described above, the Department of Labor is closing its investigation. We caution you to refrain from the conduct identified, above, as violating ERISA in the future.

While we are closing the case, the Department has not released any claims that the Secretary might assert in the future, and the decision to close this case does not prevent the Department or any other individual or governmental agency from taking any further action it may deem appropriate with respect to these or other matters.

The Department's findings or absence of findings, including the absence of findings regarding any specific provision of the Plan, do not bind the Department in:

• reviewing or investigating any other employee benefit plan, service provider, or
• a subsequent or further review of the Plan or the conduct that was the subject of this investigation.

Please note that EBSA’s Office of the Chief Accountant is responsible for accepting or rejecting any Annual Report (Form 5500) in whole or in part. [The Office of the Chief Accountant will make the final decision concerning the adequacy of any Annual Report or any part thereof pursuant to the federal regulations set forth at 29 C.F.R. 2570.61 et seq.]

[In addition, there is an excise tax on disqualified people (generally, the same as parties in interest under Title I of ERISA) who engage in prohibited transactions with employee retirement benefit plans. In general, this excise tax, which the Internal Revenue Service administers and enforces, applies in two steps:

1. a first level tax equal to 15 percent of the amount involved in the transaction for each taxable year during which the transaction is outstanding, and

2. a second level tax, equal to 100 percent of the amount involved if the transaction is not corrected.

You must pay the excise tax when you file Form 5330 with the Internal Revenue Service.

Please also note that ERISA requires the Secretary of Labor to transmit to the Secretary of the Treasury information indicating that a prohibited transaction has occurred.⁽¹¹⁾ Accordingly, we will refer this matter to the Internal Revenue Service.]

Sincerely,

Name
Regional Director

Enclosures:
Filing information on the Form 5330
SBREFA Notice

OPPEM (When 502(l) issues are involved)

(Figure 10)
Sample Closing Letter
No VC Letter/Referral to IRS
This closing letter should not be used in a 502(l) or 502(i) situation

[heading]

Dear ___________:

The Department of Labor has conducted its investigation of the XYZ Plan and of your activities as its trustee. Based on the information reviewed so far, we have concluded that, as trustee, you may have violated several provisions of the Employee Retirement Income Security Act (ERISA). The purpose of this letter is to advise you of our findings and to give you an opportunity to comment before the Department determines whether and how to proceed.

What We Found

As we understand the facts, Mr. Smith is a trustee and participant in the Plan. As a trustee and participant in the Plan, Mr. Smith is a fiduciary and party in interest to the Plan.

On December 1, 2005, the Plan loaned $25,000 to Mr. Smith. This loan is unsecured and bears an interest rate of 5 percent. It is our view that this loan violates ERISA sections 406(a)(1)(B) and 406(b)(1), which prohibit fiduciaries from self-dealing.

In addition, our investigation has disclosed that (outline additional facts and violations as above).

We Are Closing the Case

[With the exception of the reporting violations noted below,]⁽¹⁰⁾ We have concluded that further action by the Department is not warranted at this time; however, you are cautioned to refrain from such conduct in the future.

While we are closing the case, the Department has not released any claims that the Secretary might assert in the future, and the decision to close this case does not prevent the Department or any other individual or governmental agency from taking any further action it may deem appropriate with respect to these or other matters.

The Department's findings or absence of findings, including the absence of findings regarding any specific provision of the Plan, do not bind the Department in:

• reviewing or investigating any other employee benefit plan, service provider, or
• a subsequent or further review of the Plan or the conduct that was the subject of this investigation.

Please note that EBSA’s Office of the Chief Accountant is responsible for accepting or rejecting any Annual Report (Form 5500) in whole or in part. [The Office of the Chief Accountant will make the final decision concerning the adequacy of any Annual Report or any part thereof pursuant to the federal regulations set forth at 29 C.F.R. 2570.61 et seq.]

In addition, there is an excise tax on disqualified people (generally, the same as parties in interest under Title I of ERISA) who engage in prohibited transactions with employee retirement benefit plans. In general, this excise tax, which the Internal Revenue Service administers and enforces, applies in two steps:

1. a first level tax equal to 15 percent of the amount involved in the transaction for each taxable year during which the transaction is outstanding, and

2. a second level tax, equal to 100 percent of the amount involved if the transaction is not corrected.

You must pay the excise tax when you file Form 5330 with the Internal Revenue Service.

Please also note that ERISA requires the Secretary of Labor to transmit to the Secretary of the Treasury information indicating that a prohibited transaction has occurred.⁽¹¹⁾ Accordingly, we will refer this matter to the Internal Revenue Service.

Sincerely,

Regional Director

Enclosures:
Filing information on the Form 5330
SBREFA Notice⁽⁹⁾

(Figure 11)
Sample Closing Letter

Date

Recipient
1111 ABC St.
City, ST 00000

Re: Name of Plan
Case Number 00-000000 (00)

You may have violated provisions of the Employee Retirement Income Security Act by loaning money to a party in interest. You will remain in violation until you:

• Restore the money loaned to the Plan, and
• Send us documentation to confirm that you have done so.

Dear ___________:

The Department of Labor has conducted its investigation of the XYZ Plan and of your activities as its trustee. Based on the information reviewed so far, we have concluded that, as trustee, you may have violated several provisions of the Employee Retirement Income Security Act (ERISA). The purpose of this letter is to advise you of our findings and to give you an opportunity to comment before the Department determines whether and how to proceed.

What We Found

As we understand the facts, Mr. Smith is a trustee and participant in the Plan. As a trustee and participant in the Plan, Mr. Smith is a fiduciary and party in interest to the Plan.⁽⁴⁾

On December 1, 2005, the Plan loaned $25,000 to Mr. Smith. This loan is unsecured and bears an interest rate of 5 percent. It is our view that this loan violates ERISA sections 406(a)(1)(B) and 406(b)(1), which prohibit fiduciaries from self-dealing.⁽⁵⁾

In addition, our investigation has disclosed that (outline additional facts and violations as above).

In your letter dated ____________________, you denied that the facts concerning the December 1, 2005 loan were true (you confirmed that the facts concerning the December 1, 2005 loan were true, but denied that those facts constitute a violation of ERISA) as stated in my previous letter.

I have considered the information provided by you (and have conducted additional investigation with regard to the new facts presented) but remain of the view that the Department's original position is correct. Therefore, we continue to believe that you have violated, and remain in violation of; the above cited fiduciary provisions of ERISA.

We Are Closing the Case

Despite your refusal to undertake the corrective action we deem necessary, we have decided that legal action by the Department will not be commenced at this time. You are cautioned, however, that this decision only addresses issues other than reporting violations.

While we are closing the case, the Department has not released any claims that the Secretary might assert in the future, and the decision to close this case does not prevent the Department or any other individual or governmental agency from taking any further action it may deem appropriate with respect to these or other matters.

The Department's findings or absence of findings, including the absence of findings regarding any specific provision of the Plan, do not bind the Department in:

• reviewing or investigating any other employee benefit plan, service provider, or
• a subsequent or further review of the Plan or the conduct that was the subject of this investigation.

Please note that EBSA’s Office of the Chief Accountant is responsible for accepting or rejecting any Annual Report (Form 5500) in whole or in part. [The Office of the Chief Accountant will make the final decision concerning the adequacy of any Annual Report or any part thereof pursuant to the federal regulations set forth at 29 C.F.R. 2570.61 et seq.]

[In addition, there is an excise tax on disqualified people (generally, the same as parties in interest under Title I of ERISA) who engage in prohibited transactions with employee retirement benefit plans. In general, this excise tax, which the Internal Revenue Service administers and enforces, applies in two steps:

1. a first level tax equal to 15 percent of the amount involved in the transaction for each taxable year during which the transaction is outstanding, and

2. a second level tax, equal to 100 percent of the amount involved if the transaction is not corrected.

You must pay the excise tax when you file Form 5330 with the Internal Revenue Service.

Please also note that ERISA requires the Secretary of Labor to transmit to the Secretary of the Treasury information indicating that a prohibited transaction has occurred.⁽¹¹⁾ Accordingly, we will refer this matter to the Internal Revenue Service.]

Sincerely,

Name
Regional Director

Enclosures:
Filing information on the Form 5330
SBREFA Notice⁽⁹⁾

Footnotes

1. If the correction involves any repayment period, the Regional Office must use either PTE 94-71 or obtain a consent order.
2. Settlements may still be approved for cases not otherwise meeting voluntary compliance guidelines, after Regional Office consultation with OE.
3. In certain limited situations, other methods may be appropriate, depending on the size of the plan and assurances by the applicant that all interested plan participants will be notified through their proposed notice methodology. For example, in large plans a number of methods may be used, often in combination, including electronic mail, posting notices where other important employee messages are posted, and publication in the employee newsletter. It is the applicant's responsibility to establish that notice was provided to all interested parties.
4. See ERISA § 3(21) and 3(14).
5. See ERISA § 406(a)(1)(B) and 406(b)(1).
6. See ERISA § 502(l). Please note: The Department may, in its sole discretion, waive or reduce the penalty in conjunction with a settlement agreement:
   • if it determines in writing that the fiduciary or knowing participant in the breach acted reasonably and in good faith, or
   • if it is reasonable to expect that the fiduciary or knowing participant will not be able to restore all losses to the plan without severe financial hardship unless such waiver or reduction is granted.
   You may direct a petition for a waiver or reduction of the civil penalty to an EBSA Regional Office following the procedure set forth in 29 CFR 2570.80-88.
   In situations where there are 502(i) issues, add the following sentence: [The Department may assess a civil penalty under 502(i) of ERISA.]
7. See ERISA §504(a).
8. For questions, please call 202-693-8564.
9. Include when subject of investigation is a plan, or other business entity, with fewer than 100 participants or employees and when the notice has not been provided previously.
10. This introduction should be used when reporting violations were identified during the investigation.
11. See ERISA §3003(c), 29 USC §1203(c).

1. 502(i) Civil Penalty

   1. Statutory Authority. ERISA section 502(i)⁽¹⁾ authorizes the Secretary to assess a civil penalty against a party in interest who engages in a prohibited transaction with respect to either an employee welfare benefit plan or a non-qualified pension plan.⁽²⁾ This penalty applies to welfare and non-qualified plans, and complements the excise tax imposed on tax-qualified pension plans by section 4975(a) of the Internal Revenue Code.

      The Department's regulation identifies the procedures⁽³⁾ for assessing a two-tiered 502(i) civil penalty. It also communicates the circumstances when the party in interest may contest EBSA's findings and assessment.

      The first tier of the penalty may not exceed 5% of the "amount involved." The second tier of the penalty, which is not more than 100 % of the amount involved, applies only if the prohibited transaction remains uncorrected within 90 days after a final agency order⁽⁴⁾.

      Because the assessment of the civil penalty under section 502(i) is discretionary, the RO should consider the assessment of the 502(i) civil penalty as one of several enforcement options.

   2. Notice. EBSA must notify a party in interest of its intention to assess the 502(i) penalty. Because OE issues all 502(i) assessments, the RD may wish to discuss situations involving potential 502(i) assessments with OE before issuing a VC notice letter. VC notice letters should include language preserving the Department's ability to assess the penalty.

   3. Request for a 502(i) Assessment. The RO should send all requests to assess a 502(i) civil penalty to OE for processing. OE will review the request and, if appropriate, prepare the notice of assessment of the 502(i) civil penalty. See (Figure 1) for an example of a notice of assessment.

      The RO should include documentation sufficient to substantiate the violations alleged in its transmittal to OE. Specifically, the RO should forward a copy of the VC notice letter, if issued, and other correspondence, including any responses to the VC notice letter, the ROI, and exhibits to support a finding of the prohibited transactions along with an accurate calculation of the civil penalty.

   4. First Level 502(i) Penalty. The first level penalty under section 502(i) is 5% of the "amount involved."

      Amount involved means the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of property received as of the date the prohibited transaction occurred.

      1. Amount Involved. When determining the amount involved, distinguish between situations that involve the prohibited transfer of ownership (generally, a sale or transfer of property) and the prohibited use of property (generally, the lease or loan of property). If there is a transfer of ownership rights, base the penalty on whichever is greater: the fair market value of the property or the actual amount of money that changes hands. For situations involving the use of property or money, such as a lease or a loan, the amount involved is whichever is greater: the amount paid for such use or the fair market value of such use for the period for which the money or property is used.

         For example, in the situation of a prohibited loan, the amount involved will be the interest actually paid or the fair market interest for such loan, whichever is greater. In the instance of a lease transaction, the amount involved will be the greater of the rent actually paid or the fair market rental value. In those situations involving compensation to a party in interest for services provided, the amount involved will be limited to any excess compensation paid.

      2. Discrete and Continuing Transactions. When calculating the civil penalty, distinguish between discrete and continuing prohibited transactions.

         1. Discrete Transactions. In the case of discrete transactions, such as sales of property, assess the first level of the civil penalty simply as 5% of the amount involved for each taxable year or portion thereof until the correction of the prohibited transaction or assessment of the penalty.⁽⁵⁾ Calculate the penalty on discrete transactions on an annual basis and do not prorate for a portion of the year. Therefore, a transaction entered into in the middle of one year and/or the correction occurs in the middle of a subsequent year, the amount of the penalty is the full amount for each of the two years.

         2. Continuing Transactions. In the case of a continuing prohibited transaction, such as a lease or a loan, a new transaction is deemed to occur on the first day of each year or portion thereof in which the transaction continues. Such characterization of continuing transactions gives rise to the assessment of an additional sanction for each year the transaction remains uncorrected.

            In continuing violations, prorate the amount involved in the transaction for the actual period the use takes place. In addition, where there is an uncorrected completed lease or loan, the amount involved is cumulative for each taxable year until correction or assessment of the penalty. Calculate the penalty on a continuing transaction on an annual basis, but prorate for a portion of any year involved.

   5. Second Level 502(i) Penalty. The Department may assess the second tier of the 502(i) civil penalty (100% of the amount involved), in addition to the first level penalty, if the prohibited transaction is not corrected within 90 days after a "final agency order" is issued.⁽⁶⁾

      Final Order means the final decision or action of the Department concerning the assessment of a civil sanction under ERISA section 502(i) against a particular party. Such final order may result from a decision of an administrative law judge or the Secretary, or the failure of a party to invoke the procedures for hearings or appeals under the regulation.

      In general, the correction period begins on the date the prohibited transaction occurs and ends 90 days after a final agency order.

   6. 502(i) Appeals. A party in interest who elects to contest EBSA's findings and assessment may request a hearing before an administrative law judge (ALJ). In general, the party in interest may file an answer and request for a hearing with the ALJ within 30 days of service of process. Failure to do will be deemed to be a waiver of the right to appeal as well as an admission of the facts alleged.

      Amount involved in the transaction, for purposes of the second level of the 502(i) penalty, is the highest fair market value during the correction period.

      Unless otherwise waived, the party in interest may file an appeal to the Secretary within 20 days of the issuance of the ALJ's final decision. Upon such appeal, the Secretary may affirm, modify, or set aside, in whole or in part, the decision on appeal. The Secretary's review is not a de novo proceeding, but rather a review of the record established before the ALJ. EBSA delegates the Director of the Office of Policy and Research to conduct this review.

2. 502(l) Civil Penalty.

   1. Statutory Authority. ERISA section 502(l)⁽⁷⁾ requires the Secretary to assess a civil penalty against:

      1. A fiduciary who breaches a fiduciary responsibility under, or violates, part 4 of Title I of ERISA; or

      2. Any other person who knowingly participates in such breach or violation.

      The Department's regulation⁽⁸⁾ specifies:

      1. The procedures under which a penalty will be assessed;

      2. When an assessed penalty must be paid; and

      3. The circumstances under which the Secretary may waive or reduce a penalty.

      Note: The Secretary may delegate authority to the Assistant Secretary for EBSA, RDs for EBSA, or Deputy RD for EBSA.

   2. Notice of Assessment.

      Notice shall be any document, which contains a specified assessment in monetary terms of a civil penalty under 502(l).

      The Notice will include:

      1. A brief factual description of the violation for which the assessment is being made;

      2. The identity of the person being assessed;

      3. The amount of the assessment; and

      4. The basis for assessing that particular person with that particular penalty amount.

      After receiving the applicable recovery amount pursuant to either a settlement agreement (See Voluntary Compliance section paragraph 11) or a court order, the RO shall serve a notice of assessment (Notice) on the person liable for paying the penalty.

      If there is an applicable civil penalty pursuant to a voluntary compliance settlement agreement, RDs will assess the penalty as described in the Voluntary Compliance section (see Figures 2 and 3).

      If correction is the result of a court order in a judicial proceeding, the order may include language assessing the 502(l) penalty. If not, or if the payment is not to be made immediately (i.e., either a deferred payment or a schedule of payments), the penalty will be assessed by the RD after the legal action (see Figures 3 and 4).

   3. Service of the 502(l) Assessment Letter. Serve 502(l) assessment letters by:

      1. Delivering a copy to the person⁽⁹⁾ being assessed;

      2. Leaving a copy at the principal office, place of business, or residence of such person; or

      3. Mailing a copy to the last known address of such person.

      Upon mailing the notice by certified mail, service is complete. Upon receipt by the addressee by regular mail, service is complete.⁽¹⁰⁾

   4. Assessment of the Penalty. The penalty under section 502(l) is equal to 20% of the "applicable recovery amount."⁽¹¹⁾

      Applicable recovery amount means any amount recovered from a fiduciary or other person with respect to a breach or violation:

      1. pursuant to any settlement agreement with the Secretary, or

      2. ordered by a court to be paid by such fiduciary or other person to a plan or its participants and beneficiaries in a judicial proceeding instituted by the Secretary.

      The 502(l) penalty is calculated as a percentage of the amount paid to the plan or to a participant or beneficiary that represents losses incurred by the plan, disgorged profits, and amounts necessary to achieve correction of the ERISA violation.

      EBSA may assess the penalty only against fiduciaries and knowing participants in a breach or violation of part 4 of Title I of ERISA. It assesses the civil penalty only against the person who is required by the terms of the judgment or the settlement agreement to pay the applicable recovery amount. For example, if only one of a group of fiduciaries agrees to restore losses to a plan pursuant to a settlement agreement, EBSA only assesses the civil penalty against that fiduciary.

      Additionally, in certain circumstances, the penalty may be assessed against fiduciaries or knowing participants when the restitution to the plan is made on their behalf by a third party. Specifically, the EBSA may assess the penalty when such third party does not have an independent obligation under ERISA to correct the violation(s).

   5. Payment of the 502(l) Penalty. The party assessed a 502(l) civil penalty has 60 days to pay it, unless the party submits a petition for waiver or reduction during the 60-day payment period.

      Within the 60-day payment period, the party may submit a written request for a conference with the Secretary to discuss the calculation of the assessed penalty. This request does not toll the payment period.

      At the end of the 60-day payment period, if the party does not submit a petition for waiver or reduction of the penalty and there is no penalty payment, the RO should send a copy of the assessment letter and/or court order to OPPEM with a formal memorandum (copy to OE) requesting implementation of debt collection procedures.⁽¹²⁾

   6. Petitions for Waiver or Reduction. At any time during the 60-day payment period, the party may petition the Secretary to waive or reduce the assessed penalty on the basis that:

      1. The petitioner will not be able to restore all losses to the plan or any participant or beneficiary of such plan without severe financial hardship unless such waiver or reduction is granted, and/or

      2. The petitioner acted in good faith in engaging in the breach or violation.

      A petition submitted either before or during the 60-day payment period tolls the payment period pending Department consideration of the petition. The petitioner is entitled to a conference with the Secretary regarding each petition for waiver or the reduction of the civil penalty.

      The petition for waiver or reduction of the penalty must be submitted to the RD. On petition based in whole on financial hardship, RDs will make a written determination of whether to reduce or waive the penalty on this basis within 60 days of receipt.

      If the petition is based in part on financial hardship and in part on good faith, the RD will make a written determination of whether to reduce or waive the penalty only on the basis of financial hardship within 60 days of receipt.

      If the petitioner remains liable for any portion of the penalty after the written determination, the RO will immediately forward the petition to OED, copying OE, for a determination of whether to reduce or waive the remaining portion of the penalty based on good faith.

      RDs will immediately forward petitions based in whole on good faith to OED, copying OE, for a determination of whether to reduce or waive the penalty based on good faith.

      Handling Petitions

      Basis for Petition	Regional Director	OED and OE
      Financial hardship only	Will make a written determination whether to reduce/waive penalty within 60 days of receipt	n/a
      Good faith only	Will forward petition to OED, copying OE	Will determine whether to reduce/waive penalty
      Financial hardship and good faith	Will make a written determination whether to reduce/waive financial hardship penalty within 60 days of receipt. Will forward petition to OED, copying OE, if petitioner remains liable for any portion after financial hardship determination.	Will determine whether to reduce/waive good faith penalty

   7. Offsets against other penalties. The 502(l) civil penalty assessed on a person with respect to any transaction shall be reduced by the amount of any penalty or tax imposed on such person with respect to such transaction under ERISA section 502(i) or section 4975 of the Internal Revenue Code.⁽¹³⁾ Only the identical parties on whom the Department/IRS imposed a penalty/excise tax can offset the excise tax against the 502(l) penalty.⁽¹⁴⁾ The person assessed the penalty must provide proof the offsetting penalty was paid.

   8. Compromise of 502(l) Penalty. RDs are delegated authority and responsibility with respect to compromise of 502(l) penalties. RDs may compromise a penalty only when⁽¹⁵⁾:

      1. The case was referred to SOL for litigation,

      2. The compromise is based on SOL’s written recommendation, and,

      3. The penalty is not a Final Agency Order.

      If the RD disagrees with SOL's recommendation, he/she must obtain approval from the National Office, through OE.

   9. Write-off of 502(l) Debt. EBSA may consider a debt write-off after a 502(l) penalty assessment is a Final Agency Order, making it a collectable debt to the government. Only the Deputy Assistant Secretary for National Office Operations may write-off a 502(l) penalty debt. Any request for debt write-off will be referred to the RD for a recommendation on whether to reduce the penalty in whole or part. RDs should ask SOL for a written analysis and recommendation and forward all analyses and recommendations for handling the write-off to OE. After consultation with the RD and OPPEM, OE will prepare a proposed recommendation regarding the penalty write-off to the Deputy Assistant Secretary for National Office Operations.

3. 502(c)(2) Civil Penalty.

   1. Statutory Authority. ERISA section 502(c)(2)⁽¹⁶⁾ authorizes the Secretary to assess a civil penalty against any plan administrator who fails or refuses to file an annual report as required under ERISA section 101(b)(1).⁽¹⁷⁾ ERISA provides that an annual report rejected for failure to provide material information shall be treated as not filed with the Secretary.⁽¹⁸⁾

      The Department's regulation⁽¹⁹⁾ specifies the procedures for:

      1. Assessing the penalty,

      2. Paying the penalty, and

      3. Requesting an administrative hearing.

      The Secretary can delegate authority to any assistant secretary, including the Assistant Secretary for Employee Benefits Security,⁽²⁰⁾ administrator, commissioner, appellate body, board, or other official.

   2. Implementing Procedure. The Office of the Chief Accountant (OCA) will institute penalties assessed under section 502(c)(2).

   3. Voluntary Compliance Upon Discovery of a Reporting Violation. If the RD decides to resolve an open investigation by means of a VC notice letter rather than a referral for litigation, the deficient report violation should be included in the VC notice letter.

      If the plan fails to correct the deficient report violation as requested in the VC notice letter, and no other issues require further enforcement action, the RO refers the deficient reporting issue to OCA. The RD should issue a closing letter notifying the Plan Administrator of the action being taken (See Voluntary Compliance section, Figure 8, Figure 10, and Figure 11).

      OCA will make the final determination whether to institute further procedures to assess the civil penalty authorized in ERISA section 502(c)(2).

   4. Referrals for Litigation. When the RD decides to refer a case to SOL with a recommendation for civil litigation, the deficient report violation is included in the Action ROI. Forward a copy of the transmittal memorandum, or a separate memorandum if necessary, so that the assessment of the civil penalty can be coordinated with OCA and SOL. The transmittal memo, copied to OE as described in the Fiduciary Investigations Manual section, should discuss the referral to OCA.

   5. Concurrent Actions. When the RO wishes to open a case on a plan that is already under investigation by OCA, it should coordinate the investigation with OCA. Similarly, OCA will coordinate with the appropriate RO if it wishes to open a case on a plan under investigation by the RO.

4. 502(c)(7) Civil Penalty

   1. Statutory Authority. ERISA section 502(c)(7)⁽²¹⁾ authorizes the Secretary to assess a civil penalty against a plan administrator of an individual account plan who fails or refuses to provide notice to affected participants and beneficiaries in accordance with ERISA section 101(i).⁽²²⁾

      The failure or refusal to provide notice is a failure or refusal, in whole or part, to provide notice of the blackout period to an affected plan participant or beneficiary at the time and in the manner prescribed by section 101(i) of ERISA.

      The RO should treat a failure or refusal to provide a notice of blackout period with respect to any single participant or beneficiary as a separate violation.⁽²³⁾

      The Department's regulation⁽²⁴⁾ specifies the procedures for:

      1. Assessing a penalty;

      2. Paying a penalty; and

      3. Requesting an administrative hearing.

      The Secretary may delegate authority to any assistant secretary, including the Assistant Secretary for Employee Benefits Security Administration, administrator, commissioner, appellate body, board, or other official.⁽²⁵⁾

   2. Implementing Procedure. OCA will institute penalties assessed under section 502(c)(7).

   3. Voluntary Compliance When there is a Blackout Notice Violation. OCA will make the determination as to whether there is a violation of ERISA section 101(i). A blackout notice violation may not be included in the VC notice letter. See Figure 5 for language to use in the closing letter.

      OCA will make the final determination whether to institute further procedures to assess the civil penalty authorized in ERISA section 502(c)(7).

   4. Referral for Litigation. When a case is referred to SOL for civil litigation, the potential blackout notice violation should be included in the Action ROI under "Other Findings." However, the transmittal memorandum should mention OCA is responsible for determining whether there is a violation of ERISA section 101(i) and the assessment of the civil penalty should be coordinated with OCA and SOL.

   5. Concurrent Actions. When the RO wants to open a case on a plan under investigation by OCA, it should coordinate the investigation with OCA. Similarly, OCA will coordinate with the appropriate RO if it wishes to open a case on a plan under investigation by the RO.

(Figure 1)
ERISA Section 502(i) Assessment Letter

Board of Trustees
Local Union
1234 Main Street
Anytown, USA

RE: Notice of Assessment of ERISA Section 502(i) Civil Penalty in the Matter of the Local Union
EBSA Case No. XX-XXXXX

Dear Trustees:

We have concluded our investigation of the Fund pursuant to Title I of the Employee Retirement Income Security Act of 1974 (ERISA).⁽²⁶⁾ Our investigation found that the Union engaged in a transaction with the [Fund], prohibited by ERISA. As a result of this prohibited conduct, we plan to assess a civil penalty against the Union in the amount of $17,500, pursuant to section 502(i) of ERISA and the regulations thereunder.

On August 24, 2016, the Trustees voted at a special meeting to "donate" $50,000 to the Union out of the Fund’s tuition account. This contribution was contingent upon the Union’s increasing its membership dues. On the same date, Check No. 9566 for $50,000, was drawn on the Fund's account and paid to the Union.

The Union is a party in interest with respect to the Fund under section 3(14)(D) of ERISA, which defines a party in interest to include an employee organization any of whose members are covered by the plan. A fiduciary with respect to an employee benefit plan is prohibited from causing the plan to engage in a transaction if he knows or should know that such transaction constitutes a direct or indirect transfer to or use by or for the benefit of, a party in interest, of any assets of the plan (section 406(a)(1)(D)). Accordingly, the transfer of $50,000 to the Union constitutes a violation of section 406(a)(1)(D).

Section 502(i) of ERISA provides, in relevant part, that:

1. In the case of a transaction prohibited by section 406 by a party in interest with respect to a plan to which this part applies, the Secretary may assess a civil penalty against such party in interest. The amount of such penalty may not exceed 5 percent of the amount involved . . .; except that, if the transaction is not corrected . . . within 90 days after notice from the Secretary . . . such penalty may be in an amount not more than 100 percent of the amount involved.

Therefore, EBSA is assessing a civil penalty of $17,500 against the Union. The penalty is assessed for the period the prohibited transaction is outstanding until corrective action is taken.⁽²⁷⁾ The penalty is computed as shown on the Penalty Computation Sheet enclosed with this letter.

You may contest EBSA’s findings and the assessment of the civil penalty by filing an Answer⁽²⁸⁾ with the:

1. Chief Docket Clerk
   Office of Administrative Law Judges
   800 K Street, N.W.
   Washington, D.C. 20001-8002.

If you file an Answer with the Office of Administrative Law Judges, that filing will initiate an adjudicatory proceeding in accordance with the regulations at 29 CFR Part 2570. Please note that 29 CFR section 2570.5 provides that if you fail to file an Answer with the Office of Administrative Law Judges within thirty (30) days of your receipt of this letter, such failure will constitute a waiver of your rights to contest this matter before an Administrative Law Judge, or to receive any other agency consideration. Failure to file an Answer will also constitute an admission of the facts alleged.

You should be aware that if you fail to correct the transaction within the correction period as described in 29 CFR 2560.502i-1(c) and (d) (generally 90 days after a final agency or judicial order), a second tier penalty of 100 percent of the amount involved will be assessed.

If you determine not to contest this matter, you should remit a check or money order in the amount of $17,500 payable to the United States Department of Labor prior to the expiration of the thirty-day period.⁽²⁹⁾ The check should be mailed to the following address:

If you would like to discuss your options for installment payments towards the debt arising from the penalty assessment, please contact Soroosh Nikouei at (202) 693-8486.

To ensure correct processing of this payment, please include the EBSA Case Number (listed at the top of this letter) on the front of your check or money order, as well as a copy of this letter. You should also notify me that you have paid the civil penalty.

If you would like to discuss correction of the violations and any other related matters, please contact Mr. X in the Office of Enforcement at (202) 693-XXXX.

Sincerely,

Director of Enforcement

Enclosure

Office of Administrative Law Judges
800 K Street, NW
Washington, DC 20001-8002

Respondent Respondent’s Answer

1. This matter is brought before the Office of Administrative Law Judges pursuant to action 502(i) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(i), and the regulations issued thereunder.

2. By letter dated ____________________, the Complainant, the U.S. Department of Labor, the Employee Benefits Security Administration served the Respondent, Local Union, a notice of assessment of the civil penalty.

3. The total amount of the civil penalty assessed by the Complainant is $17,500.

4. Respondent hereby contests the findings of the Complainant and the assessment of the civil penalty as follows:

   I hereby certify that service of the Respondent's Answer was made to the persons listed below by sending a copy by regular mail to the following addresses:

   1. Director of Enforcement
      Employee Benefits Security Administration
      U.S. Department of Labor
      200 Constitution Avenue, NW, Room 600
      Washington, DC 20210

   2. Plan Benefits Security Division
      Office of the Solicitor
      ERISA Section 502(i) Proceeding
      P.O. Box 1914
      Washington, DC 20013

Penalty Computation Sheet

1. The amount involved for the year ending December 31, 1999: $50,000 x .05= 2500

2. The amount involved for the year ending December 31, 2000: $50,000 x .05= 2500

3. The amount involved for the year ending December 31, 2001: $50,000 x .05= 2500

4. The amount involved for the year ending December 31, 2002: $50,000 x .05= 2500

5. The amount involved for the year ending December 31, 2003: $50,000 x .05= 2500

6. The amount involved for the year ending December 31, 2004: $50,000 x .05= 2500

7. The amount involved for the year ending December 31, 2005: $50,000 x .05= 2500

Total Civil Penalty Due $17,500

(Figure 2)
Sample 502(1) Civil Penalty Assessment Letter
Settlement Agreement

Certified Mail, Return Receipt Requested

Within 60 days of this notice, please pay the ERISA Section 502(l) penalty or file a petition to waive or reduce the penalty.

Re: Notice of Assessment of ERISA Section 502(l) Civil Penalty in the Matter of (Name of Plan)
EBSA Case No. ________________________

Dear Mr./Ms.:

We have concluded our investigation of the Plan and of your activities as ______________ pursuant to Title I of the Employee Retirement Income Security Act of 1974 (ERISA).⁽³⁰⁾

We have concluded that you violated your fiduciary obligations to the Plan and violated several provisions of ERISA.⁽³¹⁾ My previous letter offered you an opportunity to obtain a release from certain further action, other than the imposition of the civil penalty required by ERISA section 502(l), by correcting the ERISA violation(s) and restoring losses to the plan. Based on your letter-dated ____________________, [if applicable] we understand that you have taken such action in response to this offer. Specifically, you [detail actions taken].

Since you have taken the agreed-upon corrective action with respect to the specific violations, the Department will take no further action with respect to these matters, except to impose the civil penalty as required by ERISA section 502(l).⁽³²⁾

This letter serves as Notice that we are assessing an ERISA section 502(l) civil penalty against you of $_______.⁽³³⁾ This amount is due within 60 days of the date of this Notice.

At any time prior to the due date, you may request a conference to discuss the penalty calculation. The 60-day payment period will not, however be tolled upon such request.

In addition, at any time prior to the expiration of the 60-day period, you may petition the Secretary to waive or reduce the assessed penalty, as explained in the attachment "Procedures under ERISA Section 502(l)". If a petition for waiver or reduction is submitted during the 60-day payment period, the payment period for the penalty will be tolled pending Departmental consideration of the petition.

Please mail the petition to the following address:

1. Regional Director
   Regional Office Address

If you decide not to contest this matter, the $___ payment should be remitted by check or money order payable to the United States Department of Labor. The check should be mailed to the following address:

If you would like to discuss your options for installment payments towards the debt arising from the penalty assessment, please contact Soroosh Nikouei at (202) 693-8486.

To ensure correct processing of this payment, please include the EBSA Case Number (listed at the top of this letter) on the front of your check, as well as a copy of this letter. You should also notify me that you have paid the civil penalty.

Finally, I am required to advise the Internal Revenue Service that a prohibited transaction has occurred. As described in the enclosure, the ERISA Section 502(l) penalty amount will be reduced by the tax amount imposed under section 4975 of the Internal Revenue Code.

Sincerely,
Regional Director

bcc: OPPEM

(Figure 3)
Procedures under ERISA Section 502(l)

1. The Civil Penalty under ERISA Section 502(l)

   Section 502(l) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(l), requires the Secretary of Labor to assess a civil penalty against a fiduciary who breaches a fiduciary responsibility under, or commits any other violation of, part 4 of Title I of ERISA or any other person who knowingly participates in such breach or violation. The penalty under section 502(l) is equal to 20 percent of the applicable recovery amount.

   The Secretary of Labor has delegated most of the Secretary's penalties responsibilities under ERISA to EBSA.

2. How to Petition For Waiver or Reduction of The Civil Penalty

   1. Your Petition

      EBSA will send you a notice of the 502(l) civil penalty assessment in the form of a letter (Notice). You have 60 calendar days from the date of the Notice to pay the assessed penalty. At any time prior to the payment due date, you may petition the Secretary to waive or reduce the assessed penalty. Acceptable reasons may include that: (1) you acted reasonably and in good faith in engaging in the breach or violation; or (2) you will not be able to restore all losses to the plan or any participant or beneficiary of such plan without severe financial hardship unless such waiver or reduction is granted.

      A petition to waive or reduce the penalty must be in writing and contain the following information:

      1. The name of the petitioner;

      2. A detailed description of the breach or violation which is the subject of the penalty;

      3. A detailed recitation of the facts which support one, or both, of the bases for waiver or reduction, accompanied by underlying documentation supporting such factual allegations; and,

      4. A declaration signed and dated by the petitioner(s), in the following form: Under penalty of perjury, I declare that, to the best of my knowledge and belief, the representations made in this petition are true and correct.

      If your petition is based, in whole or in part, on financial hardship, it would be helpful in the consideration of your petition if you would provide financial information such as your Federal income tax returns for the last two years and a notarized financial statement.

      As a general matter, in determining whether a fiduciary or knowing participant acted reasonably and in good faith, EBSA will examine the decision making process with respect to the transaction in question to determine whether it was designed to adequately safeguard the interest of the participants and beneficiaries of the plan. In the absence of such decision making process, actual favorable investment return to the plan will not provide a sufficient showing that a person acted reasonably and in good faith with regard to a particular transaction.⁽³⁴⁾

   2. How Your Petition is Processed

      If your petition for waiver or reduction is based on financial hardship, a determination of whether to reduce or waive the penalty on this basis will be made by the EBSA Regional Director who originally assessed the civil penalty. If your petition is based on good faith, the Regional Director will forward your petition to EBSA’s Office of Exemption Determinations, where the decision will be made whether to reduce or waive the penalty on the basis of good faith. If your petition is based both on financial hardship and good faith, your petition will first be considered by the Regional Director, and will be forwarded to the Office of Exemption Determination only if the petition is denied on the basis of financial hardship.

      Should a decision be made to deny either petition, in whole or part, you are entitled to a conference with the Department to discuss the factual allegations contained in each petition. Any additional conferences, however, are at the discretion of the Department.

      You will be served with a written determination informing you of the decision made on your petition. This written determination will briefly state the grounds for the decision. As provided in ERISA section 502(l), this decision is final and neither reviewable nor appealable. In the case of a determination not to waive, the payment period for the penalty will resume as of the date of service of the written determination.

3. Excise Tax under Internal Revenue Code 4975

   1. What is the Excise Tax?

      When Congress enacted ERISA, it added section 4975 to the Internal Revenue Code of 1954, which imposes an excise tax on disqualified persons (generally, the same as parties in interest under Title I of ERISA) who engage in prohibited transactions with employee retirement benefit plans. In general, this excise tax, which is administered and enforced by the Internal Revenue Service, is applicable in two steps--a first level tax equal to fifteen percent of the amount involved in the transaction for each taxable year during which the transaction is outstanding and a second level tax, equal to 100 percent of the amount involved if the transaction is not corrected. The excise tax is paid concurrently with the filing of a Form 5330. The form and instructions can be found on the IRS' website. Any questions on completing the IRS Form 5330 should be directed to IRS TE/GE Tax Services at 1 (877) 829-5500.

   2. Offset Procedures

      Any penalty assessed under ERISA section 502(l) with regard to any particular transaction will be reduced by the amount of any excise tax paid by you with respect to such transaction under section 4975 of the Internal Revenue Code, exclusive of any interest or penalties paid thereon. Prior to such a reduction, you must provide proof to EBSA of your payment of the excise tax and the amount of such payment. The offset applies only to payments actually made, and does not apply to mere assessments; thus, submissions of proof of your tax assessment will not toll the 60-day payment period for ERISA section 502(l).

      If, based on information gained through submission of proof of excise tax payment, EBSA determines that a previously issued notice of assessment should be revised, EBSA will issue a revised notice of assessment, and you will be obligated to pay the revised assessed penalty within the relevant 60 day period and, where necessary, any excess penalty payment will be refunded as soon as administratively feasible.

4. The Civil Penalty Under ERISA Section 502(i)

   1. What is the Civil Penalty Under ERISA Section 502(i)?

      Section 502(i) of ERISA authorizes the Secretary of Labor to impose upon a party in interest a civil penalty of 5 percent of the amount involved in connection with a prohibited transaction with a health and welfare plan or a non-qualified pension plan. If the prohibited transaction is not corrected within 90 days, a penalty of 100 percent may be imposed.

   2. Offset Procedures

      Any penalty assessed under ERISA section 502(l) with regard to any particular transaction will be reduced by the amount of any penalty paid by you with respect to such transaction under ERISA section 502(i). Prior to such a reduction, you must provide proof to EBSA of your payment of the penalty and the amount of such payment. The offset applies only to payments actually made, and does not apply to mere assessments; thus, submissions of proof of your penalty assessment will not toll the 60-day payment period for ERISA section 502(l).

      If, based on information gained through submission of proof of penalty payment, EBSA determines that a previously issued notice of assessment should be revised, EBSA will issue a revised notice of assessment, and you will be obligated to pay the revised assessed penalty within the relevant 60 day period and, where necessary, any excess penalty payment will be refunded as soon as administratively feasible.

(Figure 4)
Sample 502(1) Civil Penalty Assessment Letter
Consent Judgment

Certified Mail, Return Receipt Requested

Mr. X, Trustee
Profit Sharing Plan
Main Street
Anytown, USA

Within 60 days of this Notice, please pay the ERISA Section 502(l) penalty or file a petition to waive or reduce the penalty.

RE: Notice of Assessment of ERISA Section 502(l) Civil Penalty in the Matter of (the Plan)
EBSA Case No. XX-XXXXX

Dear Mr. X:

We have concluded our investigation of the Plan and of your activities as Trustee. Our investigation found that you violated your fiduciary obligations to the Plan and violated several provisions of ERISA.⁽³⁵⁾ The actions taken by you that violated ERISA were detailed in the Complaint filed on [date], [Secretary v. ____________________, et al., Docket # _____________].

On [date], a Consent Order and Judgment (Order) was filed in the United States District Court, which required you to pay [$X] to the Plan.⁽³⁶⁾ The terms of the Order require that you correct the ERISA violations and restore losses to the plan. Based upon the report of Mr. Y, the court approved independent party, we understand that you have complied with the above requirements. Among other things, you paid $X. . . (list corrective actions taken).

This letter serves as Notice that we are assessing an ERISA section 502(l) civil penalty against you of $_______.^{(37, 38)} This amount is due within 60 days of the date of this Notice.

At any time prior to the due date, you may request a conference to discuss the penalty calculation. The 60 day payment period will not be tolled for such request.

In addition, at any time prior to the due date, you may petition to waive or reduce the penalty.⁽³⁹⁾ If a petition is submitted during the 60 day payment period, the payment period for the penalty will be tolled pending consideration of the petition. The petition should be mailed to the following address:

1. Regional Director
   Regional Office Address

If you decide not to contest this matter, the payment should be remitted by check or money order payable to the United States Department of Labor. The check should be mailed to the following address:

If you would like to discuss your options for installment payments towards the debt arising from the penalty assessment, please contact Soroosh Nikouei at (202) 693-8486.

To ensure correct processing of this payment, please include the EBSA Case Number (listed at the top of this letter) on the front of your check, as well as a copy of this letter. You should also notify me that you have paid the civil penalty.

Finally, we are required to advise the Internal Revenue Service that a prohibited transaction has occurred. As described in the enclosure, the ERISA Section 502(l) penalty amount will be reduced by the tax amount imposed under section 4975 of the Internal Revenue Code.

Sincerely,

Regional Director

bcc: OPPEM

(Figure 5)
Blackout Notice

We recently conducted an investigation pursuant to the Employee Retirement Income Security Act of 1974 involving the [Plan], and of [Plan Sponsor and Plan Administrator], as the Plan Sponsor and Plan Administrator, and the [Named Fiduciary], as named fiduciary to the plan.

We have concluded our investigation and, with the exception of possible violations of the ERISA section 101(i) of the blackout period notice, we have no plans for further action at this time. [Insert additional closing language as appropriate.]

The issuance of the blackout period notice by the [Plan Sponsor] on [Date of Notice], does not appear to comply with the 30-day advance notice requirements of ERISA section 101(i) or the conditions of any of the exceptions in the Department's regulation at 29 C.F.R. § 2520.101-3(b)(2)(ii). ERISA section 502(c)(7) provides that the Department may assess a civil penalty against a plan administrator of up to $100 a day from the date of the plan administrator's failure or refusal to provide notice to participants or beneficiaries in accordance with ERISA section 101(i), and further provides that each violation with respect to any single participant or beneficiary shall be treated as a separate violation. This matter will be referred to the Department's Office of the Chief Accountant to determine what further action, if any, should be taken under the civil penalty provisions in section 502(c)(7) of ERISA and the Department's regulation at 29 C.F.R. § 2560.502c-7.

Footnotes

1. 29 U.S. Code § 1132(i)
2. Accordingly, the Department assesses the 502(i) penalty only on prohibited transactions and not, for example, based on imprudence or a failure to diversify.
3. 29 CFR 2570.1-2570.12
4. 29 CFR 2560.502i-1
5. The taxable year used for purposes of the civil penalty calculation is that of the party in interest.
6. 29 CFR 2570.2(g)
7. 29 U.S. Code § 1132(l)
8. 29 CFR § 2570.8 et seq.
9. 29 CFR § 2570.82(c) defines a person as an individual, partnership, corporation, employee benefit plan, association, exchange or other entity or organization.
10. 29 CFR § 2570.83
11. 29 U.S. Code § 1132(l)(2)
12. The case file should not be archived until after the debt collection procedures are finished.
13. 29 CFR §2570.86
14. 29 USC §1132(l)(4)
15. The standards for compromising a 502(l) penalty are set forth in the Federal Claims Collection Standards -Standards for the Compromise of Claims. See 31 CRF Part 902
16. 29 USC 1132(c)(2)
17. Section 502(c)(2) actually refers to section 101(b)(4). However, in 1997, Pub. L. 105-34 re-designated pars. (4) and (5) as (1) and (2), respectively, and struck out former pars. (1) to (3).
18. Section 104(a)(4) provides, in relevant part, that the Secretary may reject any filing upon determining that such filing is incomplete.
19. 29 CFR § 2570.60 et seq.
20. Secretary's Order 01-2003 re-designated the title of Assistant Secretary for Pension and Welfare Benefits as Assistant Secretary for Employee Benefits Security Administration.
21. 29 USC 1132(c)(7)
22. 29 CFR § 2560.502c-7
23. 29 USC 1132(c)(7)
24. 29 CFR § 2570.130 et seq.
25. 29 CFR § 2570.131(p)
26. The U.S. Department of Labor’s Employee Benefits Security Administration administers and enforces Title I of the ERISA. Learn more at www.dol.gov/agencies/ebsa.
27. See 29 CFR 2560.502i-1(c) et seq.
28. Your Answer should be prepared in accordance with the sample format enclosed with this letter. In addition, copies of the filing should also be sent to EBSA and the Office of the Solicitor at the addresses listed on the Answer form.
29. The payment of this penalty is not tax-deductible.
30. The U.S. Department of Labor’s Employee Benefits Security Administration administers and enforces Title I of the ERISA. Learn more at www.dol.gov/agencies/ebsa.
31. My previous letter to you detailed our investigative findings.
32. ERISA Section 502(l) requires the Secretary of Labor to assess a civil penalty against a fiduciary who breaches a fiduciary responsibility under, or commits any other violation of, part 4 of Title I of ERISA or any other person who knowingly participates in such breach or violation. The Section 502(l) penalty is equal to 20 percent of the applicable recovery amount, which is $X.
33. Please be advised that the payment of this civil penalty is an expense that is not tax-deductible under federal tax laws (26 U.S.C. 162(f)). If you want further information, please contact the Internal Revenue Service at 1-800-829-1040.
34. You may wish to refer to ERISA Technical Release Number 85-1 for general guidelines concerning the Department's previously articulated views concerning evidence of good faith. This release can be found in the current edition of Prentice-Hall's Pension and Profit Sharing loose-leaf service, paragraph 110,735.
35. The U.S. Department of Labor’s Employee Benefits Security Administration administers and enforces Title I of the ERISA. Learn more at www.dol.gov/agencies/ebsa.
36. The Order was filed . . . A copy of the Order is enclosed.
37. ERISA Section 502(l) requires the Secretary of Labor to assess a civil penalty against a fiduciary who breaches a fiduciary responsibility under, or commits any other violation of, part 4 of Title I of ERISA or any other person who knowingly participates in such breach or violation. The Section 502(l) penalty is equal to 20 percent of the applicable recovery amount, which is $X.
38. Please be advised that the payment of this civil penalty is an expense that is not tax-deductible under federal tax laws. If you want further information, please contact the Internal Revenue Service at 1-800-829-1040.
39. See the enclosed “Procedures Under ERISA Section 502(l)” for more information.

1. Statutory Requirements. Section 510⁽¹⁾ provides for the Secretary, or a participant or beneficiary to bring civil proceedings under the provisions of Section 502 of ERISA.

2. Elements. The following are basic elements necessary to establish that a violation has occurred:

   1. The plan is an employee benefit plan within the meaning of either Section 3(1) or 3(2) of ERISA and meets the coverage requirements of Section 4 of ERISA;

   2. The complainant is a plan participant or beneficiary within the meaning of Section 3(7) or 3(8) or has given information, has testified, or is about to give testimony relating to ERISA;

      The complainant was discharged, fined, suspended, expelled, disciplined, or discriminated against:

      1. For exercising any right to which s/he is entitled under the provisions of an employee benefit plan, Title I of ERISA, or Section 3001 of ERISA; or

      2. For the purpose of interfering with the attainment of any right to which the complainant may become entitled under the plan, or Title I of ERISA; or

      3. The complainant has given information or has testified or is about to testify in any inquiry or proceeding relating to ERISA.

3. Source of Case Opening Data. An investigator may open a case after receiving a written or oral complaint. It is best to obtain a written statement of the allegations from the complainant before opening a case. The written complaint should be as complete and specific as possible:

   1. Setting forth the date of the complainant's termination or other disciplinary action;

   2. Identifying what the complainant believes to be the reason for the action; and

   3. Including any correspondence between the complainant and the employer, union, plan, etc.

4. Preliminary Steps Prior to Opening a Case

   1. Complainant should identify the benefit or the benefit right he/she was deprived of by the adverse action.⁽²⁾

   2. Advise complainant his/her name might be used during the investigation.

   3. Consider the possibility of age discrimination or other equal opportunity employment case. Refer complainant to the Equal Employment Opportunity Commission, as appropriate. Tell complainant if you do not open a case.

      Statute of limitations analysis should use the most analogous state law cause of action to determine the limitations period and be done in consultation with the SOL.⁽³⁾Use the statute of limitations matrix (Figure 1) as a guide.

5. Written Plan. At the discretion of the RD, a written investigative plan, in the form of a memorandum to the supervisor, may be prepared. See Figure 2 for the format to use in preparing the investigative plan. Use Figure 3 as a guide in determining the elements to cover in the investigation.

6. Initial Contact with Plan. ROs should exercise discretion in deciding to begin the investigation with a letter to the plan sponsor, sent by certified mail, return receipt requested, stating that the RO received a complaint from a participant or beneficiary and requesting an explanation for the actions taken against the complainant.⁽⁴⁾

   The letter should:

   1. Explain the provisions of Section 510;

   2. Discuss the nature of the alleged violation; and

   3. Request a written reply from the addressee within 14 days of receipt of the letter. A sample letter is set forth as Figure 4.

   In all contacts with the parties, the Investigator/Auditor should convey the Department's intention to resolve the matter fairly and in accordance with the provisions of ERISA.

7. Scope of Investigation. The extent of the investigation depends upon the answer received from the plan administrator after the initial contact.

8. Development of the Case. Some matters to consider in the development of Section 510 cases include:

   1. Establishing patterns of actions taken against employees in certain groups can often successfully prove discrimination.

      If several plan participants are terminated, all of whom are at an age nearing full vesting, while younger persons, less experienced and less productive, are kept on the payroll, discrimination to prevent attainment of a benefit right may be indicated. If the persons terminated include both those nearing a fully vested age and younger employees who have many years to go until full-vesting, discrimination may not be so apparent. However, establishing such a pattern may not be necessary in order to show a violation of Section 510, if other evidence is available.

   2. The Investigator/Auditor may need to prove there was no valid reason for the complainant's termination other than the Section 510 violation. This can be done through personnel and other records. Normally, an employer will deny the allegation that the employee’s termination was to prevent him/her from attaining a benefit. The company should be willing and able to prove that the complainant's work record or actions, or some other proper reason(s), were the basis for the discharge.

      If the stated reason for termination was that the employee's work record was poor, the Investigator/Auditor should question the reason for the employee’s retention for a number of years before termination. If he/she was sufficiently capable to be retained on the job until he/she was nearly vested, determine why his/her work suddenly deteriorated if, in fact, it did.

9. Allegations Involving Other Case Types. If information received or developed indicates possible ERISA violations unrelated to the current issue, open a separate case, as appropriate.

   If the investigation develops sufficient evidence to make a preliminary determination that matters being investigated may also constitute violations of Title 18 or ERISA Section 511, the investigation of the criminal aspects will be discontinued and a referral will be made pursuant to the Criminal Investigations section of this Manual.

10. Violations. When the investigation does not uncover any violations, prepare a closing ROI (Figure 5). If the RD concurs, send a pattern closing letter (Figure 6) and advise the complainant of the final decision.

11. Compliance Achieved. When there are apparent violations, the RO if appropriate, will attempt to obtain voluntary compliance from the plan officials. See the Voluntary Compliance section for further details.

    In cases where discrimination is apparent and the plan sponsor acknowledges that it may have acted improperly and is willing to correct the situation, the Investigator/Auditor must carefully consider whether the proposed correction complies with ERISA.

    For example, the plan administrator may not grant a right, such as a vested interest, to a terminated participant unless that right was earned. If the plan administrator were to do that, that action would violate the fiduciary requirement that a plan administrator must operate the plan strictly in accordance with the plan provisions.

    The corrective action in this type of case can become extremely complex, especially when a plan sponsor is willing to take some steps necessary voluntarily to correct a discrimination situation, but is not willing to take all the necessary steps.

    If there is voluntary compliance, the Investigator/Auditor will prepare a Closing Report of Investigation including documentation of the manner in which the plan corrected the violation.

    Although participant's rights cases may be resolved through voluntary compliance, EBSA is not required to seek voluntary compliance in all cases.

12. Noncompliance - Legal Action Not Warranted. In cases where a settlement offer is made that is either not acceptable to the complainant(s) or would not result in full compliance with ERISA, seek advice from OE. If legal action does not appear warranted, the Investigator/Auditor will prepare a Closing Report of Investigation and, after approval by the RD, the RO will advise the complainant of the final decision in the matter.

13. Noncompliance - Legal Action Warranted. In cases where a settlement offer is made that is either not acceptable to the complainant(s) or would not result in full compliance with ERISA, and legal action is believed to be warranted, the Investigator/Auditor will prepare an Action Report of Investigation (See Figure 7). The RO sends the Action Report of Investigation with a cover memorandum from the RD (Figure 8) to the RSOL. The RO also sends a copy of the cover memorandum and narrative portion of the Report of Investigation to OE.

Figure 1
Statute of Limitations Matrix

Figure 2
Memorandum Format for Participants’ Rights Case

Subject: (Same subject as on case opening form)

To: (Supervisor)

Investigative Plan for Subject Case

1. Allegation - set forth the alleged violation.
2. Planned Investigation - (Using Figure 3 as a guide, list the areas to be investigated.)
3. Time - Estimate the number of workdays necessary to complete the investigation.

Figure 3
Investigative Guide
ERISA Section 510

1. Name of employee
2. Address
3. Phone Number

Employment History

1. Period of service for the company. (If possible give data under next heading for each job.)
2. Job at the time of alleged discrimination.
   1. Duties
   2. Department
   3. Immediate Supervisor
   4. Length of service
   5. Wage rate
3. Efficiency
   1. Expressions from company
   2. Statements
   3. Wage increases
   4. Other evidence
4. Seniority as compared to other employees in same category

Circumstances of Discharge or Other Adverse Action

1. Timing
2. Circumstances leading up to the discharge
3. Complaints or warnings before discharge
4. Circumstances surrounding discharge
   1. Complete story
   2. Whether manner of discharge was in line with customary practice
5. Reason given by company at time of discharge--state who gave reason and when.

Lack of work

1. Whether force was being reduced.
2. Number of other employees who were similarly discharged.
3. Name, dates, and reasons given for discharge.
4. Proportion of union and non-union employees discharged.
5. Method used to determine who was discharged.
6. Whether method was in line with usual practice.
7. Whether others were uniformly affected for similar cause.
   1. Names, positions and dates
   2. Whether the practice was the same prior to the time of alleged discrimination
8. Whether company plans to recall these employees.

Status of Replacement

1. Identity
   1. Name
   2. Address
   3. Phone Number
2. Other status
   1. Experience
   2. Length of service
   3. Rating with company

Evidence to Show Motive of Company

1. Threats before discrimination
2. Explanations after

Steps Taken After Discrimination

1. Application to have company reconsider
2. Grievance machinery
3. Agreement to arbitrate
4. Satisfaction or waiver

Inefficiency

Insubordination

Violation of Rules

Figure 4
Format for Initial Letter
Participant’s Rights

Certified Mail - Return Receipt Requested

October 14, 2005

Mr. John H. Lewis
Director, Benefit Plans and Personnel Policies
ABC Company
123 Main Street
Kansas City, Missouri 64106

Dear Mr. Lewis:

Mr. Elmo Jones, a former employee of your company, lodged a complaint with this office alleging that recent action was taken with respect to his employment for the purpose of interfering with a right to which he may become entitled under the provisions of the ABC Company Retirement Plan. If true, such action would constitute a violation of section 510 of the Employee Retirement Income Security Act of 1974 (ERISA).

Briefly, section 510 of ERISA provides that it shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary of an employee benefit plan for the purpose of interfering with the attainment of any right to which such participant may become entitled under an employee benefit plan, Title I of ERISA, or the Welfare and Pension Plans Disclosure Act.

In his complaint, Mr. Jones alleges that when he was terminated he was within five months of completion of sufficient years of participation under his retirement plan to reach retirement status. Mr. Jones furnished to us a copy of a letter to you, dated October 4, 2004, wherein he requested that he be considered for The Investigator/Auditor named below has been assigned to represent this office in this matter. You may contact him/her for additional information or assistance.

In his complaint, Mr. Jones alleges that when he was terminated he was within five months of completion of sufficient years of participation under his retirement plan to reach retirement status. Mr. Jones furnished to us a copy of a letter to you, dated October 4, 2004, wherein he requested that he be considered for other positions with the company so he would be able to complete the necessary years of participation. He also included a copy of a letter from you, dated October 29, 2004, denying his request. Mr. Jones contends that other employees with fewer years of service than he were given other positions within the company.

You are requested to furnish this office, within 14 days from your receipt of this letter, a written statement of your company's position with respect to Mr. Jones' complaint. You are free to include all pertinent facts relating to this matter.

The Investigator/Auditor named below has been assigned to represent this office in this matter. You may contact him/her for additional information or assistance.

Your cooperation in this matter will be appreciated.

Sincerely,

Joe Johnson
Regional Director

Figure 5
Report of Investigation
Participant Rights Case

Predication

State the reason for case opening.

Issues and Findings

1. Allegation/Issue

   Cite the facts that show the allegations/issue was not a violation; or in cases where violations were substantiated, cite the facts to show voluntary compliance was achieved or that other dispositive action was taken.

2. Allegation/Issue (Repeat as above for each allegation/issue)

Other Findings

Use this section to present facts or any other investigative activity not previously mentioned.

Figure 6
Sample Pattern Closing Letter
No ERISA Violations Detected

Dear (Plan Administrator/Fiduciary):

We have completed an inquiry involving entitlement of (name of complainant) to a benefit from (name of plan) pursuant to the Employee Retirement Income Security Act of 1974 (ERISA).

We have concluded our inquiry and no further action on this matter is contemplated at this time. (We appreciate the cooperation you and members of your staff extended to us.)

Sincerely,
Regional Director

Enclosure: SBREFA Notice

Figure 7
Participant Rights Case
Report of Investigation

Predication

State the reason for case opening.

Potential Jurisdictional Problems

If no jurisdictional problems are anticipated, enter “None.” If any are known, set forth the facts to identify them and document jurisdiction under Section ____________________. Any issue or potential defense relating to whether the plan is covered under ERISA should be set forth in this section.

Background

Include information, as appropriate.

Issues and Findings

1. Allegation/Issue

   Cite the facts that show the allegations/issue was a violation.

2. Allegation/Issue (Repeat as above for each allegation/issue).

Other Findings

Use this section to present facts or any other investigative activity not previously mentioned.

Exhibits

All significant facts presented in the report should be supported with exhibit citations. The following procedure should be used in submitting exhibits:

1. State the name of the individual who is the subject of an RI or signed statement and the date of the interview.

2. Documents, schedules, etc., should be precisely identified.

3. Each supporting document should be a separate exhibit.

4. Multiple page exhibits should be numbered.

5. Exhibits should be identified by number.

6. All copies must be legible.

7. All plan documents (trust agreements, etc.) must be included as exhibits.

List of Documents and Workpapers Available in Regional Office but Not Used as Exhibits

List documents, schedules, Report of Interviews, and other materials in the Regional Office file that were not included as exhibits. Identify the date of each document.

Figure 8
Format for the Regional Director’s Cover Memo to an Action Report

To: Regional Solicitor

From: Regional Director

Subject:

Name of Plan
EIN
Case File No.

The following must be included in the body of the memo:

1. Give a brief synopsis of the violations.

2. Each violation must be supported by appropriate references to the regulations, interpretive bulletins, exemptions, variances, policy statements, previous no decisions involving similar cases, and any other authoritative references which would tend to establish the existence of the violation.

3. When appropriate, outline the Regional Office’s efforts to obtain voluntary compliance.

4. State the position of the violator(s) and other responsible plan officials with respect to each violation.

5. Discuss the Regional Director’s recommendations for the final disposition of the case. If a partial settlement offer has been made the Regional Director should comment on its acceptability.

cc: File

Footnotes

1. See 29 USC Section 1140.
2. The fact that the complainant is not familiar with plan provisions does not necessarily mean the complaint is not valid. The lack of knowledge may be due to a failure by the plan administrator to provide proper disclosure.
3. Because ERISA Section 413 governs limitations on actions brought under Part 4 of Title I, its 3- and 6-year limitations are inapplicable to Section 510 violations. Among the circuit courts, the analogous state laws appear to be “wrongful termination” or “retaliatory discharge.”
4. Alternatively, a RO may decide to preserve the identity of the complainant and issue a general initial contact letter.

1. Background. There are two types of Prohibited Persons⁽¹⁾ investigations:

   1. Proactive investigations into people who are, or are thought to be, currently disqualified under the statute; and

   2. Responses to debarred persons who are seeking relief from the prohibitions of Section 411.

2. Proactive Prohibited Persons Investigations. EBSA may investigate people it believes disqualified under Section 411. The purpose of the investigation may simply be to confirm that a person is complying with the debarment or EBSA suspects a person of violating the statutory bar.

3. Purpose. EBSA is responsible for ensuring disqualified parties do not serve in positions or capacities prohibited under the statute. EBSA conducts proactive investigations to monitor the employment status of disqualified persons. When an initial investigation reveals that a debarred person is serving in a prohibited capacity, EBSA will seek to have the person vacate the prohibited position or role. However, if EBSA already has an open criminal investigation involving the disqualified person, the RO should first speak with the prosecutor before requesting the person to step down. EBSA may remove the person through either a civil injunction or criminal prosecution.

4. Source of Cases. Case identification includes reviewing available data, conviction records, referrals, media reports or other methods. Whether these initial investigations will lead to criminal investigations will depend on the circumstances of the subjects of the inquiries.

5. Case Opening. A Prohibited Persons⁽²⁾ investigation is a program 47 investigation and it will examine the working status of a disqualified person. Once the investigation is open, the Investigator/Auditor should send the disqualified person an opening letter. Figure 1

6. Conducting the Investigation

   1. STEP 1 – Notice of Debarment. In an open case predicated upon a prior EBSA investigation, the first step is to determine whether there was notification to subject of his or her statutory disqualification. Acceptable methods for delivering debarment letters include:

      1. Certified mail following the sentencing hearing (EBSA preferred);

      2. By hand directly to the person;

      3. In a plea agreement by a prosecutor; or

      4. A judge may include the language in the judgment.

      Check the prior case file to determine whether the subject received a debarment letter. If there is no evidence in the file confirming that the subject ever received such a letter, send the subject a new debarment letter. See Criminal Investigations section, paragraph 26, Figure 6. Place copies of the letter and proof of delivery in both the current and original case file.

      If another agency provided the Prohibited Person with a debarment letter, the RO should request a copy for its records. If EBSA is not able to obtain a copy, the RO will deliver a separate debarment letter to the defendant.

   2. STEP 2 – Employment Status. The next step is to confirm the subject's recent and current employment to determine whether ERISA prohibits such employment. If Investigators/Auditors are uncertain as to whether ERISA bars a particular employment or service, the Investigators/Auditors will request guidance from EBSA's Chief, Division of Criminal Investigations.

      Should an investigation reveal that a barred person is serving in a prohibited capacity, but the person was apparently unaware of his/her disqualification, the RO should deliver a debarment letter to the person, and confirm receipt. This letter should explain the person’s prohibition from working in his or her present capacity.

      Because the disqualified persons may not serve in any prohibited capacity, the Investigator/Auditor should promptly notify the employer of the disqualified person's status, when appropriate. If the person consequently files for relief from debarment, then the Investigator/Auditor should follow the steps set out in Part II below.

      If an investigation discovers that a person is serving in a prohibited capacity despite having been notified of his/her debarment, or simply refuses to depart from a prohibited capacity after served with a debarment letter, the RO shall seek a civil injunction or open a criminal investigation, as appropriate.

      Whenever a Prohibited Persons investigation (proactive) reveals that a disqualified person was serving in a prohibited capacity, the RO should consider opening an investigation on the related plan to determine plan harm. This is particularly appropriate if a disqualified person refuses to surrender his/her prohibited position or function.

7. Preparation of Closing Report of Investigation. ROs will submit all ROIs under proactive investigations as closed reports modeled after Figure 2.

8. Regional Director's Transmittal. If a civil injunction is sought, completed ROIs will be transmitted to RSOL with a cover memorandum from the RD setting forth the steps the Investigator/Auditor completed. RO will direct a copy of the recommendation memo and the ROI, without exhibits, to OE (Chief, Division Criminal Investigations). RO should also provide copies of court filings by the Department and the plaintiff.

   If the disqualified person refuses to comply with the civil injunction, or if the evidence supports the person may have engaged in criminal activity while in the prohibited role, the RO should open a criminal investigation.

9. Requests for Relief from Debarment. Section 411(a) of ERISA establishes the procedures for seeking an exemption from the statutory prohibitions⁽³⁾.

   EBSA has the authority to conduct investigations and to provide information at court hearings concerning requests for an exemption to Section 411⁽⁴⁾. It is the normal procedure for the SOL to represent EBSA in such matters. Requests for reduction of the length of disability should be treated the same as a request for exemption.

10. Purpose. When there is a request for EBSA to conduct an investigation related to a motion for relief from Section 411(a), the purpose of the investigation is to provide information to the court or parole commission, rather than to prove an ERISA violation. The investigation should seek aggravating or mitigating evidence with regard to the following three factors:

    1. The character and gravity of the disqualifying offense;

    2. The nature of the position for which the applicant is seeking an exemption; and

    3. The extent to which the applicant has rehabilitated to meet the standards of responsibility required.

11. Source of Cases. Cases may be initiated when information is received pertaining to a request for relief.

12. Case Opening. ROs will open an investigation upon receipt of a request for relief. In some instances, a case opening is unwarranted. For example, due to the minimal passage of time between a guilty plea or conviction and a request for reduction in the bar, or the shortness of time between a request and the sentencing date, the RO may not have new information to contribute. In such instances, opening a case is discretionary with the RD.

    In cases where a Prohibited Person is occupying a prohibited position, Investigator/Auditors should follow steps described under Proactive Prohibited Persons Investigations.

13. Investigative Activity. A Prohibited Person Request for Relief investigation requires priority handling and close coordination among the RO, OE (Chief, Division of Criminal Investigations), the SOL and the DOJ. In view of this, when the RO receives information that a request for remedial relief is being sought, an e-mail setting forth the relevant information should be directed to the appropriate PBSD Decentralized Litigation Counsel with a copy to the appropriate RSOL ERISA Counsel and OE (Chief, Division of Criminal Investigations). The e-mail should describe:

    1. The party seeking relief;

    2. The jurisdiction involved;

    3. The nature of the position for which relief is being sought;

    4. The crime which caused the bar; and

    5. Any other relevant information.

    There will be a determination of which SOL office (national or regional) will handle the matter.

    The investigation of an application before the Parole Commission focuses upon the verification of information that is required to be included in the application by regulations (Figure 3).

    Investigations predicated on court filings should focus upon the three factors described in paragraph 10 above. The venue for these cases is United States district court, not the Parole Commission. Although a district court may choose to adopt certain Parole Commission procedures with respect to its determination, it is not subject to the regulations governing procedures before the Parole Commission. Further, investigations of cases filed in United States district court may have to address more than the three areas in which the Parole Commission was interested. Accordingly, the Investigator/Auditor should read the pleadings, address any issues raised, and verify any relevant factual assumptions.

14. Preparation of Closed Report of Investigation. ROs will submit all ROIs under request for relief investigations as closed reports modeled after Figure 4.

15. Regional Director's Transmittal. ROs will transmit all ROIs with a cover memorandum from the RD setting forth the RO's recommendation as to whether Department should oppose the motion (Figure 5). The RO should direct the ROI, exhibits, and recommendation memo to the appropriate SOL counsel. RO should direct a copy of the recommendation memo and the ROI, without exhibits, to OE (Chief, Division of Criminal Investigations). The referral should also include copies of court filings by the Department and the plaintiff.

Figure 1
Initial Contact Letter
Draft
Office Letterhead

Certified Mail No.
Return Receipt Requested

In reply, please refer to our file no. (47)

[Date]

[Subject]
[Subject's Address]

RE: Investigation pursuant to ERISA § 411

Dear [xxxx]:

The United States Department of Labor is responsible for the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), 29 U.S.C. § 1001 et seq. Investigative authority is vested in the Secretary of Labor by ERISA §§ 504 and 506(b), 29 U.S.C. §§ 1134 and 1136(b), respectively.

Under ERISA § 411, persons who have been convicted of certain enumerated crimes are debarred for a period of thirteen (13) years from serving in various capacities related to employee benefit plans. Among the crimes requiring debarment is [xx U.S.C. § xxxx], of which you were convicted in [year]. The thirteen year debarment period begins on the later of the date of conviction or the end of any imprisonment that may have resulted from the conviction. According to our records, your debarment period began on [date], which is [the date of your conviction] (or) [the date of your release from the imprisonment resulting from your conviction].

This office is conducting an investigation to determine your compliance with the bar imposed by ERISA § 411. In doing so, we hope to protect your privacy to the extent possible while fulfilling our responsibilities under the statute. Accordingly, we seek your voluntary cooperation with our inquiry. Specifically, we request that you promptly furnish the documentation listed in the attachment to this letter, and that you subsequently agree to be interviewed, possibly via telephone, regarding your employment history as it pertains to the § 411 bar. We may also request that, after you have had an opportunity to review a written summary of the information obtained in our investigation, you sign under oath a declaration that the information contained in the summary is correct.

If the information and documentation you provide is sufficient to establish your compliance with the bar, it may eliminate altogether our need to seek or to corroborate this information with third parties (e.g., employers, neighbors, etc.)

Attached to this letter is the documentation we request at this time. Please deliver these items to the undersigned within three weeks of your receipt of this letter. You may provide the documentation in paper form or electronically in PDF format.

Finally, we ask that you provide a telephone number and time of day when you would prefer that we call you, when necessary, to discuss this inquiry.

Thank you in advance for your cooperation. If you have any questions, please do not hesitate to contact me at [tel. no.] or [email address]

Sincerely,
Case Investigator

Please Provide the Following Documentation as Discussed in the Accompanying Letter (Additional documentation may be required)

1. Documents sufficient to establish your full name, date of birth, and Social Security Number

2. Documents sufficient to establish your current home address and all prior home addresses dating back to the effective date of your debarment* but no more than 3 years

3. Documents sufficient to establish the names and addresses of all current and former employers, including documents identifying all supervisors, dating back to the effective date of your debarment but no more than 3 years. Identify all periods of self-employment and unemployment. Account for all periods of time

4. Copies of all federal tax returns dating back to the effective date of your debarment but no more than 3 years

5. Copies of all Form W-2s and all employment-related Form 1099s dating back to the effective date of your debarment but no more than 3 years

6. Copies of all employment contracts and personal service contracts dating back to the effective date of your debarment but no more than 3 years

7. For each position or job held, provide the job title and a complete description of the work actually performed in the position or job. To the extent any work directly or indirectly involved any employee benefit plan, fully describe the exact nature of the work you performed with respect to the employee benefit plan

* This date is set forth in the accompanying letter.

Figure 2
Report of Investigation
U.S. Department of Labor
Employee Benefits Security Administration

This document is the property of the Employee Benefits Security Administration. It is not to be disclosed to unauthorized persons.

File No.

Subject: (Name and Address of Prohibited Person)

Date:

By:

Investigator/Auditor

Approved by:

EIN/PN:

Status: Closed

1. Predication - State the reasons for case opening and conducting the investigation.

2. Issues and Findings - Cite the facts which show:

   1. Disqualifying Offense - Describe the offense for which the subject was convicted and consequently barred from employment in employee benefit plans under section 411 of ERISA.

   2. Notification of Disbarment - Describe any known notifications of disbarment, including proof of receipt. If the subject indicates non-receipt, describe the actions taken to officially notify the subject of debarment, including proof of receipt.

   3. Nature of Current Employment of Applicant - Include a description of any employment position. Be specific about all duties and authority for which the subject may be responsible as they relate to employee benefit plans. Provide sufficient facts showing that the employment was or was not prohibited.

   4. Actions Taken - In cases where prohibited employment is found, cite the facts showing that VC was achieved, if applicable, or that other dispositive action was taken.

3. Other Findings - This section can be used to present facts or any other investigative activity not previously mentioned.

[To be used at the discretion of the Regional Director]

Distribution:

National Office:

Figure 3
Part 4 - Procedure Governing Applications for Certificates of Exemption under the Labor-Management Reporting and Disclosure Act of 1959, and the Employee Retirement Income Security Act of 1974

Sec.
4.1 Definitions
4.2 Who may apply for Certificate of Exemption
4.3 Contents of application
4.4 Supporting affidavit; additional information
4.5 Character endorsements
4.6 Institution of proceedings
4.7 Notice of hearing; postponements
4.8 Hearing
4.9 Representations
4.10 Waiver of oral hearing
4.11 Appearance; testimony; cross examination
4.12 Evidence which may be excluded
4.13 Record of decision. Receipt of documents comprising record; timing and extension
4.14 Administrative law judge's recommended decision; exceptions thereto; oral argument before Commission
4.15 Certificate of Exemption
4.16 Rejection of application
4.17 Availability of decisions

Authority: Secs. 504, 606, Stat. 536, 540 (29 U.S.C. 504, 526): and Secs. 411, 507A. 88 Stat. 887, 894, (29 U.S.C. 1111, 1137).

Source: 44 FR 6890, Feb. 2, 1979, unless otherwise noted.

Cross Reference: For Organization Statement, U.S. Parole Commission, see Subpart V of Part O of this chapter.

§ 4.1 Definitions

As used in this part:

1. Labor Act means the Labor-Management Reporting and Disclosure Act of 1959 (73 Sta. 519).
2. Pension Act means the Employee Retirement Income Security Act of 1974 (Pub. L. 94-406)(88 Sta. 829)
3. Act means both of the above statutes.
4. Commission means the United States Parole Commission.
5. Secretary means the Secretary of Labor or his designee.
6. For proceeding under the "Labor Act"
   1. Employer means the labor organization or person engaged in an industry or activity affecting commerce, or group or association of employers dealing with any labor organization, which an applicant under Section 4.2 desires to serve in a capacity for which he is ineligible under section 504(a) of the "Labor Act".
   2. All other terms used in this part shall have the same meaning as identical or comparable terms when those terms are used in the "Labor Act".
7. For proceedings under the "Pension Act"
   1. Employer means the employee benefit plan with which an applicant under § 4.2 desires to serve in a capacity for which he is ineligible under section 411(a) of the "Pension Act" (29 U.S.C. section 1111).
   2. All other terms used in this part shall have the same meaning as identical or comparable terms when those terms are used in the "Pension Act".

§ 4.2 Who may apply for Certificate of Exemption

Any person who has been convicted of any of the crimes enumerated in section 504(a) of the "Labor Act" whose service, present or prospective, as described in that section because of such a conviction or a prison term resulting therefrom; or any person who has been convicted of any of the crimes enumerated in section 411(a) of the "Pension Act" (29 U.S.C. section 1111) whose service, present or prospective, as described in that section is or would be prohibited by that section because of such a conviction or a prison term resulting therefrom, may apply to the Commission for a Certificate of Exemption from such a prohibition under the applicable Act.

§ 4.3 Contents of applications

A person applying for a Certificate of Exemption shall file with the Office of General Counsel, U.S. Parole Commission, 5500 Friendship Boulevard, Chevy Chase, Maryland 20815-7286, a signed application under oath, in seven copies, which shall set forth clearly and completely the following information:

1. The name and address of the applicant and any other names used by the applicant and dates of such use.
2. A statement of all convictions and imprisonments, which prohibit the applicant's service under the provisions of the applicable Act.
3. Whether any citizenship rights were revoked as a result of conviction or imprisonment and if so the name of the court and date of judgment thereof and the extent to which such rights have been restored.
4. The name and location of the employer and a description of the office or paid position, including the duties thereof, for which a Certificate of Exemption is ought.
5. A full explanation of the reasons or grounds relied upon to establish that the applicant's service in the office or employment for which a Certificate of Exemption is sought would not be contrary to the purposes of the applicable Act.
6. A statement that the applicant does not, for the purpose of the proceeding, contest the validity of any conviction.

(28 U.S.C. 509 and 510, 5 U.S.C. 301)
(44 FR 6890, Feb. 2, 1979, as amended at 46 FR 52354, Oct. 27, 1981)

§ 4.4 Supporting affidavit; additional information

1. Each application filed with the Commission must be accompanied by a signed affidavit, in 7 copies, setting forth the following concerning the personal history of the applicant:
   1. Place and date of birth. If the applicant was not born in the United States, the time of first entry and port of entry, whether he/she is a citizen of the United States, and if naturalized, when, where and how he/she became naturalized and the number of his Certificate of Naturalization.
   2. Extent of education, including names of schools attended.
   3. History of marital and family status, including a statement as to whether any relatives by blood or marriage are currently serving in any capacity with an employee benefit plan, or labor organization, group or association of employers dealing with labor organizations or industrial labor relations group, or currently advising or representing any employer with respect to employee organizing concerted activities or collective bargaining activities.
   4. Present employment, including office or offices held with a description of the duties thereof.
   5. History of employment, including military service, in chronological order.
   6. Licenses held at the present or at any time in the past five years, to possess or carry firearms.
   7. Veterans' Administration claims number and regional office handling claim, if any.
   8. A listing (not including traffic offenses for which a fine of not more than $25 was forfeited) by date and place of all arrests, convictions for felonies, misdemeanors, or offenses and all imprisonment or jail terms resulting therefrom, together with a statement of the circumstances of each violation which led to arrest of conviction.
   9. Whether applicant was ever on probation or parole, and if so the names of the courts by which convicted and the dates of conviction.
   10. Names and location of all employee benefit plans, labor organizations or employer groups with which the applicant has ever been associated or employed, and all employers or employee benefit plans which he has advised or represented concerning employee organizing, concerted activities, or collective bargaining activities together with a description of the duties performed in each such employment or association.
   11. A statement of applicant's net worth, including all assets held by him or in the names of others for him, the amount of each liability owed by him or by him together with any other person and the amount and source of all income during the immediately preceding five calendar years plus income to date of application.
   12. Any other information that the applicant feels will assist the Commission in making its determination.
2. The Commission may require of the applicant such additional information as it deems appropriate for the proper consideration and disposition of his application.

§ 4.5 Character endorsements

Each application filed with the Commission must be accompanied by letters or other forms of statement (in three copies) from six persons addressed to the Chairman, U.S. Parole Commission, attesting to the character and reputation of the applicant. The statement as to character shall indicate the length of time the writer has known applicant, and shall describe applicant's character traits as they relate to the position for which the exemption is sought and the duties and responsibilities thereof. The statement as to reputation shall attest to applicant's reputation in his community or in his circle of business or social acquaintances. Each letter or other form of statement shall indicate that it has been submitted in compliance with procedures under the respective Act and that applicant has informed the writer of the factual basis of his application. The persons submitting letters or other forms of statement shall not include relatives by blood or marriage, prospective employers, or persons serving in any official capacity with an employee benefit plan, labor organization, group or association of employers dealing with labor organizations or industrial labor relations groups.

§ 4.6 Institution of proceedings

All applications and supporting documents received by the Commission shall be reviewed for completeness by the Office of General Counsel of the Parole Commission and, if complete and fully in compliance with the regulations of this part, the Office of General Counsel shall accept them for filing. Applicant and/or his representative will be notified by the Office of General Counsel of any deficiency in the application and supporting documents. The amount of time allowed for deficiencies to be remedied will be specified in said notice. In the event such deficiencies are not remedied within the specified period or any extension thereof, granted after application to the Commission in writing within the specified period, the application shall be deemed to have been withdrawn and notice thereof shall be given to applicant.

§ 4.7 Notice of hearing postponements

Upon the filing of an application, the Commission shall: (a) Set the application for a hearing on a date within a reasonable time after its filing and notify the applicant of such date by certified mail; (b) Give notice, as required by the respective Act, to the appropriate State, County or Federal prosecuting officials in the jurisdiction or jurisdiction in which the applicant was convicted that an application for a Certificate of Exemption has been filed and the date for hearing thereon; and (c) Notify the Secretary that an application has been filed and the date for hearing thereon and furnish him copies of the application and all supporting documents. Any party may request a postponement of a hearing date in writing from the Office of General Counsel at any time prior to ten (10) days before the scheduled hearing. No request for postponement other than the first for any party will be considered unless a showing is made of cause entirely beyond the control of the requester. The granting of such requests will be within the discretion of the Commission. In the event of a failure to appear on the hearing date as originally scheduled or extended, the absent party will be deemed to have waived his right to a hearing. The hearing will be conducted with the parties present participating and documentation, if any, of the absent party entered into the record.

§ 4.8 Hearing

The hearing on the application shall be held at the offices of the Commission in Washington, D.C., or elsewhere as the Commission may direct. The hearing shall be held before the Commission, before one or more Commissioners, or before one or more administrative law judges appointed as provided by section 11 of the Administrative Procedure Act (5 U.S.C. 3105) as the Commission by order shall determine. Hearings shall be conducted in accordance with sections 7 and 8 of the Administrative Procedure Act (5 U.S.C. 556, 557).

§ 4.9 Representation

The applicant may be represented before the Commission by any person who is a member in good standing of the bar of the Supreme Court of the United States or of the highest court of any State or territory of the United States or the District of Columbia and who is not under any order of any court suspending, enjoining, restraining or disbarring him from, or otherwise restricting him in, the practice of law. Whenever a person acting in a representative capacity appears in person or signs a paper in practice before the Commission, his personal appearance or signature shall constitute a representation to the Commission that under the provisions of this part and applicable law he is authorized and qualified to represent the particular person in whose behalf he acts. Further proof of a person's authority to act in a representative capacity may be required. When any applicant is represented by an attorney at law, any notice or other written communication required or permitted to be given to or by such applicant shall be given to or by such attorney. If an applicant is represented by more than one attorney, service by or upon any one of such attorneys shall be sufficient.

§ 4.10 Waiver of oral hearing

The Commission upon receipt of a statement from the Secretary that he does not object, and in the absence of any request for oral hearing from the others to whom notice has been sent pursuant to §4.7 may grant an application without receiving oral testimony with respect to it.

§ 4.11 Appearance; testimony; cross-examination

1. The applicant shall appear and, except as otherwise provided in §4.10, shall testify at the hearing and may cross-examine witnesses.
2. The Secretary and other to whom notice has been sent pursuant to §4.7 shall be afforded an opportunity to appear and present evidence and cross-examine witnesses, at any hearing.
3. At the discretion of the Commission or presiding officer, other witnesses may testify at the hearing.

§ 4.12 Evidence which may be excluded

The Commission or officer presiding at the hearing may exclude irrelevant, untimely, immaterial or unduly repetitious evidence.

§ 4.13 Record for decision, receipt of documents comprising record; timing and extension

1. The application and all supporting documents, the transcript of the testimony and oral argument at the hearing, together with any exhibits received and other documents filed pursuant to these procedures and/or the Administrative Procedures Act shall be made parts of the record for decision.
2. At the conclusion of the hearing the presiding officer shall specify the time for submission of proposed findings of fact and conclusions of law (unless waived by the parties), transcript of the hearing and supplemental exhibits, if any. He shall set a tentative date for the recommended decision based upon the timing of these preliminary steps. Extensions of time may be requested by any party, in writing from the Parole Commission. Failure of any party to comply with the time frame as established or extended will be deemed to be a waiver on his part of his right to submit the document in question. The adjudication will proceed and the absence of said document and reasons thereof will be noted in the record.

§ 4.14 Administrative law judge's recommended decision; exceptions thereto; oral argument before Commission

Whenever the hearing is conducted by an administrative law judge, at the conclusion of the hearing he shall submit a recommended decision to the Commission, which shall include a statement of findings and conclusions as well as the reasons therefore. The applicant, the Secretary and others to whom notice has been sent pursuant to §4.7 may file with the Commission, within 10 days after having been furnished a copy of the recommended decision, exceptions thereto and reasons in support thereof. The Commission may order the taking of additional evidence and may request the applicant and others to appear before it. The Commission may invite oral argument before it on such questions as it desires.

The applicant, the Secretary and others to whom notice has been sent pursuant to §4.7 shall be served a copy of the Commission's decision and order with respect to each application. Whenever the Commission's decision is that the application

§ 4.15 Certificate of Exemption

The applicant, the Secretary and others to whom notice has been sent pursuant to §4.7 shall be served a copy of the Commission's decision and order with respect to each application. Whenever the Commission's decision is that the application be granted, the Commission shall issue a Certificate of Exemption to the applicant. The Certificate of Exemption shall extend only to the stated employment with the prospective employer named in the application.

§ 4.16 Rejection of application

No application for a Certificate of Exemption shall be accepted from any person whose application for a Certificate of Exemption has been withdrawn, deemed withdrawn due to failure to remedy deficiencies in a timely manner, or denied by the Commission within the preceding 12 months.

§ 4.17 Availability of decisions

The Commission's Decisions under both Acts are available for examination in the Office of the U.S. Parole Commission, 5550 Friendship Boulevard, Chevy Chase, Maryland 20815-7286. Copies will be mailed upon written request to the Office of General Counsel, U.S. Parole Commission, at the above address at a cost of ten cents per page.

(28 U.S.C. 509 and 510, 5 U.S.C. 301);(44 FR 6890, Feb. 2, 1979, as amended at 46 FR 52354, Oct. 27, 1981)

Figure 4
Report of Investigation
Sample Format
U.S. Department of Labor
Employee Benefits Security Administration

This document is the property of the Employee Benefits Security Administration. Its contents are not to be disclosed to unauthorized persons.

File No.

Subject:

(Name and Address of Applicant)

Date

Name and address of Plan

By Investigator/Auditor

EIN/PN

Approved by

Status

1. Predication

   State the reason for the case opening and for conducting an investigation.

2. Issues and Findings

   Cite the facts, which show:

   1. Nature of Employment Sought by Applicant

      Include a description of the position, including the duties for which the Certificate of Exemption is sought.

      Establish the validity or lack of validity of the reasons or grounds relied on to show the applicant's employment (for which the Certificate of Exemption is sought) would not be contrary to the purpose of ERISA. Include a statement concerning what access, if any, the applicant will have to plan funds and the degree of authority and discretion he/she will have in the position.

   2. Arrests, Convictions and Rehabilitation

      Verify applicant's statements in his/her supporting affidavit as to his/her history of arrests and convictions, which prohibit applicant's service to an employee benefit plan under Section 411 of ERISA.

      Under this heading, report views of the prosecuting officials, arresting officers, and judges, regarding the application for a Certificate of Exemption and include as exhibits. Include details of any mitigating or aggravating circumstances which might have been involved with regard to the factors listed in paragraph 2 of this Chapter.

   3. Disqualifying Offense

      Describe the offense for which the subject was convicted and consequently barred from employment in employee benefit plans under section 411 of ERISA.

      Discuss the subject's involvement in the offense. Include the extent of the subject's participation. Establish information such as whether the subject was an accessory or the principal perpetrator.

   4. Nature of the Employment Offered

      Describe the position for which the applicant is seeking an exemption. Be specific about the duties and authority for which the subject will be responsible as they relate to employee benefit plans.

   5. Personal Information

      Under this heading, report the results of the investigation into the accuracy of the sworn statements made by the applicant in his/her supporting affidavit and not previously mentioned in the report. This should include but not be limited to: birth date, extent of education, marriage and family status, present employment, past employment, military service, licenses issued, criminal record and probation or parole (if not previously reported in Part B above), labor organizations (with which applicant has been associated or employed), and financial background including net worth.

   6. Neighborhood Investigation

      Include statements of neighbors, landlord and superintendent (where applicable) as to applicant's status in the neighborhood and to verify applicant's residence.

   7. Credit Check

      Include reports of local credit bureaus and results of investigations at county clerk's offices regarding judgments against the applicant.

   8. Character References

      Include as exhibits interviews conducted with individuals who supported the applicant's application for exemption.

Exhibits

All significant facts presented in the report should be supported with exhibit citations. The following procedure should be used in submitting exhibits:

1. State the name of the individual who is the subject of an Report of Interview or signed statement and the date of the interview.

2. Documents, schedules, etc., should be precisely identified.

3. Each supporting document should be a separate exhibit.

4. Multiple page exhibits should be numbered.

5. Exhibits should be identified by number.

6. All copies must be legible.

7. All plan documents (trust agreements, etc.) must be included as exhibits.

List of Documents and Workpapers Available in Regional Office but Not Used as Exhibits

List documents, schedules, Reports of Interview, etc., in the Regional Office file that were not included as exhibits. Identify each document by the date(s) covered.

Figure 5
Format for Regional Director's Cover Memo for an Report Of Investion in a Prohibited Persons Case - Program 47
U.S. Department of Labor
Employee Benefits Security Administration

Memorandum For: SOL Counsel

From: Regional Director

XYZ Regional Office

Subject: Name, Address of Applicant

Name, Address and EIN of Plan

First paragraph – briefly state the basis for opening the case.

Second paragraph – briefly state the nature of the original conviction and any mitigating circumstances involved in sentencing.

Third paragraph – briefly state investigative results, specifically commenting on the applicant's efforts at rehabilitation.

Fourth paragraph – briefly state the recommendation of the Regional Office as to whether the Department of Labor should contest the application.

cc: File, Deputy Director for Criminal Enforcement

Footnotes

1. As amended by the Comprehensive Crime Control Act of 1984, Section 411 of ERISA prohibits individuals convicted of disqualifying crimes from serving in plan-related capacities during or for a period of 13 years after such conviction or the end of imprisonment, whichever is later. The period may be shortened by:
   1. The sentencing court to not less than 3 years following such conviction or end of such imprisonment, whichever is later, or
   2. His/her citizenship rights, revoked as a result of the conviction, are restored in full, or
   3. A federal district court determined service in any of the prohibited capacities would
      1. Not be contrary to the purposes of Title I of ERISA;
      2. In accordance with the sentencing policy at U.S.S.G Section 5J1.1; and
      3. The convicted individual was sufficiently rehabilitated as to not endanger the organization seeks to serve.
2. Before opening a Prohibited Persons proactive investigation, the RO should determine whether the subject was convicted of a debarring crime. If the crime is not an enumerated crime, then the RO should seek assistance from OE.
3. • For any disqualifying crime committed prior to November 1, 1987, a person seeking an Application for Exemption directs the request to the United States Parole Commission.
   • For a disqualifying crime committed on or after November 1, 1987, a person convicted of a disqualifying federal offense directs the Petition for Exemption to the sentencing judge. If the conviction is a disqualifying state or local offense, the person must direct the petition to the United States District Court for the district in which the disqualifying offense was committed.
   • A person seeking a Petition for Reduction of the Length of Disability for disqualifying judgments of conviction entered after October 12, 1984 directs the request to the state or federal sentencing judge. No such relief was available prior to October 12, 1984.
4. Pursuant to Section III, of the DOL/DOJ Memorandum of Understanding (MOU) related to criminal investigations (See Criminal Investigations).
5. 28 CFR Part 4

1. Statutory Requirements. The Employee Retirement Income Security Act (ERISA) expressly gives the Secretary direct responsibility and authority to investigate fiduciary violations of Title I of ERISA. In accordance with that authority, cases will be used to investigate potential violations involving ERISA, Title I, part 4, sections 402, "Establishment of plan"; 403, "Establishment of trust"; 404, "Fiduciary duties"; 405, "Liability for breach of co-fiduciary"; 406, "Prohibited Transactions"; 407, "10 percent limitation with respect to acquisition and holding of employer securities and employer real property by certain plans"; 409, "Liability for breach of fiduciary duty"; 410, "Exculpatory provisions; insurance"; 412, "Bonding"; and violations involving ERISA, Title I, part 7.

   ROs investigate violations of Part 1 in terminated plans that have assets either not allocated or distributed prudently and in accordance with the terms of the plan.

2. Elements of Fiduciary Violations. The following are basic elements of ERISA fiduciary violations:

   1. Subject plan and the assets involved are subject to the provisions of part 4 of Title I of ERISA in accordance with the requirements of ERISA section 401.

   2. At least one violator was a fiduciary within the meaning of section 3(21) at the time the breach occurred.

   3. The fiduciary violated one or more of ERISA sections 402, 403, 404, 405, 406, 407, 410, and 412, resulting in a breach of fiduciary duty. Investigators/Auditors must show that the fiduciary action(s) are not subject to statutory or regulatory exemptions or regulatory variances.

   4. Collect sufficient evidence to satisfy the various statutory definitions of terms contained in part 4. For example, if a party in interest transaction is involved, establish that the individual or entity is a party in interest within the meaning of section 3(14).

   5. Each fiduciary violation must fall within the timeliness provisions of section 413.

3. Case Opening.

   1. Consistent with National and Regional priorities, RO will open cases when:

      1. The RO acquires information indicating a possible past or prospective ERISA violation; or

      2. The National Office directs it.

   2. The case opening form should describe briefly the reasons for opening the case, any materials reviewed before opening the case, and the dates of such review. The summary section of the case opening form will include:

      1. The pertinent facts that form the basis for opening an investigation,

      2. The nature of the complaint or other information received,

      3. Whether a service provider is involved and if so, identification of the service provider(s)

      4. The ERISA related issues raised by the complaint or information, and

      5. The specific ERISA sections potentially violated.

      The summary information provided on the form should set forth the results of the preparer's search of global EBSA indices.

      The case predication should also identify and date any materials reviewed that constituted the basis for the opening.

4. Complaint-Generated Cases. The region will open investigations as soon as practical after receiving allegations of fiduciary or Part 7 violations deemed worthy of investigation.

5. Region-Generated Cases. The RO will open a case when it acquires evidence of a possible fiduciary or Part 7 violation from a review of its files, the plan's annual report, media information, or from any other applicable case development approach.

6. Preliminary Investigative Activities. Before opening a case or on-site investigation, the RO should:

   1. Obtain all recent financial reports filed by the plan.

   2. If the plan has filed an exemption application pertaining to a prohibited transaction, get a complete copy of the application from the National Office for review.

7. Planning the Investigation.

   1. Written Plan. At the RD's discretion, prepare investigative plans for cases in the form of a memorandum to the supervisor. A written investigative plan can help supervisors and Investigators/Auditors use limited resources productively. See Figure 1 for the suggested format for preparing the investigative plan.

   2. Supervisor Review. The supervisor will review the investigative plan, make any necessary changes, and initial and date the plan. After approval of the original plan and notification to Investigator/Auditor, the plan becomes part of the file.

   3. Updating the Plan. Whenever the Investigator/Auditor or the supervisor concludes a need for a major change in the original plan , the Investigator/Auditor should prepare a written update of the plan. As appropriate, the supervisor will review and approve the updated plan. See Figure 2 for the suggested format in updating the plan.

8. Disclosure of Basis of Investigation. EBSA generally does not reveal the basis or source of an open investigation.

9. Investigation of Possible Criminal Violations. Follow the procedures set forth in the Criminal Investigations section when possible criminal violations of ERISA sections 411, 501, 511, and related sections of Title 18 U.S.C. are uncovered.

   1. Dual Responsibility. If a criminal investigation is appropriate, ROs will open a separate Program 52 case to investigate the possible criminal violations. The director must decide whether to investigate both cases simultaneously or sequentially. Criteria to assist in making this decision are set forth in paragraph 4 of the Criminal Investigations section.

   2. Postponement or Delay Requests. Federal, state, or local governmental agency may request that EBSA postpone or delay a civil ERISA investigation, or witness interviews/testimony. RO should consider such requests after receiving a written request, or an oral request confirmed in a letter to the requesting agency by the RD, stating the reasons why a postponement or delay is appropriate and the length of the anticipated delay. RO should consult OE before making any EBSA decision or response.

   3. Prohibited Persons. If the investigation discloses possible violations of ERISA section 411, open a Program 47 case under the Prohibited Persons section.

10. Apparent Violations of Participant Rights. If the investigation discloses possible ERISA section 510 violations involving acts against a participant or beneficiary for exercising any right to which he/she is entitled under the provisions of an employee benefit plan, or interfering with the attainment of any right to which the participant may become entitled, the RO should immediately open a Program 43 case. Follow the procedures for a Program 43 case under the Participants' Rights section.

11. Fiduciary Violations Involving Gifts and Gratuities. Investigations may disclose possible fiduciary violations involving a plan fiduciary's acceptance, from a party dealing with the plan, of consideration such as meals, gifts, entertainment, or expenses associated with educational conferences. In such cases, the Investigator/Auditor should determine whether the facts support an allegation that the receipt of gifts, gratuities, or other consideration were for the fiduciary's personal account and received in connection with a transaction or transactions involving the assets of the plan as required for a violation of ERISA section 406(b)(3). The Investigator/Auditor should also determine whether the fiduciary or the plan maintained a reasonable written policy or plan provision governing the receipt of items or services from parties dealing with the plan and whether the fiduciary adhered to that policy.

    Further, for enforcement purposes only, the Investigator/Auditor generally should adhere to the following guidelines:

    1. The Investigator/Auditor should treat as insubstantial, and not as an apparent violation of ERISA section 406(b)(3), the receipt by a fiduciary (including his or her relatives) of the following items or services from any one individual or entity (including any employee, affiliate, or other related party). These items will be treated as insubstantial, if their aggregate annual value is less than $250 and their receipt does not violate any plan policy or provision: (a) gifts, gratuities, meals, entertainment, or other consideration (other than cash or cash equivalents) and (b) reimbursement of expenses associated with educational conferences.

    2. The Investigator/Auditor should not treat the reimbursement by a plan of expenses associated with a plan representative's attendance at an educational conference as a violation of ERISA section 406(b)(3) under the following conditions. A plan fiduciary must have reasonably determined, in advance and without regard to whether such expenses will be reimbursed that: (a) the plan's payment of educational expenses in the first instance was prudent, (b) the expenses were consistent with a written plan policy or provision designed to prevent abuse, (c) the conference had a reasonable relationship to the duties of the attending plan representative, and (d) the expenses for attendance were reasonable in light of the benefits afforded to the plan by such attendance and unlikely to compromise the plan representative's ability to carry out his or her duties faithfully in accordance with ERISA. The fiduciary's determination should be in writing.

12. DOL-IRS, Bonding, Reporting and Disclosure Checklists. As part of a fiduciary investigation, an Investigator/Auditor will complete an IRS checklist. For further guidance, see the Relationship with the IRS section. Also, the Investigator/Auditor will ordinarily determine whether a plan is in compliance with the bonding, reporting, and disclosure provisions of ERISA by completing an ERISA Bonding Checklist (Figure 3), a Reporting and Disclosure Checklist (Figure 4) and an Individual Benefit Statement Compliance Checklist (Figure 5). Investigator/Auditor completes these checklists in fiduciary cases and retains them in the RO workpaper case file unless violations are uncovered, developed, and reported in the ROI. If the RO discovers a potential bonding, reporting, or disclosure violation in the context of a fiduciary case, the Investigator/Auditor may attempt to resolve such a violation during the course of the investigation. If there are bonding, reporting, or disclosure violation corrections before completion of the ROI in the RO, the Investigator/Auditor will report the correction in the report and include documentation of the correction in the exhibit file.

13. Investigative Activity.

    1. Investigation Guidelines. Items in the investigation guidelines (Figure 6) are not either mandatory or all-inclusive, but applied as appropriate for the plan or other entity under review. The guidelines are arranged in two parts: Part I, Background Information, such as data related to the type and size of plan, the responsible parties, etc. and Part II, Review Procedures, designed to investigate compliance with and potential violations of ERISA, particularly fiduciary violations. The Investigator/Auditor performs additional investigative steps when exploration of areas not covered in the guidelines is required to develop and investigate possible violations.

    2. Additional Investigative Activity. The scope of the investigation can expand beyond the original allegations or suggests additional areas of inquiry after new information has been uncovered.

14. Subpoena. Determine the need for a subpoena and, if deemed necessary, submit the request according to established procedures described in the Subpoenas section. Alternatively, the RO may choose to send a letter requesting documents (see Figure 7).

15. Receipts for Books, Records, and Documents Obtained. It may become necessary to physically move documentary evidence or property (e.g., books, records, canceled checks, bank statements, receipt books, invoices, vouchers, letters, memoranda, etc.), offsite pursuant to subpoena or when voluntarily furnished even if only to photocopy and immediately return the material. In such cases, the Investigator/Auditor will give the organization or individual providing the documents a signed, itemized, and dated receipt for the material, and will retain a copy of the receipt in the case file. For further guidance, see the Collection and Preservation of Evidence section.

16. Investigations Involving Applications for Exemptions.

    1. During some fiduciary investigations, the RO may discover that a plan has a pending application for exemption from a prohibited transaction. In that event, the RO should advise OE of the pending application and OE will coordinate with OED. In no instance should the RO provide to OED information obtained during the course of the investigation.

    2. The RO should not assume that, because the factual situation under investigation is similar to previously granted individual exemptions, further investigation is unnecessary. The investigation should continue to its completion.

17. No Violations Found. When the investigation does not identify any violation(s), the Investigator/Auditor will prepare a Closed ROI (see Form 203A, Form 203B, Form 203C, and Form 203H for sample formats) and a pattern closing letter (see the Voluntary Compliance Manual section, Figure 7) to be sent to plan officials. RO may hold a conference with the plan officials and send a pattern closing letter. In instances when the RD determines that it is not advisable to send a closing letter the RO should enter a notation to the file and notify OE of the decision not to issue a closing letter.

18. Technical Advice. When the RO needs technical advice concerning the existence of actionable violations, appropriate remedial procedures including voluntary compliance, or similar matters, it will contact OE for assistance.

19. Violations/Voluntary Compliance (VC). When violations are apparent, the RD will determine, in accordance with National Office policy, whether initially to pursue corrective action through voluntary compliance. If the decision is to pursue correction of apparent violations through voluntary compliance, the RO should issue a VC notice letter (see the Voluntary Compliance Manual section, Figure 1) which will advise plan fiduciaries or other responsible parties of the results of the investigation and the section(s) of ERISA violated. The letter will invite the recipients to discuss with the RO corrections of violations and any restoration of losses to the plan.

    Although some cases may be suitable for resolution through voluntary compliance, neither the RO nor EBSA must seek voluntary compliance in all cases.

    In the health insurance industry, it is a common practice for issuers or other service providers to issue standardized plan documents and other material to ERISA plan clients. To leverage agency resources, EBSA will continue to identify service providers who are providing non-compliant health insurance policies or standardized plan documents and pursue global correction that will affect all plans governed by the faulty policies or plan documents.

20. Report Writing for Voluntary Compliance Cases.

    1. In voluntary compliance cases involving limited or non-complex issues, the Investigator/Auditor should prepare a VC notice letter (see the Voluntary Compliance Manual section, Figure 1) and statute of limitations matrix (Figure 8) for review. If the basis for the asserted violations or the need for the suggested corrective action is not apparent from the VC notice letter alone, the RD may require the Investigator/Auditor prepare a detailed memorandum, Checksheet ROI, or Action ROI.

    2. In voluntary compliance cases involving numerous or complex issues, the Investigator/Auditor may prepare for the RD's review a detailed memorandum explaining all the issues and citing supporting facts, a VC notice letter for the plan officials or other affected parties, and a statute of limitations matrix. The documentation of the facts presented in the detailed memorandum may be available in the RO. At the RD's discretion, a Checksheet ROI or an Action ROI may be prepared in such cases (See paragraph 21a. below).

    3. In all VC cases, RDs will approve and sign all VC notice letters and closing letters prior to issuance. Copies of all approved and dated VC notice and corresponding closing letters sent to plan officials or other related parties become part of the case file and available to OE. The case and program number should be noted on all VC notice and closing letters.

    4. In voluntary compliance cases in which full compliance is achieved, or if partial or no compliance is achieved but the case will not be referred for litigation, the Investigator/Auditor may prepare a Closed ROI in an appropriate format as set forth in Form 203A, Form 203B, Form 203C, Form 203H. If an Action ROI has already been prepared, the Investigator/Auditor may prepare a supplemental memorandum to reflect the outcome of the voluntary compliance process, rather than using the Closed ROI formats. All 502(l) and 502(i) civil penalty issues must be resolved before a case may be closed.

    5. In a voluntary compliance case where there is only partial or no compliance, and the case is appropriate for litigation referral, the Investigator/Auditor will prepare an Action ROI in the format outlined in Figure 9.

21. Action Reports. The Investigator/Auditor will prepare an Action ROI together with exhibits and a cover memorandum whenever: (1) the RD determines that there are established violation(s) of Parts 4 or 7 of Title I of ERISA that remain uncorrected, and (2) the litigation referral serves enforcement priorities.

    The RO sends the Action ROI together with exhibits and a cover memorandum from the RD to the PBSD or RSOL, as appropriate. In instances where the Action ROI is referred to PBSD or RSOL, a copy of the cover memorandum and ROI becomes part of the case file, and is available to OE.

    1. Preparation of Action ROIs. An Action ROI should describe the facts obtained during the investigation and necessary to show each element of the alleged violations. The ROI should also set forth evidence, if any, that contradicts or does not support the elements of the violations. It should also contain facts regarding each element of any applicable statutory or administrative exemption. The ROI should normally not state that all elements are met unless it also describes the facts that support that conclusion. Every Action ROI must include both a list of exhibits attached to the ROI and a list of file material, documents, and workpapers maintained in the RO, obtained or produced in the course of the investigation. See Figure 9 for the format of an Action ROI.

       The following general rules apply to the preparation of all ROIs:

       1. Report all material allegations and leads pursued during an investigation.

       2. The ROI should be objective and not contain legal analysis, recitation or paraphrasing of ERISA, assumptions, Investigator/Auditor opinions, or other extraneous matters. Such items are more appropriately included, if at all, in a cover memorandum accompanying the ROI.

       3. All significant facts presented in the report must be supported by a reference to an exhibit (Action Reports) or by file material and workpapers (Closed Reports). Cite the page and paragraph number of the exhibit when an exhibit exceeds two pages in length.

       4. The ROI should be concise and clearly written. Identify terms, individuals, or abbreviations the first time they are used.

       5. The ROI should report all significant facts contained in the exhibits.

       6. Investigator/Auditor should promptly prepare a ROI after an investigation is completed.

    2. RD Cover Memorandum Format. The RD’s cover memorandum, that must accompany each Action ROI, should include: (1) a summary of the facts; (2) a discussion of ERISA violations; (3) loss computation(s); (4) statute of limitations analysis; (5) potential defendants' defenses and financial condition, if known; (6) voluntary compliance efforts; (7) the existence (if any) of a parallel criminal investigation; (8) recommendation(s) for remedies; and (9) appropriate footnotes on page 1 reflecting IRC 6103 material or referrals to OCA. See Figure 10 for the format for the RD cover memorandum.

22. Case Closing-No Other Action. When the RO pursues voluntary compliance with full, partial, or no compliance, the RO should follow case closing procedures outlined in the Voluntary Compliance Manual section.

23. SBREFA Notice. In accordance with the provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), the Small Business Administration has established a National Small Business and Agriculture Regulatory Ombudsman and 10 Regional Small Business Regulatory Fairness Boards to receive comments from small businesses about federal agency enforcement actions. The Ombudsman annually evaluates enforcement activities and rates each agency's responsiveness to small businesses. If a small business wishes to comment on the enforcement actions of EBSA it may call 1-888-REG-FAIR (1-888-734-3247) or write to the Ombudsman at 409 3rd Street SW, MC 2120, Washington, DC 20416. Notice of the right to comment to the SBREFA Ombudsman will be provided by copy of the EBSA Customer Service Standards pamphlet to all plan sponsors, plans, or plan service providers with less than 100 participants or employees during the course of ERISA Title I civil investigations. EBSA RDs have discretion regarding the timing of the delivery of the pamphlet/notice on a case-by-case basis. The case file must reflect appropriate documentation of the SBREFA notice. The right to file a comment with the Ombudsman does not affect EBSA's authority to enforce or otherwise seek compliance with ERISA. The filing of a comment by a small business with the Ombudsman is not a substitute for complying with an EBSA subpoena or addressing EBSA's proposed corrective action in a timely manner to protect the business' interests.

(Figure 1)
Memorandum Format for Program 48 Investigative Plan

Subject:

Name of Plan
Location
EIN
File No.

To:

Supervisor

Investigative Plan for Subject Case

1. Results of Search of Indices and Exemption Applications

   Summarize any pertinent information in the Regional Office files, which might have a bearing on the investigation.

2. Analysis and Scope of Investigation

   1. Allegations/Investigative Leads/Basis for Investigation.

      Analyze each allegation, investigative lead, or area of investigation within the context of the applicable sections of the statute, interpretations, and regulations. Identify each allegation, investigative lead, or area of investigation seriatim using the following general outline:

      1. Set forth the issue being investigated, being as concise as possible without sacrificing the meaning.

         1. Indicate which sections of ERISA, if known, appear to have been violated, including applicable references to the statute, regulations, and/or agency guidance.

         2. List the elements of proof needed to establish that a violation has occurred.

         3. Describe the scope of the proposed inquiry. (This section of the work plan should be used to limit, if possible, the expected duration of the inquiry, and to estimate when the investigation should be closed if no evidence of potential violations is found. A well-planned investigation should estimate how much time and effort should be expended before the costs of pursuing the investigation outweigh its potential benefits).

3. Planned Investigative Activity

   By issue, describe what records will be reviewed and/or what interviews will be conducted and what information and documentation will be developed. Use the following outline to describe the planned investigative activity.

   1. General.

      Set forth any investigative activity not related to resolving a specific issue such as verifying the adequacy of the plan's bond.

   2. Allegation/Lead/Area of Investigation.

      Identify all the activity needed to fully investigate the allegation/lead.

   3. Allegation/Lead/Area of Investigation #2.

      Repeat as in B, for all allegations/leads.

Investigator's/Auditor's Name, Signature, and Date

(Figure 2)
Memorandum Format for Updated Fiduciary Case Investigative Plan

Subject:

Name of Plan
Location
EIN
File No.

To:

Supervisor

Update of Investigative Plan

1. Changes in Original Plan

   Fully describe any deletions from the original plan together with the reasons for the deletions.

2. Additional Planned Investigative Activity

   Fully describe changes in direction or what additional investigation will be conducted.

Investigator's/Auditor's Name, Signature, and Date

(Figure 3)

Bonding Checklist

Bonding Computation Sheet

The amount of bond shall be fixed at the beginning of each reporting year and is determined by the funds "handled" by plan officials during the preceding year.

** Note: If a small plan is required to have a bond in the higher amount of the non-qualifying assets, the correction is not merely to obtain a bond in the future, but to either obtain one retroactively or to conduct an audit for the years in which the plan failed to have the proper bond.

Prepared by:

Date Prepared:

Case #:

Case Name:

(Figure 4)
Reporting and Disclosure Checklist

(Figure 5)
Investigative Guidelines
Individual Benefit Statements

Individual Benefit Statement Compliance Checklist
Participant-Directed Individual Account Plans

[For use with plans that permit participants to direct the investment of assets held in their individual account]

Timing:

1. Within what period of time following the end of the quarter(s) were statements furnished to participants? _____________

2. If statements were furnished within a period longer than 45 days following the end of the quarter(s): a) Within what period were statements (typically) furnished? _________________. b) What was the reason given for taking longer than 45 days? __________________________________________________________________________.

3. With regard to furnishing benefit statements to plan beneficiaries, were statements generally furnished within a reasonable period of time (such as 30 days) following receipt of a written request, taking into account the circumstances of the request? Yes ____ No ________. If “No”, what was the reason given for the longer period? __________________________________________________________________________.

Content:

Did the benefit statement furnished or made available to participants contain the following information:

Individual Benefit Statement Compliance Checklist
Individual Account Plans Without Participant Direction

[For use with plans that do not permit participants to direct the investment of assets held in their individual account. Note: the ability to obtain a participant loan is not participant direction for this purpose]

Timing:

1. Within what period of time following the end of the year were statements furnished to participants? _____________

2. If statements were furnished within a period longer than 45 days following the end of the year: a) Within what period were statements (typically) furnished? _________________. b) What was the reason given for taking longer than 45 days? __________________________________________________________________________.

3. With regard to furnishing benefit statements to plan beneficiaries, were statements generally furnished within a reasonable period of time (such as 30 days) following receipt of a written request, taking into account the circumstances of the request? Yes ____ No ________. If “No”, what was the reason given for the longer period? __________________________________________________________________________.

Content:

Did the benefit statement furnished or made available to participants contain the following information:

Individual Benefit Statement Compliance Checklist
Defined Benefit Plans

Election:

Defined benefit plans are required to furnish benefit statements to participants and beneficiaries at least once every 3 years OR such plans may elect to furnish at least once a year a notice informing participants of the availability of a pension benefit statement and how to obtain such a statement.

Plan has elected to furnish benefit statements every three years (earliest statement required to comply with the new requirements would be due for the 2009 plan year). Yes ____ No ____
(Note: If the plan is furnishing or intends to furnish benefit statements annually, although not required to do so, answer “Yes.”)

If “No,” has the plan provided (or does the plan intend to) furnish an annual notice (Note: first required annual notice would be for the 2007 plan year). Yes ____ No _____
Date on which notice was (or will be) furnished _________________________

Annual Notice Alternative:

If a plan has elected to furnish an annual notice, does the annual notice:

1. Explain that participants have a right to request and receive a pension benefit statement? Yes ____ No ____

2. Explain how participants can request and receive a pension benefit statement from the plan? Yes ____ No ____

Pension Benefit Statement:

Did the plan provide a pension benefit statement to each participant with nonforfeitable benefits and who is employed by the employer maintaining the plan at the time the statement is furnished? Yes ____ No _____

Did the benefit statement furnished or made available to participants contain the following information:

Statements Upon Request

1. With regard to furnishing benefit statements to participants and beneficiaries following receipt of a written request, were statements generally furnished within a reasonable period of time (such as 30 days) following receipt of a written request, taking into account the circumstances of the request? Yes ____ No ____. If “No”, what was the reason given for the longer period? __________________________________________________________________________.

2. Did the furnished statements contain the “content” information described above? Yes ____ No ____

(Figure 6)
Investigation Guidelines

Part I. Background Information

Obtain the following data for the pension or welfare plan which has been selected for investigation.

Note: You need not complete the following items to the extent that the data is already in your possession; for example, on Form 5500.

A. General

Plan name _____________________________________

Plan sponsor name _____________________________

Plan administrator name _______________________

Sponsor EIN ________________ Plan number ______

Plan address ___________________________________

________________________________________________

Contact person ______________ Telephone ____________

B. Coverage (describe types and locations of employees covered by the plan)

number of participants _________

active _________

retired or separated _________

Type of Plan

total _________

C. Type of Plan

D. Contributions

Sponsor (number and types of employers, unions or other organizations contributing to plan)

_____________________________________________________

_____________________________________________________

Participants contribute ____ yes ____ no

E. Funding

____ trusteed

____ insured

____ both trusteed and insured from sponsor assets

name and location of trust fund

__________________________________________

insurance carriers and insurance vehicles

_________________________________________

_________________________________________

total plan assets $ ___________ at (date)______________

F. Plan Managers (include named fiduciaries)

Plan Managers

G. Service Providers (attorney, accountant, actuary, insurance agent, contract administrator, investment manager, etc.)

Service Providers

H. Verifications

date of most recent audit by outside auditors______________

date of most recent review by internal auditors____________

date of most recent actuarial valuation___________________

I. Plan Documents

List the basic documents, which establish and govern the plan and/or trust

____________________________________________________________

____________________________________________________________

____________________________________________________________

J. Plan Records

List the basic books and records of the plan, e.g., contribution records, participant hours/earnings/ benefits, records, investment policies, claim forms and files, bank statements, trust reports, cash books, journals, ledgers, inventories, investment reports, etc

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

K. List related plans and trusts

___________________________________________________________________

___________________________________________________________________

Part II. Review Procedures

1. Fiduciary - Establishment of Plan
   1. Determine that the employee benefit plan has been established pursuant to a written instrument.
   2. Determine that the written instrument provides for one or more named fiduciaries.
   3. Determine that the plan
      1. provides a procedure for establishing and carrying out a funding policy consistent with plan objectives.
      2. describes any procedure for allocating responsibilities for the operation and administration of the plan.
      3. provides a procedure for amending the plan and for identifying the persons who have authority to amend the plan.
      4. specifies the basis on which payments are made to and from the plan.
2. Fiduciary - Establishment of Trust
   Ascertain that assets of the plan are held in trust [unless the assets are insurance contracts, are held by insurance companies or are otherwise exempted by section 403(b)].
3. Fiduciary Duties
   1. Examine all or selected expenses paid or incurred by the plan for the last year in an attempt to identify expenses which were not incurred exclusively to provide benefits to participants and their beneficiaries or to defray reasonable plan administrative costs. Examine income and expense statements and the general ledger accounts for unusual expenses (accounts). Examine selected cash disbursements and non-cash transactions and supporting documentation for transactions, which appear unrelated to operating the plan.
   2. Examine administrative expenses for categories that appear unreasonably costly in relation to other similar plans.
   3. Explore the management of plan operations by examining whether contributions are collected timely; cash is deposited promptly; investment certificates are properly safeguarded; assets are appropriately insured; reserves and retentions held by insurance carriers are not unreasonable; tax qualified status with IRS is maintained; PBGC insurance is current.
   4. Analyze plan investments to ascertain extent of diversification. Consider diversification:
      1. among types of investments, i.e., stocks, bonds, real estate, etc.;
      2. within types, i.e., is common stock all of one or two companies; and
      3. geographical areas of investment.
         Determine if investment portfolio appears to adhere to investment policy in plan instruments, minutes of meetings, etc.
   5. Read the basic plan documents and note substantive policy direction (other than investment policy) to the plan fiduciaries and examine if it is being followed.
   6. Inquire whether any plan funds are invested in assets which are beyond the reach of United States courts in contravention of section 404(b).
4. Fiduciary - Co-Fiduciary Liability
   Examine selected allocations of fiduciary responsibilities (other than trustee responsibilities) to both named fiduciaries and other fiduciaries, to determine if they have been allocated in accordance with the instrument under which the plan is maintained.
5. Fiduciary - Prohibited Transaction
   1. Obtain a list of parties in interest from the plan. Compare to the lists of plan sponsors, plan managers, and service providers obtained in Part I of these guidelines. Determine how plan management identifies parties in interest and how plan fiduciaries prevent inadvertent party in interest transactions from occurring.
   2. Inquire as to any applications for individual exemptions from prohibited transactions for the plan and their status. Compare with OED information available at RO, and clarify if necessary. Also be aware of applicable statutory and class exemptions.
   3. For selected sales, purchases, and lease property transactions by the plan during the period being investigated, examine property records and supporting documentation to ascertain if any of the transactions were between the plan and a party in interest.
   4. Examine accounts receivable, accounts payable, cash receipt records, and cash disbursement records for the period under examination in an attempt to identify any loan of money or extension of credit by the plan to or from a party in interest.
   5. For the period being investigated, examine expense accounts representing acquisition of goods, services or facilities by the plan. For selected transactions, ascertain whether they were acquired by the plan from a party in interest.
   6. Inquire as to any plan assets, which have been transferred. Ascertain whether such assets were transferred to parties in interest.
   7. For some of the larger and continuous transactions in which the plan engages, e.g., purchases/sales of securities, purchases/sales of properties, placing of insurance contracts, advisory and consulting fees, etc., ascertain the organizations that acted as broker, agent, consultant, etc. Determine whether any of the plan's fiduciary have had any ownership or direct involvement in these organizations, or have received any remuneration from their organizations.
6. Fiduciary - Employer Securities and Real Property
   Request a listing of all employer securities and properties held by the plan. Ascertain whether any such post-ERISA acquisitions have resulted in holdings by the plan of employer securities and properties in excess of 10% of total plan assets (measured on a fair market value basis).
7. Bonding
   The Bonding Checklist and Bonding Computation Sheet will ordinarily be completed for every plan. See Figure 3.
8. Reporting and Disclosure
   The Reporting and Disclosure Checklists and Individual Benefit Statement Compliance Checklist will ordinarily be completed for every plan. See Figure 4 and Figure 5.
9. Verifying Financial Data Reported
   Verify the accuracy of plan financial data reported to DOL on the most recent annual report by:
   1. Determining whether the plan is exempt from completing financial data on annual report forms and from engaging an independent qualified public accountant pursuant to DOL regulation.
   2. Determining for non-exempt plans that the annual report, related schedules, and accountant's opinion have been completed and reported, as appropriate.
10. Verifying Assets Held by Third Parties
    If a plan fiduciary or other plan official indicates that plan assets are being held by a third party, such as an investment manager or custodian, verify that the assets exist and are in the name of the plan by contacting the third party directly.
11. Claims Procedures
    Determine whether plan instruments and operating procedures provide for:
    1. Prompt handling of claims from participants and beneficiaries.
    2. Notice in writing to participants and beneficiaries of claim denials and reasons therefore.
    3. Full and fair review by a named fiduciary of claim denials.

(Figure 7)
Sample Document Request Letter

Month DD, YYYY

Plan Administrator
XYZ Corporation
234 N. Fairfield Street
Somewhere, Illinois 12345

Re: XYZ Plan

Dear Sir:

As you know, our office will be reviewing XYZ Plan for compliance with Title I of the Employee Retirement Income Security Act (ERISA), which establishes standards governing the operation of employee benefit plans such as XYZ Plan.⁽¹⁾

Submitting relevant documents to our office before the on-site field investigation begins, can help to:

• increase the speed of the process,
• reduce the administrative burden for plan and corporate officials, and
• (in some cases) eliminate the need for an on-site visit entirely.

Please submit to this office by DATE OF LETTER + 10 WORKING DAYS the documents indicated on the checklist below for the XYZ plan. You can also send the documents electronically to: [INVESTIGATOR NAME]@dol.gov.

Thank you for your cooperation. If you have any questions, please contact Investigator/Auditor ____________________ at 200-321-1234.

Sincerely,

Please Submit Copies of the Items Listed Below:

(Figure 8)

(Figure 9)
Report of Investigation
Sample Format