Proposed Rule2021-19713
Annual Reporting and Disclosure
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 15, 2021
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document contains proposed amendments to Department of Labor (DOL) regulations relating to annual reporting requirements under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The proposed amendments contained in this document would conform these DOL reporting regulations to proposed revisions under Title I of ERISA and the Internal Revenue Code (Code) to the Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan being published in this issue of the Federal Register in a separate Notice of Proposed Forms Revisions (NPFR) prepared jointly by DOL, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) (collectively ``Agencies''). Those proposed form changes and these proposed regulatory amendments primarily implement statutory changes enacted as part of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). Conforming changes also are being proposed to the requirements for the summary annual report. The proposed regulatory amendments would affect employee pension and welfare benefit plans, plan sponsors, administrators, and service providers to plans subject to annual reporting requirements under ERISA and the Code.
Full Text
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[Federal Register Volume 86, Number 176 (Wednesday, September 15, 2021)]
[Proposed Rules]
[Pages 51284-51310]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-19713]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2520
RIN 1210-AB97
Annual Reporting and Disclosure
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Proposed rule.
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SUMMARY: This document contains proposed amendments to Department of
Labor (DOL) regulations relating to annual reporting requirements under
Title I of the Employee Retirement Income Security Act of 1974, as
amended (ERISA). The proposed amendments contained in this document
would conform these DOL reporting regulations to proposed revisions
under Title I of ERISA and the Internal Revenue Code (Code) to the Form
5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF
Short Form Annual Return/Report of Small Employee Benefit Plan being
published in this issue of the Federal Register in a separate Notice of
Proposed Forms Revisions (NPFR) prepared jointly by DOL, the Internal
Revenue Service (IRS), and the Pension
[[Page 51285]]
Benefit Guaranty Corporation (PBGC) (collectively ``Agencies''). Those
proposed form changes and these proposed regulatory amendments
primarily implement statutory changes enacted as part of the Setting
Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
Conforming changes also are being proposed to the requirements for the
summary annual report. The proposed regulatory amendments would affect
employee pension and welfare benefit plans, plan sponsors,
administrators, and service providers to plans subject to annual
reporting requirements under ERISA and the Code.
DATES:
Comment due date: Comments are due on or before November 1, 2021.
Proposed applicability dates: If adopted, the proposed regulatory
amendments to implement the SECURE Act's amendment of section 103(g)
would apply to 2021 plan year reporting. All other proposed regulatory
amendments would apply to reporting for plan years beginning on or
after January 1, 2022.
ADDRESSES: You may submit written comments, identified by RIN 1210-
AB97, by one of the following methods:
Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the
instructions for submitting comments.
Mail: Office of Regulations and Interpretations, Employee Benefits
Security Administration, Room N-5655, U.S. Department of Labor, 200
Constitution Ave. NW, Washington, DC 20210, Attention: Proposed
Revision of Annual Information Return/Reports RIN 1210-AB97.
Instructions: All submissions must include the agency name and
Regulatory Identifier Number (RIN) for this rulemaking. The DOL will
share any comment submitted in response to this regulatory proposal
with the IRS and the PBGC. To avoid unnecessary duplication of effort,
the Agencies also will treat public comments submitted in response to
this notice of proposed rulemaking as public comments on the Notice of
Proposed Forms Revisions to the extent they include information
relevant to the proposed regulatory amendments. If you submit comments
electronically, do not submit paper copies. Comments will be available
to the public, without charge, online at <a href="http://www.regulations.gov">http://www.regulations.gov</a> and
<a href="http://www.dol.gov/agencies/ebsa">http://www.dol.gov/agencies/ebsa</a> and at the Public Disclosure Room,
Employee Benefits Security Administration, Suite N-1513, 200
Constitution Ave. NW, Washington, DC 20210.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records posted on the internet as received and can be
retrieved by most internet search engines.
FOR FURTHER INFORMATION CONTACT: Janet Song or Colleen Brisport
Sequeda, Office of Regulations and Interpretations, Employee Benefits
Security Administration, U.S. Department of Labor, (202) 693-8500 (this
is not a toll-free number), for questions related to these proposed
amendments to the DOL regulations.
Customer service information: Individuals interested in obtaining
information from the DOL concerning Title I of ERISA may call the EBSA
Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the DOL's website
(<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>).
SUPPLEMENTARY INFORMATION:
A. Legislative and Regulatory Reporting Framework
Titles I and IV of ERISA and the Internal Revenue Code (Code),
generally require pension and other employee benefit plans to file
annual returns/reports concerning, among other things, the financial
condition and operations of the plan. Filing a Form 5500 Annual Return/
Report of Employee Benefit Plan (Form 5500) or, if eligible, a Form
5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan
(Form 5500-SF), together with any required schedules and attachments
(together ``the Form 5500 Annual Return/Report''),\1\ in accordance
with their instructions, generally satisfies these annual reporting
requirements.
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\1\ References to the ``Form 5500 Annual Return/Report'' may
include depending on the context, the Form 5500, the Form 5500-SF,
and the Form 5500-EZ, Annual Return of One Participant (Owners and
Their Spouses) Retirement Plan (Form 5500-EZ). The Form 5500-EZ is a
return that is required only to satisfy the Code. Form 5500-EZ
filers are not subject to Title I of ERISA.
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ERISA section 103 broadly sets out annual financial reporting
requirements for employee benefit plans under Title I of ERISA. The
Form 5500 Annual Return/Report for Title I purposes is promulgated
pursuant to DOL regulations under the ERISA provisions authorizing
limited exemptions and simplified reporting and disclosure for welfare
plans under ERISA section 104(a)(3), simplified annual reports under
ERISA section 104(a)(2)(A) for pension plans that cover fewer than 100
participants, and alternative methods of compliance for all pension
plans under ERISA section 110. The Form 5500 Annual Return/Report, and
related instructions and regulations, are also promulgated under the
DOL's general regulatory authority in ERISA sections 109 and 505.
In addition to being an important disclosure document for plan
participants and beneficiaries, the Form 5500 Annual Return/Report is a
critical enforcement, compliance, and research tool for the DOL, the
Internal Revenue Service (IRS), and the Pension Benefit Guaranty
Corporation (PBGC) (together ``Agencies''). The Form 5500 Annual
Return/Report is also an important source of information and data for
use by other Federal agencies, Congress, and the private sector in
assessing employee benefit, tax, and economic trends and policies. In
the United States, there are an estimated 2.5 million health plans, an
estimated 885,000 other welfare plans, and nearly 772,000 private
pension plans. These plans cover roughly 154 million private sector
workers, retirees, and dependents, and have estimated assets of $12.2
trillion. The Form 5500 Annual Return/Report serves as the principal
source of information and data available to the Agencies concerning the
operations, funding, and investments of approximately 843,000 pension
and welfare benefit plans that file.\2\ Accordingly, the Form 5500
Annual Return/Report is essential to each Agency's enforcement,
research, and policy formulation programs, as well for the regulated
community, which makes increasing use of the information as more
capabilities develop to interact with the data electronically. The data
is also an important source of information and data for use by other
Federal agencies, Congress, and the private sector in assessing
employee benefit, tax, and economic trends and policies. The Form 5500
Annual Return/Report also serves as the primary means for monitoring
the operations of plans by participating employers in multiple employer
plans and other group arrangements, plan participants and
beneficiaries, and by the public.
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\2\ Estimates are based on 2019 Form 5500 filings. DOL notes
that welfare plans with less than 100 participants that are unfunded
or insured (do not hold assets in trust) are generally exempt from
filing a Form 5500. Therefore, while DOL estimates there are 2.5
million health plans and 885,000 non-health welfare plans,
respectively only 69,000 and 91,000 of these plans filed a 2019 Form
5500.
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The forms, schedules, and instructions, also serve to help the DOL
carry out its statutory directives under sections 506 and 513 of ERISA.
Specifically, section 506(a) of ERISA authorizes the Secretary of Labor
to coordinate with other Agencies to avoid unnecessary expense and
duplication of functions among Government agencies. The Agencies
designed the Form 5500
[[Page 51286]]
Annual Return/Report so that it could be used simultaneously to satisfy
annual return/report requirements to the Agencies, and to help the
Agencies more effectively and efficiently (from both the public's and
the Agencies' perspectives) provide oversight, assist with compliance,
and enforce the provisions of ERISA and the Code. Section 506(b) gives
the DOL responsibility for detecting and investigating civil and
criminal violations of Title I of ERISA. The Form 5500 Annual Return/
Report is one of the important tools the DOL uses to carry out its
responsibility to detect and investigate such violations. Section
513(b)(2) of ERISA specifically directs DOL to undertake research
studies relating to pension plans, including but not limited to (A) the
effects of this subchapter upon the provisions and costs of pension
plans, (B) the role of private pensions in meeting the economic
security needs of the nation, and (C) the operation of private pension
plans including types and levels of benefits, degree of reciprocity or
portability, and financial and actuarial characteristics and practices,
and methods of encouraging the growth of the private pension system.
Recent legislative and regulatory changes affecting multiple
employer pension plans (MEPs) and similar arrangements are spurring the
current need to update the Form 5500 Annual Return/Report and related
regulations. Specifically, as discussed in more detail in the NPFR, the
Setting Every Community Up for Retirement Enhancement Act of 2019
(SECURE Act),\3\ included various provisions designed to improve the
private employer-based retirement system. Among other things, the
SECURE Act included changes designed to simplify retirement plan
administration for certain eligible defined contribution plans and
added provisions to the Code relating to MEPs, including MEPs with
pooled plan providers, and adopted provisions under Title I of ERISA
that designated these MEPs with pooled plan providers as pooled
employer plans.
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\3\ The SECURE Act was enacted on December 20, 2019, as Division
O of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-
94).
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The NPFR published concurrently in this issue of the Federal
Register sets forth a discussion of form and instruction changes that
relate to these proposed regulations. These proposed revisions to the
DOL's reporting regulations are needed for the DOL to implement the
forms revisions proposed in the three-agency (DOL, IRS, and PBGC)
Notice of Proposed Forms Revisions (NPFR).
B. Discussion of the Proposed Revisions to 29 CFR Part 2520
1. Section 2520.103-1(a)(2)
Section 2520.103-1 generally describes the content of the Form 5500
Annual Return/Report as a limited exemption and alternative method of
compliance for ERISA-covered employee benefit plans to satisfy annual
reporting requirements under Title I. The proposal adds a reference to
``section 202 of the SECURE Act'' to paragraph (a)(2) of Sec.
2520.103-1 to set forth the authority for prescribing a consolidated
report alternative method of compliance for certain groups of defined
contribution retirement plans under proposed Sec. Sec. 2520.103-14 and
2520.104-51, discussed below, relating to defined contribution group
(DCG) reporting arrangements.
2. Sections 2520.103-1(b)(1) and 2520.103-1(c)(1)
Paragraphs (b) and (c) of Sec. 2520.103-1 generally describes the
contents of the annual report for large plans (generally those with 100
or more participants) and small plans (generally those with fewer than
100 participants). The proposal would amend Sec. 2520.103-1(b)(1) to
add a proposed multiple employer plan (MEP) schedule (titled Schedule
MEP) to the list of schedules and attachments required to be included
with the Form 5500 for large MEPs. A parallel update is being proposed
to Sec. 2520.103-1(c)(1) to add the Schedule MEP as a schedule that
small MEPs must include with the Form 5500.\4\
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\4\ See NPFR for detailed discussion of the proposed Schedule
MEP and Schedule DCG.
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2. Section 2520.103-1(c)(2)(ii)
Paragraph (c) of Sec. 2520.103-1 describes the conditions under
which an eligible small plan (generally with fewer than 100
participants) may file the Form 5500-SF. The proposal would add Sec.
2520.103-1(c)(2)(ii)(F) to state that MEPs, which include pooled
employer plans, as well as MEPs described in the DOL's regulation at
Sec. 2510.3-55 (association retirement plans and professional employer
organization (PEO) MEPs), are not permitted to use the Form 5500-SF
regardless of whether the plan meets the size and other requirements
for filing a Form 5500-SF. A similar prohibition applies under the
current regulation to MEWA plans required to file the Form M-1 and to
multiemployer plans. The proposal would also add a new Sec. 2520.103-
1(c)(2)(ii)(G) to provide a similar prohibition on filing the Form
5500-SF for DCG reporting arrangements. As described below in proposed
Sec. Sec. 2510.103-14 and 104-51, DCG reporting arrangements must file
the aggregated annual report for participating plans using the Form
5500, including the schedules and attachments that are generally
required for large retirement plans and Direct Filing Entities (DFEs)
as well as a Schedule DCG (Individual Plan Information) for each plan
whose reporting obligation is being satisfied by the DCG filing.
3. Amendments to Sec. 2520.103-10
Section 2520.103-10 identifies financial schedules that are
required to be included as part of the Form 5500 Annual Return/Report
depending on the characteristics and operations of the plan. The listed
schedules include the ``Schedule of Assets Held for Investment'' and
``Schedule of Assets Acquired and Disposed within the Plan Year.''
Paragraph (b) of Sec. 2520.103-10 sets forth the content requirements
for these schedules. The NPFR being published concurrently with this
NPRM includes proposed additions and clarifications to the content of
the ``Schedules of Assets Held for Investment'' and the ``Schedule of
Assets Acquired and Disposed within the Plan Year'' that are designed
to improve the consistency, transparency, and usability of the
information reported regarding plan investments. The proposed changes
to the contents and format of the schedule are described in detail in
the NPFR and also set forth in the proposed amendment to the regulatory
text in paragraph (b)(1)(i) of Sec. 2520.103-10. Currently, filers
typically file the schedule as a PDF. Of particular note, the proposal
specifies that the schedules would have to be filed electronically
through the ERISA Filing Acceptance System II (EFAST2) electronic
filing system in a structured format in accordance with the EFAST2
requirements and the Form 5500's instructions.
4. New Sec. Sec. 2520.103-14, 2520.104-51 and 2520.104a-9--
Consolidated Form 5500 as an Alternative Method of Compliance for Plans
Participating in a DCG Reporting Arrangement
The proposal would amend the ERISA annual reporting regulations to
implement the SECURE Act section 202 directive to the Secretary of
Labor to jointly with the Secretary of the Treasury provide for a
single, aggregated Form 5500 option that would satisfy the annual
reporting obligations for the defined contribution pension plans
[[Page 51287]]
participating in the group. Under the proposal, several conditions
relating to the DCG reporting arrangement, the participating plans, and
the content of the Form 5500 filing would have to be satisfied before
the aggregated filing would satisfy the annual reporting requirements
of the separate participating plans. The NPFR describes those
conditions in detail. The conditions also are set forth in a proposed
new 29 CFR 2520.103-14 and 2520.104-51.\5\
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\5\ The proposal is modeled to some extent on the existing
annual reporting rules for fully insured welfare benefit plans that
participate in a group insurance arrangement (GIA) and for
investment entities that file as a Direct Filing Entity. See 29 CFR
2520.103-2, 2520.103-12, 2520.104-21, and 2520.104-43.
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With respect to the content requirements for a DCG consolidated
Form 5500 filing, proposed paragraph (b) of Sec. 2520.103-14 provides
that the consolidated DCG report would be required to include a Form
5500 ``Annual Return/Report of Employee Benefit Plan'' and various
statements or schedules based on the characteristics and operations of
the participating plans, including Schedule A (Insurance Information),
Schedule C (Service Provider Information), Schedule D (DFE/
Participating Plan Information), Schedule G (Financial Transaction
Schedules), Schedule H (Financial Information), Schedule R (Retirement
Plan Information), Schedule DCG (Individual Plan Information),\6\
supplemental schedules referred to in 29 CFR 2520.103-10 with
information aggregated for all the participating plans, the report and
opinion of an independent qualified public accountant (IQPA) for the
DCG trust, and an IQPA report and opinion for any individual
participating plans with 100 or more participants that would be subject
to the audit requirement if filing a separate Form 5500. This would
include separate financial statements, if such financial statements are
prepared in order for the independent qualified public accountant to
form the required opinions on the DCG trust required under the proposal
and the individual participating large plans required by section
103(a)(3)(A) of the Act and Sec. 2520.103-2(b)(5).\7\
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\6\ See NPFR for detailed description of the proposed Schedule
DCG. A separate Schedule DCG would be required for each individual
participating plan. In the case of an existing plan that joins a DCG
filing arrangement, the identifying information regarding the plan
and employer/plan sponsor that was used in prior filings for the
plan must be used to identify the plan and the employer/plan sponsor
on the Schedule DCG for the plan.
\7\ See NPFR for a more detailed discussion of the content
requirements for DCG Form 5500.
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Proposed paragraph (d) would make clear that the DCG reporting
arrangement must comply with the electronic filing requirements that
apply to all plan filers and direct filing entities (DFE). See Sec.
2520.104a-2 and the instructions for the Form 5500 Annual Return/Report
for electronic filing requirements. In addition, the proposed paragraph
emphasizes that the common plan administrator of all the participating
plans that is filing the consolidated Form 5500 must maintain an
original copy, with all required signatures, as part of its records
(which also would be treated as records of each of the participating
plans).
The proposed new Sec. 2520.104-51 would authorize the DCG
consolidated report as an alternative method of compliance under ERISA
section 110 for defined contribution pension plans that participate in
DCG reporting arrangements. Specifically, filing of a complete and
accurate consolidated Form 5500 for the DCG reporting arrangement would
relieve the administrator of each individual participating defined
contribution pension plan that meets the requirements of paragraph (b)
of Sec. 2520.104-51 of the obligation to file an individual annual
report under Title I of ERISA. This alternative method of compliance
would be available only for a defined contribution pension plan in a
plan year in which (i) such plan participates in a DCG reporting
arrangement that meets the conditions of paragraph (c) of this proposed
Sec. 2520.104-51; and (ii) the DCG reporting arrangement has filed
with the Secretary of Labor in accordance with proposed Sec.
2520.104a-9, a complete and accurate consolidated annual report that
meets the content requirements under proposed Sec. 2520.103-14. To
make clear that the DCG reporting arrangement is a direct filing entity
(DFE) that is submitting the aggregated Form 5500 on behalf of the
participating plans, proposed Sec. 2520.104-51(b)(2) provides that
that the term ``DCG reporting arrangement'' shall be used in place of
the term ``plan'' where it appears in Sec. Sec. 2520.103-3, 2520.103-
4, 2520.103-6, 2520.103-8, 2520.103-9, and 2520.103-10 and elsewhere in
subparts C and D of 29 CFR part 2520, as applicable.
Proposed Sec. 2520.104-51 would also provide that the reporting
relief for individual plans would apply only if all plans participating
in the DCG reporting arrangement (i) are individual account plans or
defined contribution plans; (ii) have--(A) the same trustee (``common
trustee'') and same trust holding the assets of the participating plans
(``common trust''); (B) the same one or more named fiduciaries, except
the proposal would allow for the employer/plan sponsor to be a named
fiduciary of each employer's own plan provided that the other named
fiduciaries under the plans are the same and common to all plans
(``common named fiduciaries''); (C) a designated administrator that is
the same plan administrator for all the participating plans (``common
plan administrator''); (D) plan years beginning on the same date
(``common plan year''); (iii) provide the same investments or
investment options to participants and beneficiaries (``common
investments or investment options''); (iv) have the investment assets
held in a single trust of the DCG reporting arrangement; (v) not hold
any employer securities; (vi) be 100% invested in certain secure, easy
to value assets that meet the definition of ``eligible plan assets''
(see the instructions for line 6a of the Form 5500-SF), such as mutual
fund shares, investment contracts with insurance companies and banks
valued at least annually, publicly traded securities held by a
registered broker dealer, cash and cash equivalents, and plan loans to
participants; (vii) be audited by an IQPA or be eligible for the waiver
of the annual examination and report of an IQPA under 29 CFR 2520.104-
46, but not by reason of enhanced bonding; and (viii) may not be a
multiemployer plan or a MEP (including association retirement plans,
pooled employer plans and professional employer organization plans (PEO
plans)).
Proposed Sec. 2520.104-51 would also expressly state that the
alternative method of complying with the Title I annual reporting
requirements would not relieve the administrator of the individual
participating plans from any other requirement of Title I of the Act,
including, for example, the provisions that require that plan
administrators furnish copies of the summary plan description to
participants and beneficiaries (ERISA section 104(b)(1)), furnish
certain documents to the Secretary of Labor upon request (ERISA section
104(a)(6)), and furnish a copy of a Summary Annual Report (SAR) to
participants and beneficiaries of the plan (ERISA section 104(b)(3)).
Proposed Sec. 2520.104-51(c)(2)(iii) provides that all plans
participating in a DCG reporting arrangement must have a designated
common plan administrator that is the same plan administrator for all
the participating plans. The SECURE Act was not explicit on whether
this was intended to require the same person to be the plan
administrator under ERISA section
[[Page 51288]]
3(16)(A) for the purpose of meeting the annual reporting requirements
for each participating plan or was intended to require that the same
person be the plan administrator of each participating plan for all
purposes under ERISA. The proposal requires that the same person sign
the DCG filing as the plan administrator for each participating plan.
The Department solicits comments on whether the final rule should
address whether individual plans participating in a DCG may have a
separate statutory administrator responsible for other duties ERISA
assigns to the plan administrator (e.g., distribution of summary plan
descriptions).
Finally, proposed new Sec. 2520.104a-9 provides that, as would be
the case for all of the participating plans in the DCG reporting
arrangement if they were filing individually, the aggregated Form 5500
for the DCG is due no later than the end of the 7th month after the end
of the common plan year that all the plans must have in order to
participate in a DCG reporting arrangement pursuant to the requirement
in section 202 of the SECURE Act and the proposed regulation at Sec.
2520.104-51. Because the DCG filing is an alternative to each
participating plan filing its own Form 5500, that would mean that each
plan would have to submit its own IRS Form 5558 to extend the plan's
due date, and, as a consequence, extend the due date for the DCG
filing. A plan that did not submit a timely Form 5558 and that
participated in a DCG filing that was submitted after the 7th month
normal due date would be treated as having filed late. Public comments
are specifically solicited on how the filing extension process should
be structured for DCGs, including whether DCG reporting arrangements
should be able to file a single Form 5558 to obtain an extension for
filing the DCG consolidated report on behalf of the participating plans
as an alternative to having each individual plan file a Form 5558 for
there to be an extension for the reporting group as a whole.\8\
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\8\ Under the somewhat similar consolidated reporting provisions
applicable to GIAs, the GIA is permitted to use the IRS Form 5558 to
apply for an extension of time the GIA consolidated report on behalf
of the plans participating in the GIA.
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As noted above, section 110 of ERISA permits the DOL to prescribe
for pension plans alternative methods of complying with any of the
reporting and disclosure requirements if the Secretary finds that: (1)
The use of the alternative method is consistent with the purposes of
ERISA and it provides adequate disclosure to plan participants and
beneficiaries, and adequate reporting to the Secretary; (2) application
of the statutory reporting and disclosure requirements would increase
costs to the plan or impose unreasonable administrative burdens with
respect to the operation of the plan; and (3) the application of the
statutory reporting and disclosure requirements would be adverse to the
interests of plan participants in the aggregate. The DOL believes that
the proposal on DCG reporting arrangements meets those conditions,
especially given the statutory direction in the SECURE Act to create
such a reporting option, but also specifically solicits comments on the
required findings under section 110.
As also discussed in the NPFR, the DOL expects that cost savings
for plans relying on a DCG filing compared to plans filing separately
will generally require the DCG to collectively exceed an aggregate
participant count of 100 participants. In other words, the DOL does not
expect a DCG filing to provide meaningful cost savings for plans
compared to filing their own annual report in the case of DCG
arrangements with an aggregate participant count of under 100
participants. Rather, we expect in such cases that the individual plans
would likely qualify for filing the Form 5500-SF and that they will
likely find it more cost effective to file their own separate Form
5500-SF. Accordingly, this proposal does not include an option under
which such a ``small'' DCG could file as a small plan. Nonetheless, the
DOL solicits comments regarding the merit of those expectations and
assumption and whether the rules should provide a simplified reporting
option for ``small'' DCG reporting arrangements.
5. Section 2520.104b-10
Section 2520.104b-10 sets forth the requirements for the Summary
Annual Report (SAR) appendix and prescribes formats for such reports.
The DOL proposes updating this section to reflect the new filing option
for DCG reporting arrangements and the addition of the new Schedule MEP
and Schedule DCG to the 5500 Annual Report/Return. The proposal
includes adding to the existing model language in the DOL's regulation
new text that plans would use to provide a brief description of the
plan based on the plan characteristic codes listed for the plan on the
Form 5500, including whether it is a defined contribution or defined
benefit plan, and whether the plan is a pooled employer plan, another
type of multiple employer plan, a single employer plan, or a plan
participating in a DCG reporting arrangement, respectively. The
proposed new regulatory language also includes text for plans to use
that states a copy of the Schedule DCG and the Schedule MEP are
available on request, as applicable. For plans participating in a DCG
reporting arrangement, the new language advises that a statement of the
aggregate assets and liabilities of all the plans in the DCG reporting
arrangement and accompanying notes, a statement of aggregate income and
expenses of the DCG reporting arrangement and accompanying notes, and a
copy of the audit report filed for the trust of the DCG reporting
arrangement are available on request. Finally, the new SAR language
would state that a copy of the Form 5500 annual report filed for the
plan or DCG is available online from EBSA via a DOL website at
<a href="http://www.efast.dol.gov">www.efast.dol.gov</a>.
C. Applicability Dates
If adopted, the proposed amendments to implement the SECURE Act's
amendment of section 103(g) would apply to reporting for plan years
beginning on or after January 1, 2021. The other proposed rules,
including those under section 202 of the SECURE Act and structuring the
schedules of assets held for investment, generally would apply to
reporting for plan years beginning on or after January 1, 2022. The
NPFR published concurrently in this issue of the Federal Register sets
forth a comprehensive discussion of form and instruction changes that
relate to these proposed regulations.
D. Regulatory Impact Analysis
The following is a discussion of the DOL's examination of the
effects of this rule as required by Executive Order 12866,\9\ Executive
Order 13563,\10\ the Paperwork Reduction Act of 1995,\11\ the
Regulatory Flexibility Act,\12\ section 202 of the Unfunded Mandates
Reform Act of 1995,\13\ Executive Order 13132,\14\ and the
Congressional Review Act.\15\
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\9\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\10\ Improving Regulation and Regulatory Review, 76 FR 3821
(Jan. 18, 2011).
\11\ 44 U.S.C. 3506(c)(2)(A) (1995).
\12\ 5 U.S.C. 601 et seq. (1980).
\13\ 2 U.S.C. 1501 et seq. (1995).
\14\ Federalism, 64 FR 153 (Aug. 4, 1999).
\15\ 5 U.S.C. 804(2) (1996).
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1.1. Executive Orders
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety effects; distributive impacts; and equity). Executive Order
13563 emphasizes the
[[Page 51289]]
importance of quantifying costs and benefits, reducing costs,
harmonizing rules, and promoting flexibility.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to review by the Office of Management and Budget (OMB).\16\
Section 3(f) of the Executive order defines a ``significant regulatory
action'' as an action that is likely to result in a rule (1) having an
annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or state,
local, or tribal governments or communities (also referred to as
``economically significant''); (2) creating a serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raising novel legal or policy issues arising
out of legal mandates, the President's priorities, or the principles
set forth in the Executive order.
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\16\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
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A full regulatory impact analysis must be prepared for major rules
with economically significant effects (for example, $100 million or
more in any 1 year), and the Office of Management and Budget (OMB)
reviews ``significant'' regulatory actions. It has been determined that
this rule is not economically significant within the meaning of section
3(f)(1) of the Executive order. Pursuant to the terms of the Executive
order, OMB has determined, however, that this action is ``significant''
within the meaning of section 3(f)(4) of the Executive order.
Therefore, the DOL has provided an assessment of the potential costs,
benefits, and transfers associated with this proposed rule. In
accordance with the provisions of Executive Order 12866, this proposed
rule was reviewed by OMB. Pursuant to the Congressional Review Act, OMB
has designated this proposed rule as not a ``major rule,'' as defined
by 5 U.S.C. 804(2).
1.2. Introduction and Need for Regulation
The Form 5500 Annual Return/Report is the principal source of
information and data available to the Agencies concerning the
operations, funding, and investments of pension and welfare benefit
plans covered by ERISA and the Code. Accordingly, the Form 5500 Annual
Return/Report is essential to each Agency's enforcement, research, and
policy formulation programs and is a source of information and data for
use by other Federal agencies, Congress, and the private sector in
assessing employee benefit, tax, and economic trends and policies. The
Form 5500 Annual Return/Report also serves as the primary means by
which the operations of plans can be monitored by plan participants and
beneficiaries and the general public.
As discussed earlier in this document and the related NPFR
publishing concurrently with this proposal, the SECURE Act included
various provisions designed to improve the private employer-based
retirement system by seeking to make it easier for businesses to offer
retirement plans, and for individuals to save for retirement, through
the creation of new plan structure and reporting options. These new
structures will require new annual reporting, which has resulted in the
need to update the Form 5500 Annual Return/Report and related
regulations.
Pooled Employer Plans and Other MEPs: The SECURE Act amended ERISA
and the Code to address certain MEPs administered by pooled plan
providers. Under section 3(43) of ERISA such plans are called pooled
employer plans. The proposed regulation would add a new Schedule MEP to
the Form 5500 annual report to collect information on employers
participating in MEPs and to gather compliance information on pooled
employer plans. Some of the information on the proposed Schedule MEP is
currently reported on the Form 5500 Annual Return/Report by MEPs, but
it is reported on a nonstandard attachment. Only an image or picture of
the attachment is available through the EFAST2 public disclosure
function. Making the information data-capturable by including it on the
proposed Schedule MEP would improve the uniformity and accuracy of the
data and increase its usability.
``Defined Contribution Group (DCG) Reporting Arrangement'': Section
202 of the SECURE Act directs the Secretary of the Treasury and the
Secretary of Labor (together ``Secretaries'') to modify the returns
required under section 6058 of the Code and the reports required by
section 104 of the ERISA, respectively, so that all members of a group
of defined contribution individual account plans that meet certain
conditions may file a single aggregated annual return/report satisfying
the requirements of both such sections. The SECURE Act provides that to
constitute an eligible group of plans, all of the plans in the group
must be either individual account plans or defined contribution plans,
must have the same trustee, the same named fiduciaries, the same
administrator, plans years beginning on the same date, and must provide
the same investments or investment options to participants and
beneficiaries. The proposed rule would establish the conditions,
including the SECURE Act conditions, under which filing a single,
aggregated Form 5500 Annual Return/Report by a ``defined contribution
group (DCG) reporting arrangement'' would satisfy the individual,
annual reporting obligations for each of the plans participating in the
group. As discussed in more detail in the NPFR, the proposed rule also
includes adding a new Schedule DCG (Individual Plan Information) to
provide individual plan-level information for plans covered by a DCG
consolidated Form 5500 filing.
In addition, although not directly implementing SECURE Act changes,
some of the changes being proposed in this document are intended to
ensure that annual reporting by pooled employer plans, other MEPs, and
DCGs provides appropriate financial and operational transparency and
accountability. Certain proposed changes would benefit workers in plans
other than pooled employer plans and DCGs would apply more broadly,
e.g., improving the quality of financial reporting. Other changes being
proposed relate to efforts to improve compliance and oversight with
respect to the Code issues and defined benefit plans subject to the
PBGC insurance program under Title IV of ERISA.
Schedule H, Schedule of Assets Held for Investment, and Schedule of
Assets Acquired and Disposed of Within the Year: As discussed in the
NPFR, the Agencies are proposing structural, data element, and
instruction changes to the current Schedule H, Line 4i Schedules of
Assets. Current Line 4i would be broken into two items to identify the
existing schedules separately: Line 4i(1) would identify the Schedule
of Assets Held for Investment at End of Year, and Line 4i(2) would
identify the Schedule of Assets Acquired and Disposed of Within Year
(together ``Schedules of Assets''). The current regulations and
instructions require most large plans and DFEs to attach the Schedules
of Assets to the Form 5500, Schedule H.\17\
[[Page 51290]]
They are the only place on the Form 5500 Annual Return/Report where
plans are required to list individual plan investments identified by
major characteristics, such as issue, maturity date, interest rate,
cost and current value. As such, they are the only part of the Form
5500 Annual Return/Report useful to evaluate the year-to-year
performance, liquidity, and risk characteristics of a plan's individual
investments.
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\17\ In 2019, the plans required to file the Form 5500 included
any benefit plan or a welfare benefit plan that covered 100 or more
participants as of the beginning of the plan year and a Form 5500
filed for a master trust investment account (MTIA), common/
collective trust (CCT), pooled separate account (PSA), 103-12
investment entity (103-12 IE), or GIA. However, fully insured,
unfunded, or a combination of unfunded/insured welfare plans and
fully insured pension plans that meet the requirements of 29 CFR
2520.104-44 are exempt. If a Schedule I was filed for the plan for
the 2018 plan year or a Form 5500-SF and the plan covered fewer than
121 participants as of the beginning of the 2019 plan year, the
Schedule I may be completed instead of a Schedule H. Plans that file
a Form 5500-SF for the 2019 plan year are not required to file a
Schedule H for that year.
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The current reported information suffers from several shortcomings.
First, filers currently submit this information as non-standard
attachments to filers' electronic Form 5500 Annual Return/Report
filings, so only an image or picture of the attachments is available
through the EFAST2 public disclosure function. A survey panel of plan
sponsors, service providers, representatives of plan participants, and
researchers was conducted in 2014 as part of a Government
Accountability Office (GAO) report; 11 of 31 respondents indicated that
having no standard reporting format was a very or extremely significant
challenge. GAO reported that attachments to the form may be as long as
400 pages, making it particularly difficult for users to find
information.\18\ Second, filers do not always provide the Line 4i
Schedules of Assets in the same place in each annual return/report. For
example, the Line 4i Schedules of Assets are often incorporated in the
larger audit report of the plan's IQPA that itself is filed as a
nonstandard attachment to the Form 5500 Annual Return/Report. Third,
the schedules do not require a standardized method for identifying and
describing assets on the Line 4i Schedules. Different filings may
identify the same stock or mutual fund with various different names or
abbreviations. In the aforementioned GAO survey, most researchers
indicated that a lack of a standard reporting format or unique
identifier for plan assets was a major challenge, while representatives
of plan sponsors and service providers did not.\19\
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\18\ Private Pensions: Targeted Revisions Could Improve
Usefulness of Form 5500 Information, at 17.
\19\ Id.
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Data capturability of the Line 4i Schedules of Assets would make it
much easier and more efficient to monitor plan holdings as computer
programs can read and analyze the data much more efficiently.
Currently, entities expend considerable resources collecting the data
and presenting it in a usable format, to which they then sell access.
Making the information data capturable at the submission stage of the
process would be more cost effective as it removes the need for a
second entity to gather the information, and allow more entities access
to the data at a lower overall cost. The DOL's Office of Inspector
General (``DOL-OIG'') and the GAO have both recommended that EBSA
implement changes to create more detailed and structured Schedules of
Assets.\20\ It would also allow the Agencies and the interested public,
including the participants and beneficiaries in impacted plans, to
better monitor a larger number of pension plans and their asset
allocations. A number of private entities have been using the
information reported on Line 4i Schedule of Assets Held for Investment
in larger pension plan Form 5500 Annual Return/Report filings into
data-capturable information and have been using it to compare plan
investment menus and investment allocations. The DOL believes this
development is evidence that plans sponsors and their service providers
are interested in having access to these data. For example, one company
that uses the Schedules of Assets data sent a letter to DOL stating
that they believe that the information on the Form 5500 Annual Return/
Report is very useful in ``helping the agency understand the
performance and design of retirement plans in the market place'' and
that the data availability fosters ``third party data collection and
evaluation efforts that in turn help protect retirement plan
participants.'' \21\ Plan sponsors can use this information to see
better how their investment menus compare to similarly situated plans
and service providers use this information to identify plans with
underperforming investments in order to attract new business. This can
lead to more competition and improved plan performance, which would
ultimately benefit plan participants and beneficiaries.
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\20\ See EBSA Needs to Provide Additional Guidance and Oversight
to ERISA Plans Holding Hard-to-Value Alternative Investments at 17,
September 30, 2013. <a href="https://www.oig.dol.gov/public/reports/oa/2013/09-13-001-12-121.pdf">https://www.oig.dol.gov/public/reports/oa/2013/09-13-001-12-121.pdf</a>; Private Pensions: Targeted Revisions Could
Improve Usefulness of Form 5500 Information, at 37. June 5, 2014.
<a href="https://www.gao.gov/products/gao-14-441">https://www.gao.gov/products/gao-14-441</a>.
\21\ See August 23, 2010 Comment Letter from Ryan Alfred,
President, BrightScope, Inc. Re: Proposed Extension of Information
Collection, Form 5500 <a href="http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201009-1210-002">http://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201009-1210-002</a>).
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Defined Benefit Pension Plan/ERISA Title IV Additions: The Form
5500 collects information from defined benefit pension plans in
Schedules MB, SB, and R. The PBGC has determined that it needs more
detail in these schedules accurately to project defined benefit pension
plan and PBGC insurance program liabilities. The PBGC's proposed
changes to the information required to be reported by PBGC-insured
defined benefit plans would remedy the deficiencies of the current Form
5500 filings and better protect participants. There are 23,371 single
employer defined benefit plans and 1,373 multiemployer defined benefit
plans that are covered by the PBGC and would be impacted by these
changes.\22\
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\22\ PGBC 2018 Pension Insurance Data Tables. <a href="https://www.pbgc.gov/sites/default/files/2018_pension_data_tables.pdf">https://www.pbgc.gov/sites/default/files/2018_pension_data_tables.pdf</a>.
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Internal Revenue Code Compliance Additions: Prior to 2009, Schedule
E, ESOP Annual Information, Schedule P, Annual Return of Fiduciary of
Employee Benefit Trust, and Schedule T, Qualified Pension Plan Coverage
Information, were required as part of the annual return under section
6058(a) of the Code and associated regulations, but they were not
information collections of the DOL or the PBGC. Beginning in 2009, DOL
mandated electronic filing of Form 5500, Annual Return/Report of
Employee Benefit Plan, and Form 5500-SF, Short Form Annual Return/
Report of Small Employee Benefit Plan. At that time limitations on the
IRS' authority to require electronic filing of annual returns resulted
in the removal of the ``IRS-only'' schedules from the Form 5500 filing
requirements. The lack of information from these schedules has
negatively impacted the IRS's ability to focus effectively on specific
factors of noncompliance when selecting retirement plans for
examination. Rather than reinstating the Schedules E, P, and T, the IRS
is proposing to add new questions to the 2022 Form 5500 designed to
assist the IRS in identifying plans that are non-compliant relating to
Code section 410(b) coverage, Code section 401(a)(4) non-
discrimination, and Code section 401(k) non-discrimination testing.
Additionally, IRS is proposing to add a question that would help it
identify whether adopters of pre-approved plans have been updated
timely for changes in the law.
Affected Entities
Major portions of this proposal relate to SECURE Act statutory
changes that
[[Page 51291]]
(1) recognized a new type of multiple employer plan under Title I of
ERISA called pooled employer plans; and (2) called for the Secretaries
to establish a new consolidated annual report for certain groups of
defined contribution pension plans (herein called DCG reporting
arrangements). The SECURE Act amendments first authorized pooled
employer plans to begin operating beginning on January 1, 2021; even
early adopted pooled employer plans generally will not file a Form 5500
before July 2022. Similarly, DCG reporting arrangements are a new
filing option starting with the 2022 plan year; such consolidated
filings will not begin until July 2023. Thus, there is no historical
Form 5500 information that the DOL can use reliably to evaluate the
number of affected entities. As a result, there is significant
uncertainty regarding the DOL's ability to measure costs and benefits
that may result from this proposal. The DOL nonetheless is presenting
below an overview of potentially affected entities and an approach to
evaluating the possible impacts of this proposal. In evaluating costs
and benefits, the DOL took account of the fact that various types of
plans could be affected by more than one proposed revision. DOL is also
soliciting data relevant to an evaluation of costs and benefits and
comments on alternative methodologies and assumptions for evaluating
the costs and benefits.
Defined Contribution Pension Plans: In 2018, there were 675,007
defined contribution plans with 105.8 million total participants and
83.4 million active participants. Plans with fewer than 100 total
participants (small plans) account for 87.4 percent of plans.\23\
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\23\ Employee Benefits Security Administration. ``Private
Pension Plan Bulletin, Abstract of 2018 Form 5500 Annual Report.''
(2020). The 2018 Form 5500 data set is the most recent available
because Form 5500 filings for the 2018 reporting year generally are
not required to be filed for calendar year plans until July through
October of 2019, and the deadline for fiscal year plans may extend
well into 2020. The User Guide for the 2018 Form 5500 Private
Pension Plan Research File includes a discussion of the creation of
the annual data set and timing of data extraction. See <a href="http://www.dol.gov/sites/dolgov/files/EBSA/researchers/data/retirement/pension-user-guide-2018.pdf">www.dol.gov/sites/dolgov/files/EBSA/researchers/data/retirement/pension-user-guide-2018.pdf</a> (Accessed July 21, 2021).
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Defined Contribution Group (DCG) Reporting Arrangement: As this is
a new type of annual reporting method, the DOL does not have data on
how many DCGs would be created nor the number of plans that would
choose to satisfy their individual filing obligations by meeting the
requirements for being part of a DCG, including the filing of a
consolidated Form 5500 Annual Return/Report by the common plan
administrator. We note that in 2018 there were 499,234 small defined
contribution plans that reported the plan characteristic code 3D in
their Form 5500-SF to indicate that they are intended to operate as
pre-approved plans under sections 401, 403(a), and 4975(e)(7) of the
Code. The DOL assumes that a DCG reporting option may suit their
existing plan and business models and that, therefore, some fraction of
these plans may find it advantageous to join a DCG for filing purposes.
Defined Benefit Pension Plans: In 2018, there were 46,869 defined
benefit plans with 34.0 million total participants and 13.1 million
active participants. There were 45,275 single-employer defined benefit
plans and 1,388 multiemployer defined benefit plans.\24\
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\24\ Id.
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Multiple Employer Pension Plans: A MEP, for Form 5500 reporting
purposes, generally is a retirement plan maintained by two or more
employers that are not members of the same controlled group or
affiliated service group under Code section 414(b), (c), or (m), and
which is not a multiemployer plan.\25\ In 2018, there were 4,730 MEPs
filing a Form 5500, of which 207 were defined benefit pension plans and
4,523 were defined contribution pension plans. There were 6.9 million
participants reported as covered by these plans.\26\ The proposal, if
finalized, would establish a new Schedule MEP to report information
specific to pension MEPs. While the new Schedule MEP would retain ERISA
section 103(g) participating employer information that MEPs must
currently file as a non-standardized attachment, it also would add the
SECURE Act requirement for pension MEPS to report aggregate account
balances information for each participating employer in the MEP.
Schedule MEP would also include questions intended to focus on SECURE
Act issues and compliance for pooled employer plans.
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\25\ See, e.g., 2020 Form 5500 instructions at 14.
\26\ Employee Benefits Security Administration. ``Private
Pension Plan Bulletin, Abstract of 2018 Form 5500 Annual Reports.''
(June 2020).
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Association Retirement Plan. An association retirement plan is a
defined contribution MEP, sponsored by a bona fide group or association
of employers that meets the conditions under 29 CFR 2510.3-55(b). The
DOL does not have information on how many reporting MEPs are
association retirement plans or otherwise to estimate the number of
association retirement plans (a sub-class of MEPs) that currently
exist.
Professional Employer Organizations (PEOs) Plan: A PEO MEP is a
defined contribution pension plan sponsored by a bona fide PEO that
meets the conditions under 29 CFR 2510.3-55(c). According to the
National Association of Professional Employer Organizations, there are
487 PEOs in the United States.\27\ The DOL does not have information on
how many PEOs currently meet the conditions under 29 CFR 2510.3-55(c)
to sponsor defined contribution MEPs for their clients, but assumes a
substantial percentage of PEOs do sponsor MEPs, including defined
contribution MEPs.
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\27\ National Association of Professional Employee
Organizations, Industry Statistics (Accessed 6/28/2021), <a href="https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics">https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics</a>. NAPEO had previously reported 904 PEOs but revised its
methodology. An explanation of the revision is included on the NAPEO
website. See The PEO Industry Footprint 2021, Laurie Bassi and Dan
McMurrer, McBassi & Company at page 4 (May 2021) (available at
<a href="http://www.napeo.org/docs/default-source/white-papers/2021-white-paper-final.pdf?sfvrsn=6dde35d4_2">www.napeo.org/docs/default-source/white-papers/2021-white-paper-final.pdf?sfvrsn=6dde35d4_2</a>.
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Pooled Employer Plans. The SECURE Act amended section 3(2) of ERISA
and added section 3(43) to ERISA to authorize a new type of ERISA
covered defined contribution MEP referred to as a ``pooled employer
plan'' to be operated by a ``pooled plan provider.'' In its 2020 final
rule on Registration Requirements for Pooled Plan Providers, the DOL
noted the uncertainty surrounding the number of pooled employer plans
that could be created based on the final rule, the number of employers
that would participate in such plans, and the number of participants
and beneficiaries that would be covered by them.\28\ Approximately 50
pooled plan providers have filed an initial Form PR Pooled Plan
Provider Registration (Form PR) and registered with the DOL.\29\
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\28\ 85 FR 72934, 72949 (Nov. 16, 2016).
\29\ Department of Labor. Form PR. <a href="https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-pr">https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-pr</a>.
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The DOL does not have comprehensive data on how many employers are
participating in pooled employer plans or the number of participants
covered by the plans until the pooled employer plans file their first
Forms 5500 in 2022 for their 2021 reporting year. The DOL attempted to
review available public information on pooled employer plans by looking
at information included in the filed Forms PR, and by examining news
articles and statements on the pooled plan provider's websites. That
review indicated that that there are a variety of approaches in how
pooled employer plans are offered, and a variation in the
[[Page 51292]]
number of employers that have joined a pooled employer plan. While
pooled plan providers are required to update the Form PR to advise the
DOL and the IRS about the establishment and offering of new pooled
employer plans, the Form PR does not collect information on the number
of employers participating in their pooled employer plans or the number
of employees covered by each plan. One pooled plan provider was
reported in another source as having 2,000 employers joined their
pooled employer plan, whereas other providers reported five to 10
employers had joined their pooled employer plans. As part of the
request for comments, the DOL is seeking information on the number of
employers that have already joined a pooled employer plan and the
number of employees covered by the plan in total and broken down by
employer.
Pre-approved Pension Plans: These are plans that reported plan
characteristics code 3D when filing the Form 5500 Annual Return/Report.
The code 3D indicates ``A pre-approved plan under sections 401, 403(a),
and 4975(e)(7) of the Code that is subject to a favorable opinion
letter from the IRS.'' A pre-approved retirement plan is a plan offered
to employers by financial institutions and others that are authorized
to sponsor pre-approved plans. The pre-approved plan provider then
makes the IRS-approved plan available to adopting employers. Providers
must make reasonable and diligent efforts to ensure that adopting
employers of the plan have actually received and are aware of all plan
amendments and that such employers complete and sign new plans when
necessary.\30\ Of the 611,568 defined contribution pension plans that
reported code 3D, 544,090 are reported as small plans, as they report
having fewer than 100 participants each. Of these small defined
contribution plans, 499,234 file the Form 5500-SF, cover approximately
10.0 million participants, and hold approximately $0.6 trillion in
assets. The DOL expects that Form 5500-SF small pension plan filers are
the most likely candidates to join a DCG or a pooled employer plan. The
DOL lacks information on the number of plans, whether or not currently
Form 5500-SF eligible filers, that would join a DCG or a pooled
employer plan. The DOL is seeking comment on this issue.
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\30\ IRS website at <a href="https://www.irs.gov/retirement-plans/pre-approved-retirement-plans">https://www.irs.gov/retirement-plans/pre-approved-retirement-plans</a> (last updated Apr 2, 2021).
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Multiple Employer Welfare Arrangement (MEWA): A MEWA is defined in
ERISA section 3(40)(B) generally as an employee welfare benefit plan or
any other arrangement, which is established or maintained for the
purpose of offering or providing welfare benefits to the employees of
two or more employers, or to their beneficiaries. For purposes of this
definition, two or more trades or businesses, whether or not
incorporated, are deemed a single employer if such trades or businesses
are under common control. Section 3(40) excludes from the definition of
the term MEWA any plan or arrangement established or maintained under
or pursuant to a collective bargaining agreement, or by a rural
electric cooperative or rural telephone cooperative association. MEWAs
that offer or provide coverage for medical benefits are generally
required to file the Form M-1. In the 2018 calendar year, there were
640 total plan MEWAs that filed a Form M-1 with 2.0 million total
participants. There were 47 non-plan MEWAs based on Form M-1
filings.\31\
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\31\ These figures are based on calculations from 2018 Form M-1
filing data.
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Plans affected by change in participant-count methodology for
determining large plan versus small plan status and related filing
requirements. As discussed in the NPFR, the Agencies are proposing a
change in the methodology for defined contribution pension plans to
determine whether the plan is a ``large plan'' (generally covers 100 or
more participants) for purposes of Form 5500 annual reporting
requirements, including the requirement to include an IQPA report and
other schedules generally applicable to large pension plans. The plan
size measure for this annual reporting distinction is based on the
total number of participants at the beginning of the plan year and
expressly includes employees eligible to participate in a Code section
401(k) plan (``401(k) plan'') even if the employees has not elected to
participate and does not have an account balance. The proposed change
would use a participant count based on the number of participants at
the beginning of the year with an account balance. Current Form 5500
filings collect the number of participants at the end of the year with
a balance, and does not currently collect such a figure for the
beginning of the plan year. Accordingly, we used the end of year number
of participants with a balance to estimate the number of plans impacted
by this change. The actual number of plans effected could be higher or
lower, depending on a plan's dynamics, but for plans that are growing,
using the end of year number as a proxy for the beginning of year
number could lead to an overestimate of the number of affected plans.
Using the current definitions of large and small plans, there are
84,754 large defined contribution plans and 590,254 small defined
contribution plans. Using the number of participants at the end of the
year with an account balance as a proxy for the new proposed
methodology, there are 65,312 large defined contribution plans and
609,695 small defined contribution plans. This would result in an
estimated 19,442 defined contribution plans that, if the regulations
are finalized as proposed, would be able to file as small plans instead
of large ones and would experience cost savings, including due to being
able to satisfy the conditions for being exempt from the IQPA report
and from including the Schedules of Assets as part of their annual
report.
Benefits
Benefits of Changes for Pooled Employer Plans. The SECURE Act
established a new type of ERISA-covered defined contribution pension
plan, the pooled employer plan, that is established and maintained by a
pooled plan provider that meets the conditions of the statute. By
creating the pooled employer plan structure, the SECURE Act permitted
multiple unrelated employers to participate without the need for any
common interest among the employers (other than having adopted the
plan). As discussed above, pooled employer plans need to provide ERISA
section 103(g) participating employer information, as well as certain
basic information regarding the pooled plan provider. Potentially
increased reporting costs for those employers choosing to offer
retirement benefits to their employees through participating in a
pooled employer plan would be offset by other cost reductions or
business benefits relative to not having administer an individual plan
as further discussed below.
By participating in a pooled employer plan, employers could
minimize their fiduciary responsibilities for ongoing administration
and operation of the plan. Employers could benefit from reduced risk
and liability because the pooled plan provider would bear most of the
administrative and fiduciary responsibility for operating the pooled
employer plan, including hiring and monitoring the 3(38) investment
manager. Similarly, because the pooled plan provider handles the
administrative tasks such as participant communications, plan
recordkeeping, submitting the Form 5500 and complying with plan audits,
this could increase the operating efficiency for participating
employers. Also, as they
[[Page 51293]]
are expected to be professional plan providers, it is anticipated that
a pooled plan provider, relative to a small employer, would ensure that
more accurate and complete data is reported to the DOL on the Form
5500. Further, as discussed in the regulatory impact analysis to the
regulation establishing the Form PR, pooled employer plans generally
would benefit from scale advantages, including the ability to obtain
lower fees for investment options.\32\ The marginal costs for pooled
employer plans would diminish and pooled plan providers would spread
fixed costs over a larger pool of member employers and employee
participants, creating direct economic efficiencies. Szapiro's research
finds that the per-employer cost of a large MEP can be lower than the
cost of a small single employer plan.\33\ Specifically, the study finds
that a MEP with $125 million and 80 participating companies cost 78
basis points, whereas a single-employer plan with $1.5 million cost 111
basis points. Thus, compared to single-employer plans, MEPS can be a
more cost-efficient option for small employers. The increased economic
efficiency may result in small businesses being able to compete more
easily with larger companies in recruiting and retaining workers due to
a competitive employee benefit package. Finally, pooled employer plans
may enable participants to achieve better retirement outcomes.
VanDerhei's research finds that the adoption of a MEP in which the
members do not need to share a common interest, other than
participating in the same plan, with a 25 percent opt-out rate among
employees, results in an overall 1.4 percent reduction in the
retirement savings deficit, compared to when a MEP is not adopted.\34\
The study also finds a 3.1 percent reduction in the retirement savings
deficit for individuals working for employers with fewer than 100
employees and 3.3 percent reduction in the retirement savings deficit
for individuals working for employers with 100 to 500 employees.
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\32\ 85 FR at 72949-72950.
\33\ Szapiro, Aron, ``Pooled Employer Plans: Paperwork or
Panacea.'' Accessible at <a href="https://www.morningstar.com/lp/paperwork_or_panacea">https://www.morningstar.com/lp/paperwork_or_panacea</a>.
\34\ VanDerhei, Jack. ``How Much More Secure Does the SECURE Act
Make American Workers: Evidence from EBRI's Retirement Security
Projection Mode.'' EBRI Issue Brief. No 501 (2020). VanDerhei refers
to MEPs in which the members do not need to share a common interest
as ``Open MEPs.'' (Available at <a href="https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_501_secure-20feb20.pdf?sfvrsn=db6f3d2f_4">https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_501_secure-20feb20.pdf?sfvrsn=db6f3d2f_4</a> (Accessed July 21, 2021.)).
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Benefits of Establishing the Proposed Schedule MEP. A benefit of
the proposed Schedule MEP would provide a unified vehicle to report
information related to new SECURE Act provisions, including information
unique to MEPs. The participating employer information collected
pursuant to section 103(g) of ERISA would also be data capturable and
available at publicly viewable website containing images of the Form
5500 and related data sets. That public data would help protect plan
participants and beneficiaries by allowing for improved analysis for
oversight and research purposes by the government, the regulated
community, and other interested stakeholders.
Benefits of DCGs. The proposal would update Form 5500 annual
reporting requirements to establish requirements pursuant to section
202 of the SECURE Act for a consolidated return/report to provide
eligible individual account plans with an alternative method of
compliance with annual reporting requirements that would otherwise
mandate a separate annual report for each plan. The consolidated
reporting option for defined contribution pension plans also allows for
more choice and flexibility in the reporting of information to the
government. Eligible plans can choose, based on benefits and
preferences, if they want to continue with the plan filing as
individual plan or as part of a DCG. Plans whose individual reporting
obligations would be satisfied by a DCG annual return/report filing may
see a reduction in reporting costs depending on their circumstances.
The proposal includes the proposed Schedule DCG to provide
individual plan-level information for those defined contribution
pension plans whose annual reporting requirement would be satisfied by
a DCG's consolidated filing. The uniformity of the DCG arrangement
structure and the benefits of consolidated reporting may reduce the
complexity and administrative burden of plans. Also, by having a common
plan administrator who is expected to be a professional service
provider filing on behalf of a group, it may increase the likelihood
that more accurate and complete data is reported to the DOL. As a
result, there may be an increase in annual reporting compliance and
compliance with applicable ERISA requirements in general. Additionally,
the Schedule DCG would help the Agency compare individual plan
participation and aggregate asset and liability information from year-
to-year. The Schedule DCG would include many of the questions that are
currently required on the Form 5500-SF, and for large plans, the
Schedule H questions regarding the report of an IQPA, as well as an
IQPA report. While this requirement reduces the cost saving of filing
as a DCG, the DOL and the IRS (collectively ``Departments'') believe
the information requested is consistent with the SECURE Act provision
permitting the Departments to collect whatever plan level information
is needed to perform adequate oversight and vital to provide to
participants, beneficiaries, and the Departments information needed to
adequately monitor the plans and keep track of their assets from year
to year.
In light of changes in the financial environment and increasing
concern about investments in hard-to-value assets and alternative
investments, the proposed requirement that plans participating in DCGs
must have investments that meet the currently applicable ``eligible
plan investment'' criteria for filing a Form 5500 is important for
regulatory, enforcement, and disclosure purposes. The proposal would
also add trust questions to the Form 5500, the Form 5500-SF, and, the
IRS Form 5500-EZ, regarding the name of the plan's trust, the trust's
employer identification number (EIN), the name of the trustee or
custodian, and the trustee's or custodian's telephone number. This
information will enable the Agencies to focus more efficiently on
compliance concerns for retirement plan trusts, including those for
pooled employer plans and DCG reporting arrangements.
Changes to Method of Determining Small Plan Status for Certain
Filing Exemptions and Requirements: As described in the NPFR, the
proposal would change the current method of counting covered
participants for purposes of determining when a defined contribution
plan may file as a small plan and whether the plan may be exempt from
the IQPA audit requirements generally applicable to large defined
contribution pension plans. Under the proposal, defined contribution
pension plans, including 401(k) plans and 403(b) plans, would determine
whether they have to file as a large plan and whether they have to
attach an IQPA report based on the number of participants with account
balances as of the beginning of the plan year. Currently, the IQPA
requirement includes the total number of eligible participants at the
beginning of the plan year, even if the participant is not making
contributions, receiving employer contributions, or maintaining an
account in the plan. Further, some stakeholders have suggested that
section 112 of the SECURE Act could make it even more likely that a
plan with a small number of active participants
[[Page 51294]]
might be required to bear the cost of an audit based on eligible, but
not participating employees being counted toward the audit threshold.
Specifically, because section 112 provides that, beginning January 1,
2024, long-term, part time workers that have reached the plan's minimum
age requirement and have worked at least 500 hours in each of three
consecutive 12-months period must be permitted to make elective
contributions to a section 401(k) qualified cash or deferred
arrangement, there could be more employees eligible to participate that
would elect not to do so. This change in counting methodology would
result in not counting, for this annual reporting purpose, those long-
term, part time workers who are eligible to make elective contributions
to a 401(k) plan, but have not in fact elected to participate in the
plan. The DOL expects that excluding from the participant count
participants who are eligible to participate but do not have an account
balance at any time during the plan year will reduce expenses of
establishing and maintaining a retirement plan, and as a consequence,
encourage more employers to offer workplace-based retirement savings
plans to their employees.
Improving Consistency and Enhancing Usability of Data Filed on the
Schedules of Assets. The financial information reported on the Form
5500 Annual Return/Report, particularly the asset/liability statement,
contained in the current Schedule H (Large Plan Financial Information),
Schedule I (Small Plan Financial Information), as well as the more
recently established Form 5500-SF, is based on data elements that have
remained largely unchanged since the Form 5500 Annual Return/Report was
established in 1975. Many investments in alternative and hard-to-value
assets and held in collective investment funds do not fit squarely into
any of the existing reporting categories on data captured financial
schedules filed with the Form 5500 (Schedule H for large plans and
Schedule I for small plans). The GAO has expressed concerns that many
investments with widely varying risk, return, and disclosure
considerations are often reported in the catchall ``other plan asset''
category.\35\ GAO also noted that the plan asset categories on the
Schedule H are not representative of current plan investments, and
provide little insight into the investments themselves, the level of
associated risk, or structures of the investments.\36\ The DOL-OIG have
also recommended that the Agencies revise the Form 5500 Annual Return/
Report to improve reporting of hard-to-value assets and alternative
investments.\37\ As part of their overall evaluation of how best to
structure financial reporting for pooled employer plans, MEPs, and DCG
reporting arrangements to maximize usable data while limiting burden
increases, the Agencies decided, as discussed in detail earlier in this
document and the Notice of Proposed Forms Revisions published
simultaneously, to propose format, data element and instruction changes
to the Schedule H, Line 4i Schedule of Assets Held for Investment and
the Schedule of Assets Acquired and Disposed of Within the Plan Year.
Although driven by an interest in ensuring transparency and financial
accountability for pooled employer plans, MEPs, and DCG reporting
arrangements, the rationales for the changes applied more generally to
large pension and retirement savings plans. These changes apply to
large plans required to file the Schedules of Assets and would not
increase the annual reporting burden for small plans. The proposed
changes to the Schedule H Line 4i Schedules of Assets, in addition to
better meeting the needs of the Agencies, other government users, and
other end users of the data, should serve to address the shortcomings
identified in these reports. The basic objective of general financial
reporting is to provide information about the reporting entity for the
Agencies' enforcement, research, and policy formulation programs, for
other Federal agencies, Congress, and the private sector in assessing
employee benefit, tax, and economic trends and policies; and for plan
participants and beneficiaries and the general public in monitoring
employee benefit plans. Making consistent the financial reporting
instruments would bring greater transparency to plan transactions,
which would enhance the efficiency of the Agencies' enforcement
efforts. Specifically, the Agencies would be better able to focus their
enforcement efforts, which will reduce the number of investigations
involving plans that are not engaging in problematic activities.
Additionally, ERISA Section 513(a) authorizes and directs the Secretary
of Labor and EBSA to conduct a research program on employee benefits.
The Form 5500 Annual Return/Report is one of the leading sources of
data used in this research program. Making uniform and receiving in a
data searchable way the financial information reported on the Form 5500
Annual Return/Report would improve the quality of the research
conducted by internal and external researchers. This improved research,
in turn, would improve the quality of policy decisions made by DOL and
other governmental policymakers that rely on the Form 5500 Annual
Return/Report data.
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\35\ GAO Targeted Revisions Could Improve Usefulness of Form
5500 Information, at 12.
\36\ Id.
\37\ EBSA Needs to Provide Additional Guidance and Oversight to
ERISA Plans Holding Hard-To-Value Alternative Investments,
Department of Labor Office of Inspector General Report Number: 09-
13-001-12-121 at 4, 18, and 19.
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Benefits of Maintaining Participating Employer Information for
MEWAs and Expanding It to Non-Plan MEWAs that Provide Medical Benefits.
The proposal, as described in the NPFR, would add new questions to the
Form M-1 and instructions to require MEWAs (plan and non-plan) that
offer or provide coverage for medical benefits to provide multiple
employer participating employer information on the Form M-1 and not as
an attachment to the Form 5500 Annual Return/Report. Plan MEWAs that
provide other benefits and thus are not required to file a Form M-1
(i.e., life and disability benefits) would continue to report the
participating employer information as an attachment to the Form 5500
Annual Return/Report.
The proposal would also change which MEWAs are required to report
the participating employer information. The current Form 5500
requirement for MEPs to report participating employer information
applies to plan MEWAs only. Non-plan MEWAs providing health benefits
would now have to provide the information. Based on 2018 Form M-1
filings, there were 640 plan MEWAs and 47 were non-plan MEWAs.\38\ The
proposal, by transferring the participating employer information from
the Form 5500 Annual Return/Report to the Form M-1 for MEWAs that offer
or provide coverage for medical benefits and continuing to require
reporting of participating employer information on the Form 5500 Annual
Return/Report for plan MEWAs that provide other benefits, would enable
the Agencies to receive participating employer information from both
plan and non-plan MEWAs, regardless of how they are funded or
structured. This would help the Agencies better monitor activities of
MEWAs and protect plan beneficiaries.
---------------------------------------------------------------------------
\38\ These calculations are based on internal Department
calculations based on 2018 Form M-1 filings. See the affected
entities section for more information.
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[[Page 51295]]
Internal Revenue Code-Based Questions for the 2022 Form 5500s. In
the NPFR, several questions are being proposed to be added to the 2022
Form 5500s to help identify plans that are more likely to experience
compliance issues, and help the IRS more effectively conduct
investigations. Section III.F of the preamble to the NPFR provides a
description of these proposed Code-based questions. The proposal, as
set forth in the NPFR, would add a nondiscrimination and coverage test
question to Form 5500 and Form 5500-SF that was on the Schedule T
before it was eliminated. The question asks if the employer aggregated
plans in testing whether the plan satisfied the nondiscrimination and
coverage tests of Code sections 401(a)(4) and 410(b). Adding this
question will allow EP to identify these plans for examination. This
question is also helpful when performing pre-audit analysis and allows
the IRS to narrow any inquiries for information that is requested from
the plan sponsor. The restoration of this question also reflects the
elimination of optional coverage and nondiscrimination demonstrations
in the IRS determination letter process. See Rev. Proc. 2012-6, 2012-1
I.R.B. 235 and Announcement 2011-82, 2011-52 I.R.B. 1052.
The proposal, as described in the NPFR, would add a question to
Form 5500 and Form 5500-SF, for 401(k) plans asking whether the plan
sponsor used the design-based safe harbor rules or the ``prior year''
ADP, or ``current year'' ADP test, or if it is not applicable. A plan
that performs ``prior year'' or ``current year'' ADP testing is more
likely to have compliance issues than a plan with a ``designed-based
safe harbor.'' Adding this question, would allow EP to identify 401(k)
plans that use ADP testing for examination over plans that have
designed-based safe harbors. This question would also help the IRS
perform pre-audit analysis and for design-based safe harbor plans allow
us to verify whether allocations of required safe harbor contributions
comply with the terms of the plan; and whether proper notice
requirement is satisfied on an annual basis.
Finally, the proposal, as indicated in the NPFR, would add a
question to Form 5500 and the Form 5500-SF asking whether the employer
is an adopter of a pre-approved plan that received a favorable IRS
Opinion Letter, the date of the favorable Opinion Letter, and the
Opinion Letter serial number.\39\ This question would help the IRS
identify whether a plan sponsor has adopted a pre-approved plan and to
determine whether the plan was adopted timely in accordance with the
Code section 401(b) remedial amendment period. This question would also
assist IRS in determining whether to select a plan for examination as a
late amender for changes in the law.
---------------------------------------------------------------------------
\39\ IRS is proposing to make a parallel update to the Form
5500-EZ, which is solely in the jurisdiction of the IRS.
---------------------------------------------------------------------------
Defined Benefit Plan/Title IV Questions for the 2022 Form 5500s:
The proposed changes to the Form 5500 Schedules MB, SB, and R would
help remedy data and information inadequacies, increasing plans'
transparency, enable Agencies to project more precisely defined benefit
pension plans' and insurance programs' liabilities, and help the PBGC
more effectively conduct investigations and better protect plan
participants and beneficiaries.
Schedule MB collects actuarial information on multiemployer defined
benefit plans and certain money purchase plans. By revising line 6 and
clarifying the expense load percentage calculation, the Agencies would
be able to easily identify the expense load and more accurately project
plan liabilities to model the impact of additional employers
withdrawing from the plan in the future. The proposed changes to the
schedule would provide greater transparency in the actuarial status and
the actuarial assumptions of the plans. Based on reviewing previously
filed Schedules MB responses to line 4f, it appears to the Agencies
that there is some confusion as to how to fill out line 4f of Schedule
MB correctly, as some of the responses do not make sense. Clarification
of the instructions and line language is intended to remove potential
confusion and provide more consistent and correct responses.
Schedule SB collects actuarial information on single-employer
defined benefit plans. The proposed changes would better align filing
requirements for single-employer defined benefit plans with the more
detailed requirements for PBGC-insured multiemployer plans. As with the
proposed changes to the Schedule MB, these proposed changes would allow
for greater transparency in the actuarial status and the actuarial
assumptions of the plans.
Schedule R collects information on retirement plans. Previously,
multiemployer defined-benefit pension plans were required to report
identifying information about any employer whose contributions to the
plan exceeded five percent of total annual contribution. The regulation
proposes, instead, to require plans to report identifying information
on any employer who (1) contributed more than five percent of the
plan's total contributions or (2) was one of the top ten highest
contributors. This would provide greater transparency on contributors
and ensure that reported data represents a reasonable sampling of
contributors.
The proposed regulation also proposes changes in format for certain
attachments. EFAST2 filers currently file some Form 5500 attachments as
PDF and plain text files. Due to the nature of the attachments, they
often include many numbers that are difficult to extract from these
file types. There is consideration being given to steps that could be
taken to allow more integration of common tabular formats (spreadsheet)
such as Comma Separate Value(s) (CSV). As this is not being considered
as a requirement at this point, plans would not incur an additional
cost if such functionality were made available. Rather, the Agencies
expect this option may simplify the process for preparing and filing
attachments.
1.3. Cost Estimates and Savings
The DOL anticipates that the costs for plans to satisfy their
annual reporting obligations would on average decrease under these
proposed regulations relative to the current regime.\40\ As shown in
Table 1 below, the aggregate annual cost of such reporting under the
current regulations and forms is estimated to be $514.8 million
annually, shared across the 822,100 filers subject to the filing
requirement.
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\40\ The DOL believes that the annual cost burden on filers
would be higher still in the absence of the regulations enabling use
of the Form 5500 Annual Return/Report in lieu of the statutory
requirements. Without the Form 5500 Annual Return/Report, filers
would not have the benefits of any regulatory exceptions, simplified
reporting, or alternative methods of compliance, and standardized
and electronic filing methods.
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The DOL estimates that the regulations and forms revisions in this
proposed rule would impose an annual burden of $514.1 million on
804,100 filers, for a total decrease of $64.6 million annually, $63.9
million annually in audit cost savings and $0.7 million annually in
other reporting costs. This proposal makes important changes to the
requirements currently in effect while also allowing for the number of
small plans and large plans to change for annual reporting purposes.
The DOL estimates that a total of 17,601 small plans and 563 large
plans would opt to join either a DCG or a pooled employer plan, and
therefore have their filing requirement fulfilled by these
[[Page 51296]]
entities. The DOL also estimates that 19,442 large plans would be re-
defined and file as small plans as a result of the change in the
current threshold for determining when a defined contribution plan may
file as a small plan.
Table 1--Estimated Burden Change by Type of Filer
All Proposed Changes
----------------------------------------------------------------------------------------------------------------
Number of Number of
filers under filers under Aggregate cost Aggregate cost Aggregate cost
Type of plan current proposed under current under proposed change
(thousands) (thousands) (millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 146.8 126.9 $268.8 $260.3 -$8.4
Small Plans..................... 666.1 667.9 234.7 235.2 0.5
DFEs............................ 9.3 9.4 11.4 18.6 7.2
-------------------------------------------------------------------------------
All Plans................... 822.1 804.1 514.8 514.1 -0.7
----------------------------------------------------------------------------------------------------------------
Audit Cost -63.9
----------------------------------------------------------------------------------------------------------------
Overall Total -64.6
----------------------------------------------------------------------------------------------------------------
Note: Some displayed numbers do not sum up to the totals due to rounding.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.
To estimate the net change in cost burden, as a result of the
interaction of the proposed changes, the DOL has also analyzed the cost
impact of the individual revisions on classes of filers. In doing so,
the DOL took account of the fact that various types of plans would be
affected by more than one revision and that the sequence of multiple
revisions would create an interaction in the cumulative burden on those
plans. The total changes in Table 1 show the accumulated changes. The
other tables below show only the impact of a single change at a time
from the status quo; therefore, the tables cannot be added to arrive at
the estimates in Table 1.
Schedule MEP and Pooled Employer Plans. The proposed new Schedule
MEP would be filed by all MEPs, including pooled employer plans, and
includes participating employer information already filed as an
attachment, as well as limited specific reporting requirements for
pooled employer plans. The information on participating employers would
then be data-readable, whereas currently it is only included as a
nonstandard attachment. As discussed in the affected entities section,
estimates are available for MEPs that have filed a Form 5500
previously, but not for the newly created pooled employer plans that
have yet to file a Form 5500. The impacts of the DOL recent rulemaking
on association retirement plans and PEO MEPs also carries some
uncertainty regarding the number of MEPs that may be affected.
Approximately 50 entities have filed the Form PR to register as pooled
plan providers. Therefore, for purposes of this analysis, the DOL
assumes there would be a total of 75 pooled employer plans. As it is
the case with MEPs, joining a pooled employer plan translates into less
plan maintenance expenditures given that MEPs can take advantage of
economies of scale. Additionally, in the DOL's view, the information
requested on the Schedule MEP should already be available to plans, so
the burden is primarily entering the information onto the form. The
burden to file the Schedule MEP is estimated to average 10 minutes for
MEPs and 14 minutes for pooled employer plans, with variation depending
on the number of participating employers.
Although the DOL does not know for certain how many plans would
decide to offer benefits through a pooled employer plan, it is assumed
that the current average number of participating employers in a MEP is
indicative of the average number of employers that would eventually be
in any particular pooled employer plan that may be established in the
future. The DOL estimates that MEPs, on average, have nine employers
participating in a MEP with fewer than 100 participants and two
employers with 100 or more participants. The DOL uses these measures as
estimates for most of the upcoming pooled employer plans, therefore
assuming that, for most pooled employer plans, on average there would
be nine small participating plans and two large participating plans per
pooled employer plan. Combined with one pooled plan provider registrant
that has already listed 2000 participating employers, it is estimated
that a total of 2,251 small participating plans and 563 large
participating plans would provide benefits through pooled employer
plans.\41\ The DOL assumes this would result in a direct decrease of
2,251 defined contribution Form 5500-SF filers and a decrease of 563
Form defined contribution 5500 filers. As Table 2 shows this would
result in a reporting cost reduction of $1.5 million (not including the
audit cost reduction in Table 1) and a total reduction of filers from
822,100 to 819,400 filers. Such a reduction in filers would be
partially offset by an increase in pooled employer plan filings. We are
not, however, able to explicitly measure the net impact on filings
because of the uncertainty
[[Page 51297]]
regarding the number of pooled employer plans and the resulting
increase in pooled employer plan filings. The DOL requests comments on
these estimates.
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\41\ For the calculation of the total number of participating
employers in pooled employer plans, it is first assumed that 80
percent of all the employers who would participate in a pooled
employer plan are currently providing benefits through small plans,
and that the remaining 20 percent through large plans. This
distribution would apply to the registrant that has already
exceptionally listed 2000 employers (which would then be divided in
1600 small participating plans and 400 large participating plans)
and to the other 74 pooled plan providers assumed to be created. It
is also assumed that each one of these other 74 pooled plan
providers would be servicing in total 11 employers. Therefore, the
total number of small participating plans in a pooled employer plan
is calculated as: 1,600 + (74 * 11 * 0.8) = 2,251 (rounded).
Similarly, the total number of large participating plans is
calculated as 400 + (74 * 11 * 0.2) = 563 (rounded).
Table 2--Estimated Burden Change by Type of Filer
Introduction of Pooled Employer Plans and Schedule MEP Filing
----------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Number of Number of reporting cost reporting cost Aggregate cost
Type of plan filers under filers under under current under proposed change
current rules proposed rules rules rules (millions)
(thousands) (thousands) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 146.8 146.3 $268.8 $267.9 -$0.9
Small Plans..................... 666.1 663.8 234.7 234.0 -0.7
DFEs............................ 9.3 9.3 11.4 11.4 0.0
-------------------------------------------------------------------------------
Overall Total............... 822.1 819.4 514.8 513.3 -1.5
----------------------------------------------------------------------------------------------------------------
Note: Some displayed numbers do not sum up to the totals due to rounding.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.
DCG filings. As discussed above, a DCG filing for a group of plans
has the potential to reduce reporting burden as only one Form 5500 is
filed and signed by a common plan administrator so signatures from
separate administrators of the participating plans are not needed.
Offsetting these cost savings would be the burden from the consolidated
Form 5500 filed by the DCG, including the Schedule DCG to report
individual plan information for each participating plans. There are
499,234 small defined contribution plans that file the Form 5500-SF and
report the plan characteristic code 3D; the DOL assumes this type of
plan may find it advantageous to adopt this new structure of providing
benefits and therefore a fraction of them will join a DCG. The DOL
seeks comments on these assumptions.\42\
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\42\ The DOL acknowledges that there could be other employers
whose plans are outside the category of small defined contribution
type, which currently file the Form 5500-SF and report plan
characteristic 3D, that might also find an advantage in joining a
DCG and therefore start providing benefits this way.
---------------------------------------------------------------------------
The change in burden from allowing a DCG to file on behalf of plans
is estimated in the following manner. Apart from the 499,234 small
defined contribution mentioned above, there are 1,813 pre-approved
plans.\43\ While the DOL does not know if all 1,813 pre-approved plans
actually would file on behalf of these 499,234 plans, if they did there
would be an average of 275 plans per pre-approved filer. These pre-
approved filers are the likeliest entities to file as a DCG. Although
DOL lacks sufficient information to confidently estimate how many DCGs
will form, the 50 entities that have filed the Form PR to register as a
pooled plan provider, so far, may be suggestive of the number of
entities currently seeking to take advantage of new structures to
reduce plan administrative costs. Potential DCGs may be better
positioned than pooled plan providers to commence operations as they
already have client plans that could benefit from the savings and do
not have to switch plans. Therefore, the DOL assumes that twice the
number of DCGs (100) would form in the first year as the number of
pooled plan providers (50). With the availability of DCGs as an option,
some service providers may discontinue their provision of individual
Form 5500 filing services, and only offer to file as DCGs. Some plans
that contract with such service providers may choose to be moved into
DCG filings, while others may seek out new service providers because
they don't wish to comply with the additional filing obligations placed
on DCG filers. For purposes of this analysis, we assume that
approximately half of the plans currently associated with a pre-
approved plan provider would be offered the opportunity and would agree
to comply with the DCG requirements to stay with the same provider. The
DOL then uses these results to assume 100 DCGs with a total of 15,350
small plans whose annual return/report filing obligation would be
satisfied by the filing of a DCG Form 5500.
---------------------------------------------------------------------------
\43\ <a href="https://www.irs.gov/retirement-plans/pre-approved-retirement-plans">https://www.irs.gov/retirement-plans/pre-approved-retirement-plans</a>.
---------------------------------------------------------------------------
As described above, the consolidated return/report that would need
to be filed by the DCG to satisfy the annual reporting requirements of
participating plans would have to include a Schedule DCG for each
participating plan. The cost calculation must therefore take into
account cost of this schedule per plan participating in a DCG. The DOL
believes that once individual plans join a DCG, the average cost of
filing a Schedule DCG, which would be done for each one of the
estimated 15,350 participating plans, would be lower than the cost of
filing a Form 5500-SF separately, which cost was incurred by a small
plan before joining a DCG. Although the DOL does not know how much
lower this new cost would be, it estimates that completing a schedule
DCG as part of the DCG's Form 5500 annual return/report would take
about 40 percent less time than completing a Form 5500-SF for each
individual plan.
As Table 3 shows, assuming the number of DCGs and plans per DCG as
described above, along with the estimated cost of filing schedule DCG,
the DOL expects an overall cost reduction of $1.6 million. This cost
reduction assumes, as baseline, the current definition of large and
small plans, and would be the result of a decrease in the number of
Form 5500-SF filers, from 666,100 to 650,700. Such a reduction in
filers would be partially offset by an increase in DFE filings, which
reflects the introduction of DCGs as filing entities.
[[Page 51298]]
Table 3--Estimated Burden Change by Type of Filer
Introduction of DCGs and Schedule DCG Filing
----------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Number of Number of reporting cost reporting cost Aggregate cost
Type of plan filers under filers under under current under proposed change
current rules proposed rules rules rules (millions)
(thousands) (thousands) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 146.8 146.8 $268.8 $268.8 $0.0
Small Plans..................... 666.1 650.7 234.7 230.1 -4.6
DFEs............................ 9.3 9.4 11.4 14.3 2.9
-------------------------------------------------------------------------------
Overall Total............... 822.1 806.9 514.8 513.1 -1.6
----------------------------------------------------------------------------------------------------------------
Note: Some displayed numbers do not sum up to the totals due to rounding.
Large plans--100 participants or more.
[ssquf] Small plans--generally fewer than 100 participants.
As noted above, there is substantial uncertainty regarding these
estimates. The DOL specifically seeks comments on estimates of the
number of DCGs, the number of plans joining those DCGs, and the cost of
filing a schedule DCG compared to filing a Form 5500-SF, and the
overall cost burden savings due to plans joining a DCG.
Revised financial reporting on the Schedule H: Revising the
Schedule H Line 4i Schedules of Assets to make it data-capturable to
increase the accessibility to this information, including information
regarding hard-to-value assets, would increase costs. Without altering
the current definition of large and small plans, the DOL estimates that
the effect of this change would be to increase the total burden by
370,253 hours, which reflects the increase in burden that large plans
and DFEs, both as typical filers of Schedule H, would face. As Table 4
shows, in total this change would translate into an increase of filing
costs of $41 million (which represents an estimated cost of
approximately $260 per large plan/DFE potentially required to file the
Schedules of Assets). The Department seeks comments on the increase in
burden for entities filing the Schedule H, and if that burden will
decrease over time.
Table 4--Estimated Burden Change by Type of Filer
Revised Financial Reporting on the Schedule H
----------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Number of Number of reporting cost reporting cost Aggregate cost
Type of plan filers under filers under under current under proposed change
current rules proposed rules rules rules (millions)
(thousands) (thousands) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 146.8 146.8 $268.8 $305.4 $36.7
Small Plans..................... 666.1 666.1 234.7 234.7 0.0
DFEs............................ 9.3 9.3 11.4 15.6 4.3
-------------------------------------------------------------------------------
Overall Total............... 822.1 822.1 514.8 555.7 41.0
----------------------------------------------------------------------------------------------------------------
Note: Some displayed numbers do not sum up to the totals due to rounding.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.
Changes to Methodology for Determining Small Plan Status for
Purposes of Annual Report Filing Requirements: The proposal would adopt
the change described in the NPFR to the current method of counting
participants for purposes of determining when a defined contribution
plan may file as a small plan and whether the plan may be exempt from
the IQPA audit requirement. Specifically, the proposal would allow
plans to count just the number of participants/beneficiaries with
account balances as of the beginning of the plan year, as compared to
the current rule that counts all the employees eligible to participant
in the plan by adding to the Form 5500 and Form 5500-SF a new question,
for defined contribution pension plans only, asking for the number of
participants with account balances at the beginning of the plan year.
This change would reduce costs for plans. The additional question
imposes little burden as the end-of year number is already tracked and
reported, but to plans who now qualify as small instead of large,
savings could be significant. EBSA estimates that the typical reporting
burden of all required schedules for a small pension plan is $348. In
contrast, the typical reporting burden of all required schedules for a
large pension plan is currently estimated by EBSA to be $1,903. While
there would be a cost reduction, these plans and their participants
would no longer have the protections provided by the audit, which could
result in an increased risk of errors and fraud, but there are
conditions for small plans to be eligible for the audit waiver that are
designed to address those potential risks. In the case of small pension
plans, to be eligible for the audit waiver small pension plans must
meet conditions related to investment assets, financial institutions
holding plan assets, disclosures to participants and beneficiaries, and
enhanced fidelity bonding for persons who handle certain assets. In the
case of welfare plans, both large and small plans, the plan must be
fully insured or unfunded to be eligible for the audit waiver.
Consistent with the Department's goal of encouraging pension plan
establishment and maintenance, particularly in the small business
community, the Department
[[Page 51299]]
concluded that engaging an accountant should not be the only means by
which the security of small plan assets can be adequately protected.
Rather, in developing the proposed regulation, consistent with the
existing regulatory conditions for the small plan audit waiver, the
Department attempted to balance the interest in providing secure
retirement savings for participants and beneficiaries with the interest
in minimizing costs and burdens on small pension plans and the sponsors
of those plans.
The DOL estimates that there could be a reduction of 20,005 large
plans filing under the proposed regulations, 19,442 defined
contribution plans due to the changing definition of who can file as a
small plan, and 563 large participating plans that could provide
benefits through pooled employer plans. An estimated 11,362 of these
plans currently provide the IQPA report and audited financial
statements and would therefore save in audit costs.\44\ The Department
estimates that there could be an audit cost reduction of $7,500 for
each one of these 11,362 plans. Plans may still conduct an audit, even
if there is no requirement. It is estimated that 25 percent of plans
could still conduct an audit.\45\ Data on the cost of an audit for
these plans is not known and will vary based on plan size and
complexity. An estimate of $7,500 is used to estimate the cost
savings.\46\ The Department seeks comment on the size of the costs
savings. Cost savings of $63.91 million annually is estimated for the
8,522 plans (11,362 * 0.75) that will no longer be required to conduct
an audit. These cost-savings are reported in Table 1 above.
---------------------------------------------------------------------------
\44\ To estimate the number of large plans currently providing
the IQPA report and audited financial statements the DOL identified
those large plans that would be most likely to be re-defined as
small plans and to have filed the Schedule H in 2018, as estimated
on the 2018 Form 5500 Pension Research Files. Note that the 80 to
120 participant transition provision at 29 CFR 2520.103-1(d) allows
a plan that covers fewer than 100 participants to continue taking
advantage of the simplified option or exemption, as applicable,
until they reach 121 participants, therefore not all plans with 100
or more participants will file a plan in a given year.
\45\ See <a href="http://Mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms">http://Mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms</a>.
\46\ A report by Mathematica suggests audit costs of between
$3,000 and $30,000. Adjusted for inflation this would be about
$5,000 to $50,000 in 2021 dollars. <a href="https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms">https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms</a>. See also
<a href="http://www.paychex.com/retirement-services/pooled-employer-plans">www.paychex.com/retirement-services/pooled-employer-plans</a> (accessed
July 21, 2021) which suggest $10,000 to $20,000. Additionally
conversations with stake holders suggest a range similar to the
$10,000 to $20,000. As the affected plans are expected to be small,
the low estimates are averaged ($5,000 and $10,000) to arrive at
$7,500.
---------------------------------------------------------------------------
As discussed above there are an estimated 19,442 defined
contribution plans that would now be able to file as a small plan.
Other reporting cost savings for these plans are based on their filing
the Form 5500-SF instead of the Form 5500 and the correspondent
schedules. As shown in Table 5, the DOL estimates that this
redefinition of small and large alone would translate into a decrease
of filing costs of $29.4 million, with a reduction from 146,800 to
127,400 in large plan filers. The DOL requests comments on this
estimate.
Table --Estimated Burden Change by Type of Filer
Changes to Filing Exemptions and Requirements for Small Plans
----------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Number of Number of reporting cost reporting cost Aggregate cost
Type of plan filers under filers under under current under proposed change
current rules proposed rules rules rules (millions)
(thousands) (thousands) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 146.8 127.4 $268.8 $233.6 -$35.2
Small Plans..................... 666.1 685.5 234.7 240.4 5.8
DFEs............................ 9.3 9.3 11.4 11.4 0.0
-------------------------------------------------------------------------------
Overall Total............... 822.1 822.1 514.8 485.4 -29.4
----------------------------------------------------------------------------------------------------------------
Note: Some displayed numbers do not sum up to the totals due to rounding.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.
Changes for MEWAs that file the Form M-1. As set forth in the NPFR,
the proposal would update the Form M-1, transferring the multiple
employer participating employer information questions from the Form
5500 to the Form M-1 for MEWAs (plan and non-plan) that offer or
provide coverage for medical benefits and continued reporting of
participating employer information on the Form 5500 Annual as an
attachment for plan MEWAs that provide other benefits. The current Form
5500 requirement for MEPs to report participating employer information
applies to plan MEWAs offering all types of benefits--not just those
that provide group health plans. The DOL estimates that the change in
burden would be de minimis for these plans.
However, non-plan MEWAs providing health benefits would now have
the added burden of providing the participating employer information.
The DOL assumes that non-plan MEWAs already have access to this
information, and reporting it would not add a substantive burden to
these entities' reporting costs.
Internal Revenue Code and ERISA Title IV Proposed Changes. As
described the NPFR, the proposal includes changes related to Internal
Revenue Code requirements and reporting requirements for defined
benefit pensions subject to filing Schedules MB, SB, and R. The
Agencies' believe the additional questions reflect information plans
should know and expect that reporting this information would result in
a de minimis marginal burden.
Assumptions, Methodology, and Uncertainty: The cost and burden
associated with the annual reporting requirement for any given plan
depend upon the specific information that must be provided, given the
plan's characteristics, practices, operations, and other factors. For
example, a small, single-employer defined contribution pension plan
eligible to file the Form 5500-SF should incur far lower costs than a
large, multiemployer defined benefit pension plan that holds multiple
insurance contracts, engages in reportable transactions, and has many
service providers that each received over $5,000 in compensation. The
DOL separately considered the cost to different types of plans in
arriving at its aggregate cost estimates. The DOL's basis for these
estimates follows.
[[Page 51300]]
Assumptions Underlying this Analysis: The DOL's analysis assumes
that all benefits and costs would be realized in the first year of the
reporting cycle to which the changes apply and within each year
thereafter. This assumption is premised on the requirement that each
plan will be required to file the Form 5500 Annual Return/Report. The
DOL has used a ``status quo'' baseline for this analysis, assuming that
the world in the future, absent the proposed regulations, will resemble
the present. The DOL does not anticipate that there will be material
one-time transition cost for learning or updating systems during the
first year in which the reporting changes apply. The proposal would
largely apply requirements currently in effect for large MEPs to pooled
employer plans and DCGs. The financial services providers and
recordkeepers that be sponsoring such plans and DCGs generally are
already providing Form 5500 filings services for the employee benefit
plans they service so we do not anticipate material start-up costs for
them to file Form 5500s on behalf of pooled employer plans or DCGs. We
also do not anticipate that individual plans that participate in a DCG
reporting arrangement would expend more time to supply information to
DCG reporting arrangements during the first year than what they
currently incur to supply annual reporting data to service provides
that prepare their annual reports (and may in fact incur less time even
during the first year). Similarly, the creation of the Schedule MEP
mostly reorganizes the way annual reporting data is provided by
affected plans, rather than adding significant additional information
collection. Similarly, the changes to the content of the Schedules of
Assets are calling for reporting of a very limited number of data
elements that plans should already have as part of the ordinary
business records. The DOL also expects that the formatting changes
being proposed to make the Schedules of Assets more usable will match
formatting that filers already use to file various other schedules,
and, accordingly, they would not involve material costs for learning or
system adjustments. Moreover, the DOL is proposing to permit (but not
require) certain attachments to Schedule MB and SB to be provided in a
tabular format (spreadsheet) rather than PDF or TXT formats. The DOL
solicits comments on whether filers would want a similar option for the
Schedules of Assets and whether they believe such an option would
reduce reporting burdens, including any potential transition cost.
Further, with respect to the limited number of additional questions for
defined benefit pension plans and Code-related questions for pension
plans relate to existing compliance obligations, those questions should
not entail material start-up or learning costs. We also do not
anticipate material transition costs related to the proposed changes
related to reporting participating employer information which largely
apply existing requirements in the context of a new schedule for some
filers and as an attachment to current filings for others. Nonetheless,
the DOL specifically solicits comments on whether plans or groups of
plans anticipate a material increase in such transition costs during
the first year.
Methodology: Mathematica Policy Research, Inc. (MPR) developed the
underlying cost data, which has been used by the Agencies in estimating
burden related to the Form 5500 Annual Return/Report since 1999. See 65
FR 21068, 21077-78 (Apr. 19, 2000); Borden, William S., Estimates of
the Burden for Filing Form 5500: The Change in Burden from the 1997 to
the 1999 Forms, Mathematica Policy Research, submitted to DOL May 25,
1999.\47\ The cost information was derived from surveys of filers and
their service providers, as modified due to comments, which were used
to measure the unit cost burden of providing various types of
information. The DOL has adjusted these unit costs since 1999 to
account for changes to the forms and schedules and increases in the
cost of labor and service providers since MPR developed the initial
data.
---------------------------------------------------------------------------
\47\ The MPR report can be accessed at <a href="https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms">https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms</a>. See also Technical
Appendix: Documentation of Form 5500 Revision Burden Model at
<a href="http://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/technical-appendices">www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/technical-appendices</a>.
---------------------------------------------------------------------------
For this forms revision, the DOL used the adjusted MPR unit cost
data for pension and non-health welfare plans. The DOL developed the
unit cost data for group health plans using the best available data. To
develop unit costs for DFEs, the DOL created weighted averages of the
unit costs for plans.
To obtain filer counts for pension plans, welfare plans, and DFEs,
the DOL used historical counts of Form 5500 Annual Return/Report filers
tabulated by type and reported characteristics.
The DOL modeled its approach to calculating burden on the approach
used during the 2009 forms revision and the 2016 modernization
proposal.\48\ Aggregate burden estimates were produced in both
revisions by multiplying the unit cost measures by the filer count
estimates. The methodology is described in broad terms below.
---------------------------------------------------------------------------
\48\ See 72 FR 64731 (Nov. 16, 2007) and 81 FR 47496 (July 16,
2016).
---------------------------------------------------------------------------
To estimate aggregate burdens, types of plans with similar
reporting requirements were grouped together in various groups and
subgroups. Calculations of aggregate cost were prepared for each of the
various subgroups both under requirements in effect prior to this
action and under the forms as revised. The universe of filers was
divided into four basic types: Defined benefit pension plans, defined
contribution pension plans, welfare plans, and DFEs. For the plans,
each of these major plan types was further subdivided into
multiemployer and single-employer plans.\49\ Since the filing
requirements differ substantially for small and large plans, the plan
types were also divided by plan size. For large plans (100 or more
participants), the defined benefit plans were further divided between
very large (1,000 or more participants) and other large plans (at least
100 participants, but fewer than 1,000 participants). Small plans (less
than 100 participants) were divided similarly, except that they were
divided into Form 5500-SF eligible and Form 5500-SF ineligible plans,
as applicable. Welfare plans were divided into group health plans and
plans that do not provide any group health benefits, while plans that
provide group health benefits and have fewer than 100 participants were
divided into fully insured group health plans and unfunded, combination
unfunded/fully insured plans, or funded with a trust group health
plans. DFEs were divided into Master Trusts/MTIAs, CCTs, PSAs, 103-12
IEs, GIAs, and DCGs. For each of these sets of respondents, burden
hours per respondent were estimated for the Form 5500 Annual Return/
Report itself and up to seven schedules or the Form 5500-SF (and the
Schedule SB, for Form 5500-SF eligible defined benefit pension plans).
---------------------------------------------------------------------------
\49\ For purposes of this analysis, multiple employer plans were
treated as single employer plans.
---------------------------------------------------------------------------
We also separately estimated the costs for each of the forms and
schedules that are part of the Form 5500 Annual Return/Report. When
items on a schedule are required by more than one Agency, the estimated
burden associated with that schedule is allocated among the Agencies.
This allocation is based on how many items are required by each agency.
The burden associated with reading the instructions
[[Page 51301]]
for each item also is tallied and allocated accordingly.
The reporting burden for each type of plan is estimated in light of
the circumstances that are known to apply or that are generally
expected to apply to such plans, including plan size, funding method,
usual investment structures, and the specific items and schedules such
plans ordinarily complete. For example, a large single-employer defined
benefit pension plan that is intended to be tax-qualified that has
insurance products among its investments and whose service providers
received compensation above the Schedule C reporting thresholds would
be required to submit an annual report completing almost all the line
items of the Form 5500, plus Schedule A (Insurance Information),
Schedule SB (Single Employer Defined Benefit Plan Actuarial
Information), Schedule C (Service Provider Information), possibly the
Schedule G (Financial Transaction Schedules), Schedule H (Financial
Information), and Schedule R (Retirement Plan Information), and would
be required to submit an IQPA report. In this way, the Agencies intend
meaningfully to estimate the relative burdens placed on different
categories of filers.
Burden estimates were adjusted for the proposed revisions to each
schedule, including items added or deleted in each schedule and items
moved from one schedule to another.
The DOL has not attributed a recordkeeping burden to the 5500 Forms
in this analysis or in the Paperwork Reduction Act analysis because it
believes that plan administrators' practice of keeping financial
records necessary to complete the 5500 Forms arises from usual and
customary management practices that would be used by any financial
entity and does not result from ERISA or Code annual reporting and
filing requirements.
The aggregate baseline burden is the sum of the burden per form and
schedule as filed prior to this action multiplied by the estimated
aggregate number of forms and schedules filed.\50\ The DOL estimated
the burden impact of changes in the numbers of filings and of changes
made to the form and the various schedules. The burden estimates use
data from the Form 5500 Annual Return/Report for plan year 2018, which
is the most recent year for which complete data is available.
---------------------------------------------------------------------------
\50\ Some filers are eligible to file the Form 5500-SF, but
choose to file a Form 5500 and attach Schedule I and/or other
schedules because they find it less burdensome to do so in their
particular situation. Counts of these filings are adjusted to
reflect what they would have filed if they had chosen to file the
Form 5500-SF.
---------------------------------------------------------------------------
1.4. Uncertainty
The SECURE Act created pooled employer plans and directed the
Departments to make available consolidated reporting for defined
contribution pension plans that meet certain requirements. Due to these
proposed rules designed to implement the SECURE Act, as well as the
DOL's final rules with respect to association retirement plans and PEO-
sponsored plans, the DOL assumes that these types of entities will file
a Form 5500 and report the number of participating employers, numbers
of covered participants, and amount of assets in the future. However,
until they file, the Departments face significant uncertainty about the
number of each type of entity and whether they are merely providing
coverage in a different manner than was already provided by employers
to their employees through single employer plans or already existing
MEPs (including association retirement plans and PEOs) or whether with
the availability of additional commercial arrangements and plans, more
employers will establish plans for their employees.
While pooled plan providers have filed a Form PR and list plans
they are forming, they do not report the number of participating
employers. The DOL has identified 611,568 defined contribution plans
that reported code 3D, of which 499,234 are considered small defined
contribution plans filing the Form 5500-SF as possible plans that could
join a DCG or a pooled employer plan. However, the decision depends not
only on cost savings, and administrative ease, but also on employers'
preferences and perceptions about the advantages and disadvantages of
joining either group or neither.
The Departments request information that will help improve its
current estimates of the numbers of affected entities, employers and
the burdens they will experience due to these proposed rules.
1.5. Alternatives
As described above, the DOL proposed changes to Title I annual
reporting requirements primarily are designed to implement statutory
changes enacted as part of the SECURE Act. The DOL considered several
alternative approaches to address these statutory changes, including:
<bullet> Not requiring an audit for large plans that are part of a
DCG reporting arrangement, and instead requiring just an audit of the
DCG's trust. Including more or fewer questions on the Schedule DCG and
the Schedule MEP.
<bullet> Including more or fewer questions for defined benefit
plans on issues under Title IV of ERISA or questions for retirement
plans on Internal Revenue Code compliance issues.
<bullet> Not adding new content elements to the Schedules of Assets
and not requiring the Schedules of Assets to be filed in a data-
capturable format.
<bullet> Not changing the methodology for participant count for
determining whether a defined contribution retirement plan is subject
to the annual reporting requirements applicable to large plans versus
small plans.
<bullet> Allowing a DCG with under 100 total participants to file
as a small plan rather than requiring all DCGs to generally follow the
annual reporting requirements applicable to large plans--i.e., Form
5500, Schedule A (if applicable), Schedule I, Schedule R (if
applicable)--no IQPA audit, and no detailed supplemental schedules.
<bullet> Not requiring non-plan MEWAs and/or non-group health MEWA
plans report the participating plan information on the Form M-1 and
Form 5500, respectively.
While slightly less burdensome than the proposed rule's requirements,
requiring fewer data elements or less transparent and usable data
filing requirements would provide substantially less information to the
DOL, which would impede its ability to fulfill its critical oversight
role of protecting participants and plan assets. Employers in DCGs and
MEPs also would receive less information to survey the market when
choosing a DCG or pooled plan provider or deciding whether to continue
to rely on an existing provider. Less information and less usable data
filing requirements would also not have as effectively served the
interests of other users of Form 5500 data, including the IRS, PBGC,
other Federal agencies, Congress, and the private sector who use the
Form 5500 filings as an important source of information and data in
assessing employee benefit, tax, and economic trends and policies.\51\
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\51\ Section 1 of ERISA states the ``Congressional findings and
declaration of policy.'' Of relevance to our consideration of these
alternatives, section (b) states, in relevant part: ``It is hereby
declared to be the policy of this chapter to protect interstate
commerce and the interests of participants in employee benefit plans
and their beneficiaries, by requiring the disclosure and reporting
to participants and beneficiaries of financial and other information
with respect thereto . . . .'' 29 U.S.C. 1001(b).
---------------------------------------------------------------------------
2. Paperwork Reduction Act Statement
As part of its continuing effort to reduce paperwork and respondent
[[Page 51302]]
burden, the DOL conducts a preclearance consultation program to allow
the general public and Federal agencies to comment on proposed and
continuing collections of information in accordance with the Paperwork
Reduction Act of 1995 (PRA).\52\ This helps to ensure that requested
data will be provided in the desired format, reporting burden (time and
financial resources) will be minimized, collection instruments will be
clearly understood, and the impact of collection requirements on
respondents is properly assessed. Currently, the DOL is soliciting
comments concerning the proposed revision of the Form 5500 Annual
Return/Report, which is an information collection request (ICR) subject
to the PRA. The accompanying Notice of Proposed Forms Revisions
includes a separate PRA discussion that includes tables breaking out
the average time for filing the Form 5500, Form 5500-SF, and each
schedule, broken down by pension plans (sub-grouped by large plans
filing the Form 5500, small plan filing the Form 5500, small plan
filing the Form 5500-SF), welfare plans that include health benefits
(sub-grouped by large plans and small, unfunded, combination unfunded/
fully insured, or funded with a trust 5500-SF), welfare plans that do
not include health benefits (sub-grouped by large plans filing the Form
5500, small plan filing the Form 5500, small plan filing the Form 5500-
SF), and DFEs (sub-grouped by master trusts, CCTs, PSAs, 103-1IEs,
GIAs, and DCGs). The discussion also includes a table with the
estimated PRA burdens attributable the Form 5500 Annual Return/Report
broken down by the portions allocated to the DOL and the IRS. The DOL
is also submitting revisions to the Form M-1 and Summary Annual Report
ICRs. A copy of the ICRs may be obtained by contacting the person
listed in the PRA Addressee section below. The DOL has submitted a copy
of the proposed revisions to the Office of Management and Budget (OMB)
in accordance with 44 U.S.C. 3507(d) for its review of the DOL's
information collection. The DOL and OMB are particularly interested in
comments that:
---------------------------------------------------------------------------
\52\ 44 U.S.C. 3506(c)(2)(A) (1995).
---------------------------------------------------------------------------
<bullet> Evaluate whether the collection of information is
necessary for the functions of the agency, including whether the
information will have practical utility;
<bullet> Evaluate the accuracy of the agency's estimate of the
burden of the collection of information, including the validity of the
methodology and assumptions used;
<bullet> Enhance the quality, utility, and clarity of the
information to be collected; and
<bullet> Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology (e.g., permitting
electronically delivered responses).
Comments should be sent to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503 and marked ``Attention: Desk
Officer for the Employee Benefits Security Administration.'' Comments
can also be submitted by Fax: 202-395-5806 (this is not a toll-free
number), or by email: <a href="/cdn-cgi/l/email-protection#4906001b08163a3c2b24203a3a2026270926242b672c2639672e263f"><span class="__cf_email__" data-cfemail="6c23253e2d331f190e01051f1f0503022c03010e4209031c420b031a">[email protected]</span></a>. OMB requests that
comments be received by October 15, 2021, which is 30 days from
publication of the proposed rule to ensure their consideration.
PRA Addressee: Address requests for copies of the ICRs to James
Butikofer, Office of Regulations and Interpretations, U.S. Department
of Labor, Employee Benefits Security Administration, 200 Constitution
Avenue NW, Room N-5655, Washington, DC 20210. Telephone: (202) 693-
8410; Fax: (202) 219-4745; Email: <a href="/cdn-cgi/l/email-protection#e085829381ce8f9092a0848f8cce878f96"><span class="__cf_email__" data-cfemail="f194938290df9e8183b1959e9ddf969e87">[email protected]</span></a>. These are not toll-
free numbers. ICRs submitted to OMB also are available at <a href="http://www.RegInfo.gov">http://www.RegInfo.gov</a>.
3. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \53\ imposes certain
requirements with respect to Federal rules that are subject to the
notice and comment requirements of section 553(b) of the Administrative
Procedure Act \54\ and are likely to have a significant economic impact
on a substantial number of small entities. Unless an agency determines
that a proposal is not likely to have a significant economic impact on
a substantial number of small entities, section 603 of the RFA requires
the agency to present an initial regulatory flexibility analysis (IRFA)
of the proposed rule. The DOL has determined that this proposed rule is
likely to have a significant impact on a substantial number of small
entities. Therefore, the DOL provides its IRFA of the proposed rule,
below.
---------------------------------------------------------------------------
\53\ 5 U.S.C. 601 et seq. (1980).
\54\ 5 U.S.C. 551 et seq. (1946).
---------------------------------------------------------------------------
For purposes of this IRFA, an entity is considered a small entity
if it is an employee benefit plan with fewer than 100 participants.\55\
The definition of small entity considered appropriate for this purpose
differs, however, from a definition of small business that is based on
size standards promulgated by the Small Business Administration (SBA)
(13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 631 et
seq.). The basis of EBSA's definition of a small entity for this IRFA
is found in section 104(a)(2) of ERISA, which permits the Secretary to
prescribe simplified annual reports for pension plans that cover fewer
than 100 participants. The DOL has consulted with the SBA Office of
Advocacy concerning use of this participant count standard for RFA
purposes.\56\ The DOL seeks comment on the appropriateness of
continuing to use this size standard.
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\55\ While some large employers may have small plans, in
general, small employers maintain most small plans. The Form 5500
Annual Return/Report impacts any employer in any private sector
industry who chooses to sponsor a plan. The DOL is unable to locate
any data linking employer revenue to plans to determine the
relationship between small plans and small employers in industries
whose SBA size standard is revenue-based. For a separate project,
the DOL purchased data on ESOPs that file the Form 5500 and on
defined contribution pension plans that file the Form 5500-SF from
Experian Information Solutions, Inc. The Experian dataset provides
the number of employees for the plan sponsor. By merging these data
with internal DOL data sources, the DOL determined the relationship
between small plans and small employers in industries whose SBA size
standard is based on a threshold number of employees that varies
from 100 to 1,500 employees. Based on these data, the DOL estimates
that over 97 percent of small retirement plans and over 80 percent
of small health plans are sponsored by employers with fewer than 100
employees. The DOL estimates that over 99 percent of small
retirement plans and over 97 percent of small health plans are
sponsored by employers with fewer than 1,500 employees. Thus, the
DOL believes that assessing the impact of these proposed rules on
small plans is an appropriate substitute for evaluating the effect
on small entities.
\56\ Memorandum received from the U.S. Small Business
Administration, Office of Advocacy on July 10, 2020.
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The following subsections address specific components of an IRFA,
as required by the RFA.
3.1. Need for and Objectives of the Rule
This proposal would amend the DOL's reporting regulations relating
to the annual reporting and disclosure requirements to implement the
forms changes that are set forth in the NPFR published concurrently
with this notice of proposed rulemaking. DOL strives to tailor
reporting requirements to minimize reporting costs, while ensuring that
the information necessary to secure ERISA rights is adequately
available. The optimal design for reporting requirements changes over
time. In addition, the technologies available to manage and transmit
information continually advance.
[[Page 51303]]
Therefore, it is incumbent on the Agencies to revise their reporting
requirements from time to time to keep pace with such changes. The
proposed forms revisions, and associated DOL regulatory amendments in
the proposal, are intended to implement the reporting requirements
required by the SECURE Act, taking into account certain recent changes
in markets, other law, and technology, many of which are referred to
above in this document.
3.2. Affected Small Entities
The proposal would change the current method of counting covered
participants for purposes of determining when a defined contribution
plan may file as a small plan and whether the plan may be exempt from
the audit requirement from the current requirement. Specifically, the
proposal would allow plans to count just the number of participants/
beneficiaries with account balances as of the beginning of the plan
year, as compared to the current rule that counts all the employees
eligible to participant in the plan. This change would allow an
estimated 19,442 large defined contribution plans to be re-defined and
file as small defined contribution plans. The estimated distribution of
these plans by amount of assets is shown in Table 6.
Table 6--Distribution of Large DC Pension Plans To Be Redefined as Small Filers, by Type of Plan and Amount of
Assets, 2018
----------------------------------------------------------------------------------------------------------------
Single- Multiemployer Multiple-
Amount of assets Total employer plans plans employer plans
----------------------------------------------------------------------------------------------------------------
Total Plans.................................. 19,442 18,974 134 334
None or not reported......................... 50 50 ................. ..............
$1-24K....................................... 221 220 ................. 1
25-49K....................................... 183 182 ................. 1
50-99K....................................... 312 306 2 4
100-249K..................................... 816 800 3 13
250-499k..................................... 1,276 1,260 2 14
500-999K..................................... 2,561 2,522 4 34
1-2.49M...................................... 6,158 6,049 3 106
2.5-4.9M..................................... 4,790 4,683 7 100
5-9.9M....................................... 2,316 2,259 10 48
10-24.9M..................................... 592 556 27 10
25-49.9M..................................... 80 53 25 2
50-74.9M..................................... 26 12 14 ..............
75-99.9M..................................... 12 6 6 ..............
100-149.9M................................... 9 6 3 ..............
150-199.9M................................... 13 4 9 ..............
200-249.9M................................... 8 3 5 ..............
250-499.9M................................... 12 1 11 ..............
500-999.9M................................... 4 3 1 ..............
1-2.49B...................................... 2 1 1 ..............
----------------------------------------------------------------------------------------------------------------
As described in the regulatory impact analysis, above, the DOL
estimates that 100 DCGs will form in the first year, filing for 15,350
small plans. These plans would no longer need to file a Form 5500 or
Form 5500-SF; their DCG filing a complete Form 5500 Annual Return/
Report in accordance with its instructions, including the requirement
to include the proposed Schedule DCG for each individual participating
plan, would satisfy the reporting requirements for those plans. There
also may be some cases in which sponsors of small plans decide to
instead participate in the pooled employer plan, which would also
result in a number of small plans either being terminated or possibly
merged into the pooled employer plan and no longer filing a Form 5500
or Form 5500-SF. As discussed above, the DOL is estimating that 2,251
small employers/plans will join a pooled employer plan.\57\
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\57\ For the calculation of the total number of employers in
pooled employer plans it is first assumed that 80 percent of all the
employers who would participate in a pooled employer plan are
currently providing benefits through small plans, and the remaining
20 percent through large plans. This distribution would apply to the
registrant that has already exceptionally listed 2000 employers
(which would then be divided in 1600 small participating plans and
400 large participating plans) and to the other 74 pooled plan
providers assumed to be created. As explained, it is also assumed
that each one of these other 74 pooled plan providers would be
servicing in total 11 employers. Therefore, the total number of
small participating plans in a pooled employer plan is calculated
as: 1,600 + (74 * 11 * 0.8) = 2,251 (rounded).
---------------------------------------------------------------------------
Due to the change in the requirements to be considered a small plan
on the basis of account balance, in total, approximately 609,695
defined contribution pension plans covering fewer than 100 participants
with account balances would be eligible to comply with annual reporting
requirements applicable to small plans, where previously approximately
590,254 defined contribution plans were filing as small plans. In this
regard, in total there would be now 648,837 small plans where
previously were 629,397. Estimates of the number of small pension plans
are based on 2018 Form 5500 filing data.
Additionally, the proposed changes in annual reporting requirements
would affect MEWAs. In the 2018 calendar year, there were 143 plan
MEWAs and six non-plan MEWAs with fewer than 100 participants that
filed a Form M-1.\58\
---------------------------------------------------------------------------
\58\ These calculations are based on internal DOL calculations
based on 2018 Form M-1 filings. In 2018, of the 640 total plan
MEWAs, 143 reported having fewer than 100 participants, of which 69
had zero participants. Of the 47 non-plan MEWAs, six reported having
fewer than 100 participants all of which had zero participants.
---------------------------------------------------------------------------
3.3. Impact of the Rule
While many small plans could experience a reduced burden as a
result of the proposed changes, it is the 20,005 large plans filing
under the proposed regulations, that we estimate would experience a
significant impact. Specifically, 19,442 defined contribution plans due
to the change in the definition of who can file as a small plan and be
eligible for an audit waiver,
[[Page 51304]]
and 563 large participating plans that could provide benefits through
pooled employer plans and be covered by the pooled employer plan single
audit rather than a separate audit if they sponsored their own single
employer plan. An estimated 11,362 of those affected large plans
currently provide the IQPA report and audited financial statements that
would save in audit costs under the proposal.\59\ There is variation in
filing requirements based on the characteristics of a plan and types of
assets held. However, these plans would no longer need to attach the
IQPA report (audit) and other schedules required of large plans with
its annual return/report. As described earlier in this document,\60\
the Department estimates that there could be an audit cost reduction of
$7,500 for each one of these 11,362 plans. Plans may still conduct an
audit, even if there is no requirement. It is estimated that 25 percent
of plans could still conduct an audit. Data on the cost of an audit for
these plans is not known and will vary based on plan size and
complexity. An estimate of $7,500 is used to estimate the cost savings
per year. These plans also would no longer be required to file the
Schedule H, but would need to file the Schedule I. The difference in
burden between filing Schedule H and Schedule I is estimated to be $770
per year.\61\
---------------------------------------------------------------------------
\59\ To estimate the number of large plans currently providing
the IQPA report and audited financial statements the DOL identified
those large plans are most likely to be re-defined as small plans
and have filed Schedule H in 2018, as estimated on the 2018 Form
5500 Pension Research Files. Note that an 80 to 120 participant
transition provision allows a plan that covers fewer than 100
participants to continue taking advantage of the simplified option
or exemption, as applicable, until they reach 121 participants,
therefore not all plans with 100 or more participants will file a
plan in a given year.
\60\ See fns. 47-49 supra.
\61\ The methodology DOL uses results in estimates that it will
take a small pension plan approximately 12 hours to file a Schedule
H, compared to two hours and six minutes to file a Schedule I. See
``Methodology'' section starting, supra, at page 56 for a discussion
of the burden estimating methodology.
---------------------------------------------------------------------------
Table 6 above shows that number of plans by the amount of assets in
the plans. This shows an estimate of 5,369 plans (those with less than
$1 million in assets) that would see a costs savings of about one
percent of plan assets.\62\
---------------------------------------------------------------------------
\62\ Plan asset data reflects data reported on 2018 Form 5500
filings.
---------------------------------------------------------------------------
The establishment of DCGs, the use of Schedules DCG ($178 per
plan), Schedule MEP ($20 for most MEPs and $26 per pooled employer
plan), and the other changes could impact a substantial number of small
plans, as discussed above, but the impacts per plan are small in
magnitude and do not meet the qualifications for a significant impact
for this analysis.
3.4. Duplicate, Overlapping, or Relevant Federal Rules
The DOL is unaware of any relevant Federal rules for small plans
that duplicate, overlap, or conflict with these regulations.
3.5. Description of Steps Taken To Minimize the Impact on Small
Entities
These proposed regulations and related changes to the Form 5500
Annual Return/Report generally implement or otherwise relate to SECURE
Act changes to ERISA and the Code, and do not include significant
modifications to existing small plan simplified reporting options other
than expanding the number of plans that will be eligible for simplified
reporting options by reason of the proposed change in the method of
counting participants for determining small plans versus large plan
status. Small pension plans that are invested in ``eligible'' plan
assets and otherwise meet certain requirements are able to use a
simplified reporting option of filing Form 5500-SF, which was
established by regulation in part to comply with provisions of the
Pension Protection Act requiring a simplified form of reporting for
plans with fewer than 25 participants. In light of the fact that the
majority of small plans required to file an ERISA annual report cover
fewer than 25 participants, the simplified reporting option also
constitutes the Department's efforts to further reduce the information
collection burden for small business concerns with fewer than 25
employees, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506 (c)(4). The Department, in
developing the proposed regulatory changes for Form 5500 filings by
DCGs, carried forward an audit waiver for small plans participating in
a DCG consolidated Form 5500 filing. We also, in developing the
Schedule MEP filing requirements for pooled employer plans and other
MEPs, did not expand small plan reporting requirements. We generally
limited the information collection to consolidating information onto
the Schedule MEP information that is already reported elsewhere by MEPs
on the current Form 5500, as discussed elsewhere in this preamble and
in the NPFR. Overall, the DOL believes that the proposed changes to the
reporting requirements reduce the burden on small plans, while allowing
the DOL to collect sufficient information for it to fulfill its
statutory responsibilities.
4. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 requires each
Federal agency to prepare a written statement assessing the effects of
any Federal mandate in a proposed or final agency rule that may result
in an expenditure of $100 million or more (adjusted annually for
inflation with the base year 1995) in any one year by State, local, and
tribal governments, in the aggregate, or by the private sector.\63\ For
purposes of the Unfunded Mandates Reform Act, as well as Executive
Order 12875,\64\ this proposal does not include any Federal mandate
that the DOL expects would result in such expenditures by State, local,
or tribal governments, or the private sector.
---------------------------------------------------------------------------
\63\ 2 U.S.C. 1501 et seq. (1995).
\64\ Enhancing the Intergovernmental Partnership, 58 FR 58093
(Oct. 28, 1993).
---------------------------------------------------------------------------
5. Federalism Statement
Executive Order 13132 outlines fundamental principles of
federalism, and requires the adherence to specific criteria by Federal
agencies in the process of their formulation and implementation of
policies that have ``substantial direct effects'' on the States, the
relationship between the National Government and States, or on the
distribution of power and responsibilities among the various levels of
government.\65\ Federal agencies promulgating regulations that have
federalism implications must consult with State and local officials and
describe the extent of their consultation and the nature of the
concerns of State and local officials in the preamble to the rule.
---------------------------------------------------------------------------
\65\ Federalism, supra note 6.
---------------------------------------------------------------------------
In the DOL's view, these proposed regulations would not have
federalism implications because they would not have direct effects on
the States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among
various levels of government. These proposed rules do not have
federalism implications because they would have no substantial direct
effect on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Section 514 of
ERISA provides, with certain exceptions specifically enumerated, that
the provisions of Titles I and IV of ERISA supersede any and all laws
of the States as they relate to any employee benefit plan covered under
ERISA. The requirements proposed to be
[[Page 51305]]
implemented in these rules do not alter the fundamental provisions of
the statute with respect to employee benefit plans, and as such would
have no implications for the States or the relationship or distribution
of power between the National Government and the States. The DOL
welcomes input from affected States regarding this assessment.
List of Subjects in 29 CFR Part 2520
Accounting, Employee benefit plans, Freedom of information,
Pensions, Public assistance programs, Reporting and recordkeeping
requirements.
For the reasons discussed in the preamble, 29 CFR part 2520 is
proposed to be amended as follows:
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
0
1. The authority citation for part 2520 is revised to read as follows:
Authority: 29 U.S.C. 1002(44), 1021-1025, 1027, 1029-31, 1059,
1134, and 1135; and Secretary of Labor's Order 1-2011, 77 FR 1088.
Sec. 2520.101-2 also issued under 29 U.S.C. 1132, 1181-1183, 1181
note, 1185, 1185a-b, 1191, and 1191a-c. Sec. 2520.101-5 also issued
under 29 U.S.C. 1021 note; sec. 501, Pub. L. 109-280, 120 Stat. 780;
sec. 105(a), Pub. L. 110-458, 122 Stat. 5092. Secs. 2520.102-3,
2520.104b-1, and 2520.104b-3 also issued under 29 U.S.C. 1003, 1181-
1183, 1181 note, 1185, 1185a-b, 1191, and 1191a-c. Secs. 2520.104b-1
and 2520.107 also issued under 26 U.S.C. 401 note; sec. 1510, Pub.
L. 105-34, 111 Stat. 1068.
0
2. In Sec. 2520.103-1, revise paragraphs (a)(2), (b) introductory
text, (b)(1), (c)(1), (c)(2)(i), and (c)(2)(ii)(D) and (E) and add
paragraphs (c)(2)(ii)(F) and (G) to read as follows:
Sec. 2520.103-1 Contents of the annual report.
(a) * * *
(2) Under the authority of subsections 104(a)(2), 104(a)(3), and
110 of the Act, section 1103(b) of the Pension Protection Act of 2006,
and section 202 of the SECURE Act, a simplified report, limited
exemption, or alternative method of compliance is prescribed for
employee welfare and pension benefit plans, as applicable. A plan
filing a simplified report or electing the limited exemption or
alternative method of compliance shall file an annual report containing
the information prescribed in paragraph (b) or (c) of this section, as
applicable, and shall furnish a summary annual report as prescribed in
Sec. 2520.104b-10.
(b) Contents of the annual report for plans with 100 or more
participants electing the limited exemption or alternative method of
compliance. Except as provided in paragraphs (d) and (f) of this
section and in Sec. Sec. 2520.103-2, 2520.103-14, and 2520.104-44, the
annual report of an employee benefit plan covering 100 or more
participants at the beginning of the plan year which elects the limited
exemption or alternative method of compliance described in paragraph
(a)(2) of this section shall include:
(1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan''
and any statements or schedules required to be attached to the form,
completed in accordance with the instructions for the form, including
Schedule A (Insurance Information), Schedule C (Service Provider
Information), Schedule D (DFE/Participating Plan Information), Schedule
G (Financial Transaction Schedules), Schedule H (Financial
Information), Schedule SB (Single-Employer Defined Benefit Plan
Actuarial Information), Schedule MB (Multiemployer Defined Benefit Plan
and Certain Money Purchase Plan Actuarial Information), Schedule MEP
(Multiple Employer Plan), Schedule R (Retirement Plan Information), and
other financial schedules described in Sec. 2520.103-10. See the
instructions for this form.
* * * * *
(c) * * *
(1) Except as provided in paragraphs (c)(2), (d), (e), and (f) of
this section, and in Sec. Sec. 2520.103-14, 2520.104-51, 2520.104-43,
2520.104-44, 2520.104a-6, and 2520.104a-9, the annual report of an
employee benefit plan that covers fewer than 100 participants at the
beginning of the plan year shall include a Form 5500 ``Annual Return/
Report of Employee Benefit Plan'' and any statements or schedules
required to be attached to the form, completed in accordance with the
instructions for the form, including Schedule A (Insurance
Information), Schedule D (DFE/Participating Plan Information), Schedule
I (Financial Information--Small Plan), Schedule SB (Single Employer
Defined Benefit Plan Actuarial Information), Schedule MB (Multiemployer
Defined Benefit Plan and Certain Money Purchase Plan Actuarial
Information), Schedule MEP (Multiple Employer Plan), and Schedule R
(Retirement Plan Information). See the instructions for this form.
(2)(i) The annual report of an employee pension benefit plan or
employee welfare benefit plan and that covers fewer than 100
participants at the beginning of the plan year and that meets the
conditions in paragraph (c)(2)(ii) of this section with respect to a
plan year may, as an alternative to the requirements of paragraph
(c)(1) of this section, meet its annual reporting requirements by
filing the Form 5500-SF ``Short Form Annual Return/Report of Small
Employee Benefit Plan'' and any statements or schedules required to be
attached to the form, Schedule SB (Single Employer Defined Benefit Plan
Actuarial Information) and Schedule MB (Multiemployer Defined Benefit
Plan and Certain Money Purchase Plan Actuarial Information), completed
in accordance with the instructions for the form. See the instructions
for this form.
(ii) * * *
(D) Is not a multiemployer plan;
(E) Is not a plan subject to the Form M-1 requirements under Sec.
2520.101-2;
(F) Is not a multiple employer pension plan, including a pooled
employer plan described in section 3(43) of the Act and a multiple
employer defined contribution pension plan described in Sec. 2510.3-55
of this chapter; and
(G) Is not a DCG reporting arrangement described in Sec. 2520.104-
51.
* * * * *
0
3. In Sec. 2520.103-5, revise paragraph (a) introductory text to read
as follows:
Sec. 2520.103-5 Transmittal and certification of information to plan
administrator for annual reporting purposes.
(a) General. In accordance with section 103(a)(2) of the Act, an
insurance carrier or other organization which provides benefits under
the plan or holds plan assets, a bank or similar institution which
holds plan assets, or a plan sponsor shall transmit and certify such
information as needed by the administrator to file the annual report
under section 104(a)(1) of the Act and Sec. 2520.104a-5, Sec.
2520.104a-6, or Sec. 2520.104a-9:
* * * * *
0
4. In Sec. 2520.103-10:
0
a. Revise paragraphs (a) and (b)(1) and (2);
0
b. Redesignate paragraph (c) as paragraph (d);
0
c. Add a new paragraph (c); and
0
d. In newly redesiganted pargraph (d), remove ``paragraphs (b)(1),
(b)(2) or (b)(6)'' and add ``paragraph (b)(1), (2), or (6)'' in its
place.
The revisions and addition read as follows:
Sec. 2520.103-10 Annual report financial schedules.
(a) General. The administrator of a plan filing an annual report
pursuant to Sec. 2520.103-1(a)(2), the report for a group insurance
arrangement pursuant to Sec. 2520.103-2, or the report for a defined
contribution pension plan
[[Page 51306]]
group (DCG) reporting arrangement pursuant to Sec. 2520.103-14, shall,
as provided in the instructions to the Form 5500 ``Annual Return/Report
of Employee Benefit Plan,'' include as part of the report the separate
financial schedules described in paragraph (b) of this section.
(b) * * *
(1) Assets held for investment. (i) A schedule of all assets held
for investment purposes at the end of the plan year (see Sec.
2520.103-11) with assets aggregated and identified by:
(A) Identity of issue, borrower, lessor or similar party to the
transaction (including a notation as to whether such party is known to
be a party in interest);
(B) Description of investment including maturity date, rate of
interest, collateral, par, or maturity value; (including whether the
investment is a hard-to-value asset);
(C) Cost;
(D) Current value, and, in the case of a loan, the payment
schedule;
(E) The asset category in which the asset was reported on the
Schedule H;
(F) The Central Index Key (CIK) number, Legal Entity Identifier
(LEI) Code, or National Association of Insurance Commissioners (NAIC)
Company Code, or other government registration or identity number for
the investment described in paragraphs (b)(1)(i)(A) and (B) of this
section, or if no government number is available, a market or exchange
registration or identity number; and
(G) In the case of individual account plans, whether the investment
is a designated investment alternative (DIA) or a qualified default
investment alternative (QDIA), and for each such DIA and QDIA with
respect to which the return is not fixed, the total annual operating
expenses on the latest 404a-5 statement provided to participants during
the plan year.
(ii) [Reserved]
(2) Assets acquired and disposed within the plan year. (i) A
schedule of all assets acquired and disposed of within the plan year
(see Sec. 2520.103-11) with assets aggregated and identified by:
(A) Identity of issue, borrower, issuer or similar party;
(B) Descriptions of investment including maturity date, rate of
interest, collateral, par, or maturity value;
(C) Cost of acquisitions; and
(D) Proceeds of dispositions.
(ii) [Reserved]
* * * * *
(c) Presentation of investment assets in commingled trusts and
direct filing entities (DFEs). (1) Except as provided in the Form 5500
and the instructions thereto or for filings by direct filing entities
or DCG reporting arrangements, in the case of assets or investment
interests of two or more plans maintained in one trust, entries on the
schedule of assets held for investment purposes at the end of the plan
year and the schedule of assets acquired and disposed of during the
plan year shall be completed by including the plan's allocable portion
of the trust.
(2) In the case of direct filing entities and DCG reporting
arrangements required to file a schedule of assets held for investment
purposes at the end of the plan year and the schedule of assets
acquired and disposed of during the plan year, the entries on the
schedules shall be completed by including the assets held by the DFE or
in the DCG reporting arrangement's trust and shall include the number
of plans with an allocable interest in each listed investment.
* * * * *
0
5. Add Sec. 2520.103-14 to read as follows:
Sec. 2520.103-14 Contents of the annual report for defined
contribution pension plan group (DCG) reporting arrangements.
(a) General. A defined contribution pension plan group reporting
arrangement as described in Sec. 2520.104-51(c) (``DCG reporting
arrangement'') that files a consolidated annual report pursuant to
Sec. 2520.104-51 shall include in such report the items set forth in
paragraph (b) of this section, and shall furnish a summary annual
report as prescribed in Sec. 2520.104b-10.
(b) Contents of the annual report for DCG reporting arrangement.
(1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' and
any statements or schedules required to be attached to the form,
completed in accordance with the instructions for the form, including
Schedule A (Insurance Information), Schedule C (Service Provider
Information), Schedule D (DFE/Participating Plan Information), Schedule
G (Financial Transaction Schedules), Schedule H (Financial
Information), Schedule DCG (Individual Plan Information), Schedule R
(Retirement Plan Information), and the other financial schedules
referred to in Sec. 2520.103-10, completed in accordance with the
instructions for the form.
(2) A report of an independent qualified public accountant for the
DCG trust.
(3) Separate financial statements for the DCG reporting arrangement
trust described in Sec. 2520.104-51(c)(2)(i) (in addition to the
information required by paragraph (b)(1) of this section), if such
financial statements are prepared in order for the independent
qualified public accountant to form the opinion required by section
103(a)(3)(A) of the Act and paragraph (b)(6) of this section. These
financial statements shall include the following:
(i) A statement of all trust assets and liabilities at current
value presented in comparative form for the beginning and end of the
year. The statement of trust assets and liabilities shall include the
assets and liabilities required to be reported on the Form 5500;
however, the assets and liabilities may be aggregated into categories
in a manner other than that used on Form 5500.
(ii) Separate or combined statements of all trust income and
expenses and changes in net assets, which includes the categories of
income, expense, and changes in assets required to be reported on the
Form 5500; however, the income, expense, and changes in assets may be
aggregated into categories in a manner other than that used on Form
5500.
(4) Notes to the financial statements described in paragraph (b)(1)
or (2) of this section which contain a description of the accounting
principles and practices reflected in the financial statements and, if
applicable, variances from generally accepted accounting principles; a
description of the DCG reporting arrangement including any significant
changes in the arrangement made during the period and the impact of
such changes on benefits; a description of material lease commitments,
other commitments, and contingent liabilities; a description of
agreements and transactions with persons known to be parties in
interest; a general description of priorities upon termination of the
DCG reporting arrangement; an explanation of the differences, if any,
between the information contained in the separate financial statements
and the assets, liabilities, income, expenses and changes in net assets
as required to be reported on the Form 5500; and any other matters
necessary to fully and fairly present the financial condition of the
DCG reporting arrangement.
(5) In the case of a DCG reporting arrangement some or all of the
assets of which are held in a pooled separate account maintained by an
insurance carrier, or in a common or collective trust maintained by a
bank, trust company or similar institution, a copy of the annual
statement of assets and liabilities of such account or trust for the
fiscal year of the account or trust which ends with or within the plan
year for which the annual report is made as required to be furnished by
such account or trust under Sec. 2520.103-5(c). See Sec. Sec.
2520.103-3 and 2520.103-4 for
[[Page 51307]]
reporting requirements for plans some or all of the assets of which are
held in a pooled separate account maintained by an insurance company,
or a common or collective trust maintained by a bank or similar
institution, and see Sec. 2520.104-51(b)(2) for when the term ``DCG
reporting arrangement'' or ``DCG'' shall be used in place of the term
``plan.''
(6) In the case of a plan participating in a DCG reporting
arrangement covering 100 or more participants at the beginning of the
plan year, the Schedule DCG for each participating plan shall include
the following as provided in the instructions to the Schedule DCG:
(i) A report of an independent qualified public accountant for the
participating plan.
(ii) Separate financial statements and financial schedules
described in Sec. 2520.103-10 for the plan, if such financial
statements and schedules are prepared in order for the independent
qualified public accountant to form the opinion required by section
103(a)(3)(A) of the Act and paragraph (b)(6) of this section. The
financial statement shall include the information set forth in Sec.
2520.103-1(b)(2).
(iii) Notes to the financial statements described in paragraph
(b)(2)(i) of this section, which contain the information set forth in
Sec. 2520.103-1(b)(3).
(iv) In the case of a participating plan, some or all of the assets
of which are held in a pooled separate account maintained by an
insurance company, or a common or collective trust maintained by a bank
or similar institution, the information described in Sec. 2520.103-
1(b)(4).
(c) Technical requirements. The accountant's report required for
the DCG trust and any participating plan subject to the requirements in
paragraph (b)(6) of this section--
(1) Shall be dated;
(2) Shall be signed manually;
(3) Shall indicate the city and state where issued;
(4) Shall identify without detailed enumeration the financial
statements and schedules covered by the report;
(5) Shall state whether the audit was made in accordance with
generally accepted auditing standards;
(6) Shall designate any auditing procedures deemed necessary by the
accountant under the circumstances of the particular case, which have
been omitted, and the reasons for their omission. Authority for the
omission of certain procedures which independent accountants might
ordinarily employ in the course of an audit made for the purpose of
expressing the opinions required by paragraph (b)(5)(iii) of this
section is contained in Sec. 2520.103-8; and
(7) Shall state clearly:
(i) The opinion of the accountant in respect of the financial
statements and schedules covered by the report and the accounting
principles and practices reflected therein; and
(ii) The opinion of the accountant as to the consistency of the
application of the accounting principles with the application of such
principles in the preceding year, or as to any changes in such
principles which have a material effect on the financial statements.
(8) Any matters to which the accountant takes exception shall be
clearly identified, the exception thereto specifically and clearly
stated, and, to the extent practicable, the effect of the matters to
which the accountant takes exception on the related financial
statements given. The matters to which the accountant takes exception
shall be further identified as to:
(i) Those that are the result of DOL regulations; and
(ii) All others.
(d) Electronic filing requirement. See Sec. 2520.104a-2 and the
instructions for the Form 5500 ``Annual Return/Report of Employee
Benefit Plan'' for electronic filing requirements. The common plan
administrator for each plan whose reporting obligations are satisfied
by a DCG filing under this section must maintain an original copy of
the DCG filing, with all required signatures, as part of the DCG's
records.
0
6. Add Sec. 2520.104-51 to read as follows:
Sec. 2520.104-51 Alternative method of compliance for defined
contribution pension plan group (DCG) reporting arrangements.
(a) General. Under the authority of section 110 of the Act and
section 202 of the SECURE Act, the plan administrator common to each
plan (``common plan administrator''), as described in paragraph
(c)(2)(iii) of this section, satisfies the obligation to file an annual
report for each of the plans participating in the DCG reporting
arrangement described in paragraph (c) of this section if the
participating plan meets the requirements of paragraph (b) of this
section.
(b) Application. (1) The alternative method of compliance set out
in this section is available only for an individual account or defined
contribution pension plan in a plan year in which:
(i) Such plan participates in a defined contribution pension plan
group (DCG) reporting arrangement described in paragraph (c) of this
section; and
(ii) A consolidated annual report containing the items set forth in
Sec. 2520.103-14 has been filed with the Secretary of Labor in
accordance with Sec. 2520.104a-9 by the common plan administrator (as
described in paragraph (c)(2)(iii) of this section) for all of the
plans participating in the DCG reporting arrangement (as described in
paragraph (c) of this section).
(2) For purposes of this section, the term ``DCG reporting
arrangement'' or ``common plan administrator'' shall be used in place
of the terms ``plan'' and ``plan administrator,'' in Sec. Sec.
2520.103-3, 2520.103-4, 2520.103-6, 2520.103-8, 2520.103-9, and
2520.103-10 and elsewhere in subpart C of this part and this subpart,
as applicable.
(c) Defined contribution pension plan group (DCG) reporting
arrangement. An arrangement is only a ``DCG reporting arrangement'' if
all plans participating in the arrangement--
(1) Are individual account plans or defined contribution plans as
defined in section 3(34) of the Act;
(2) Have--
(i) The same trustee as described in section 403(a) of the Act
(``common trustee'') and trust(s) (``common trust'');
(ii) The same one or more named fiduciaries as described in section
402(a) of the Act (``common named fiduciaries''), except that nothing
in this paragraph (c)(2)(ii) precludes an individual employer acting as
an additional named fiduciary with respect to the individual plan it
sponsors;
(iii) A designated plan administrator that is the same plan
administrator as defined in section 3(16)(A) of the Act (``common plan
administrator''); and
(iv) Plan years beginning on the same date (``common plan year'');
(3) Provide the same investments or investment options (``common
investments or investment options'') to participants and beneficiaries;
and
(4) Have the investment assets held in a single trust of the DCG
reporting arrangement, and the participating plan:
(i) Do not hold any employer securities at any time during the plan
year;
(ii) At all times during the plan year, are 100% invested in assets
that have a readily determinable fair market value as described in
Sec. 2520.103-1(c)(2)(ii)(C);
(iii) Are either audited by an independent qualified public
accountant (IQPA) or satisfies the audit waiver conditions in Sec.
2520.104-46(b)(1)(i)(A)(1) and (b)(1)(i)(B) and (C);
(iv) Are not a multiemployer plan; and
(v) Are not a multiple employer pension plan, including a pooled
employer plan described in section
[[Page 51308]]
3(43) of the Act and multiple employer defined contribution pension
plans described in Sec. 2510.3-55 of this chapter.
(d) Limitations. The alternative method of reporting set out in
this section does not relieve the administrator of a defined
contribution pension plan participating in a DCG reporting arrangement
described in paragraph (c) of this section from any other requirements
of Title I of the Act, including the provisions which require that plan
administrators furnish copies of the summary plan description to
participants and beneficiaries (section 104(b)(1)), furnish certain
documents to the Secretary of Labor upon request (section 104(a)(6)),
authorize the Secretary of Labor to collect information and data from
employee benefit plans for research and analysis (section 513), and
furnish a copy of a summary annual report to participants and
beneficiaries of the plan, as required by section 104(b)(3) of the Act.
0
7. In Sec. 2520.104a-5, revise paragraph (a) introductoty text to read
as follows:
Sec. 2520.104a-5 Annual reporting filing requirements.
(a) Filing obligation. Except as provided in Sec. Sec. 2520.104a-6
and 2520.104a-9, the administrator of an employee benefit plan required
to file an annual report pursuant to section 104(a)(1) of the Act shall
file an annual report containing the items prescribed in Sec.
2520.103-1 within:
* * * * *
0
8. Add Sec. 2520.104a-9 to read as follows:
Sec. 2520.104a-9 Annual reporting for defined contribution pension
plan group (DCG) reporting arrangements.
(a) General. A defined contribution pension plan group (DCG)
reporting arrangement described in Sec. 2520.104-51(c) that files an
annual report in accordance with the terms of paragraphs (b) and (c) of
this section shall be deemed to have filed such a report for purposes
of Sec. 2520.104-51.
(b) Date of filing. The annual report shall be filed within seven
months after the close of the plan year of the DCG reporting
arrangement, unless extended. See ``When to file'' instructions of the
appropriate Annual Return/Report Form.
(c) Where to file. The annual report prescribed in Sec. 2520.103-
14 shall be filed electronically in accordance with the instructions to
the Annual Return/Report Form.
0
9. In Sec. 2520.104b-10:
0
a. In paragraph (d)(3):
0
i. Revise the ``Summary Annual Report for (name of plan)'';
0
ii. Add paragraphs 11 and 12 immediately following paragraph 10 under
``Your Rights to Additional Information''; and
0
iii. Remove the last undesignated paragraph and add two undesignated
paragraphs in its place; and
0
b. Remove the appendix to the section; and
0
c. Add table 1 at the end of the section.
The revisions and additions read as follows:
Sec. 2520.104b-10 Summary Annual Report.
* * * * *
(d) * * *
(3) * * *
Summary Annual Report for (name of plan)
This is a summary of the annual report [insert as applicable either
Form 5500 Annual Return/Report of Employee Benefit Plan or Form 5500-SF
Annual Return/Report of Small Employee Benefit Plan] of [insert name of
plan and EIN/PN] for [insert period covered by this report]. The
[insert as applicable either Form 5500 or Form 5500-SF] annual report
has been filed with the Employee Benefits Security Administration, as
required under the Employee Retirement Income Security Act of 1974
(ERISA). Your plan is a [insert a brief description of the plan based
on the plan characteristic codes listed for the plan on the Form 5500,
including whether it is a defined contribution or defined benefit plan,
and whether the plan is a pooled employer plan, another type of
multiple employer plan, a single employer plan].
[If the plan is participating in a DCG reporting arrangement]:
Your plan participates in an annual reporting arrangement that
files a consolidated Form 5500 Annual Report for all the separate plans
in the arrangement. This summary includes aggregate information on all
the participating plans from the consolidated Form 5500. The
consolidated Form 5500 also includes a separate schedule (Schedule DCG)
for each individual plan. As noted below regarding your rights to
additional information, you have a right to receive a copy of the
Schedule DCG relating to your plan on request from the plan
administrator.]
* * * * *
Your Rights to Additional Information
* * * * *
0
11. a Schedule DCG for plans participating in a consolidated group Form
5500 filing that includes your plan sponsor's name, EIN, total number
of participants in your plan and basic financial information about the
plan.
0
12. a Schedule MEP, including name and EIN of the employers
participating in the MEP, each participating employer's percentage of
the total contributions (employer and employee) made by all employer
participating in the MEP and aggregate account balance for each of the
employer participating in the MEP.
* * * * *
[If the plan is participating in a DCG reporting arrangement]:
You also have the legally protected right to examine the annual
report at the main office of the plan (address), (at any other location
where the report is available for examination), and at the U.S.
Department of Labor in Washington, DC, or to obtain a copy from the
U.S. Department of Labor upon payment of copying costs. Requests to the
Department should be addressed to: Public Disclosure Room, Room N-1513,
Employee Benefits Security Administration, U.S. Department of Labor,
200 Constitution Avenue NW, Washington, DC 20210. The annual report is
also available online at the Department of Labor website
<a href="http://www.efast.dol.gov">www.efast.dol.gov</a>.
* * * * *
Table 1 to Sec. 2520.104b-10--The Summary Annual Report (SAR) Under ERISA: A Cross-Reference to the Annual
Report
----------------------------------------------------------------------------------------------------------------
Form 5500 large plan Form 5500 small plan Form 5500-SF filer line
SAR item filer line items filer line items items
----------------------------------------------------------------------------------------------------------------
A. Pension Plan:
1. Funding arrangement........... Form 5500-9a........... Same................... Not applicable.
2. Total plan expenses........... Sch. H-2j.............. Sch. I-2j.............. Line 8h.
3. Administrative expenses....... Sch. H-2i(5)........... Sch. I-2h.............. Line 8f.
4. Benefits paid................. Sch. H-2e(4)........... Sch. I-2e.............. Line 8d.
[[Page 51309]]
5. Other expenses................ Sch. H--Subtract the Sch. I-2i.............. Line 8g.
sum of 2e(4) & 2i(5)
from 2j.
6. Total participants............ Form 5500-6f........... Same................... Line 5b.
6. Value of plan assets (net):
a. End of plan year.......... Sch. H-1l [Col. (b)]... Sch. I-1c [Col. (b)]... Line 7c [Col. (b)].
b. Beginning of plan year.... Sch. H-1l [Col. (a)]... Sch. I-1c [Col. (a)]... Line 7c [Col. (a)].
8. Change in net assets.......... Sch. H--Subtract 1l Sch. I--Subtract 1c Line 7c--Subtract Col.
[Col. (a)] from 1l [Col. (a) from Col. (a) from Col. (b).
[Col. (b)]. (b)].
9. Total income.................. Sch. H-2d.............. Sch. I-2d.............. Line 8c.
a. Employer contributions.... Sch. H-2a(1)(A) & 2a(2) Sch. I-2a(1) & 2b if Line 8a(1) if
if applicable. applicable. applicable.
b. Employee contributions.... Sch. H-2a(1)(B) & 2a(2) Sch. I-2a(2) & 2b if Line 8a(2) & 8a(3) if
if applicable. applicable. applicable.
c. Participating employer's Sch. MEP Line 2c....... Sch. MEP Line 2c....... Not applicable.
percentage of the total
contributions (employer and
employee) made by all
employers participating in a
MEP.
d. Aggregate account balance Sch. MEP Line 2d....... Sch. MEP Line 2d....... Not applicable.
of the employer
participating in a MEP
(determined as the sum of
the account balances of the
employees of such employer
(including the beneficiaries
of such employees).
e. Gains (losses) from sale Sch. H-2b(4)(C)........ Not applicable......... Not applicable.
of assets.
f. Earnings from investments. Sch. H--Subtract the Sch. I-2c.............. Line 8b.
sum of 2a(3), 2b(4)(C)
and 2c from 2d.
11. Total insurance premiums..... Total of all Schs. A-6b Total of all Schs. A-6b Not applicable.
12. Unpaid minimum required
contribution (S-E plans) or
Funding deficiency (ME plans):
a. S-E Defined benefit plans. Sch. SB-39............. Same................... Same.
b. ME Defined benefit plans.. Sch. MB-10............. Same................... Not applicable.
c. Defined contribution plans Sch. R-6c, if more than Same................... Line 12d.
zero.
13. Individual plan information Schedule DCG........... Same................... Not applicable.
for plans participating in a DCG
reporting arrangement.
B. Welfare Plan:
1. Name of insurance carrier..... All Schs. A-1(a)....... Same................... Not applicable.
2. Total (experience rated and All Schs. A--Sum of Same................... Not applicable.
non-experienced rated) insurance 9a(1) and 10a.
premiums.
3. Experience rated premiums..... All Schs. A-9a(1)...... Same................... Not applicable.
4. Experience rated claims....... All Schs. A-9b(4)...... Same................... Not applicable.
5. Value of plan assets (net):
a. End of plan year.......... Sch. H-11 [Col. (b)]... Sch. I-1c [Col. (b)]... Line 7c [Col. (b)].
b. Beginning of plan year.... Sch. H-11 [Col. (a)]... Sch. I-1c [Col. (a)]... Line 7c [Col. (a)].
6. Change in net assets.......... Sch. H--Subtract 1 Sch. I--Subtract 1c Line 7c--Subtract [Col.
[Col. (a)] from 1 [Col. (a)] from 1c (a)] from 7c [Col.
[Col. (b)]. [Col. (b)]. (b)].
7. Total income.................. Sch. H-2d.............. Sch. I-2d.............. Line 8c.
a. Employer contributions.... Sch. H-2a(1)(A) & 2a(2) Sch. I-2a(1) & 2b if Line 8a(1) if
if applicable. applicable. applicable.
b. Employee contributions.... Sch. H-2a(1)(B) & 2a(2) Sch. I-2a(2) & 2b if Line 8a(2) if
if applicable. applicable. applicable.
c. Gains (losses) from sale Sch. H-2b(4)(C)........ Not applicable......... Not applicable.
of assets.
d. Earnings from investments. Sch. H--Subtract the Sch. I-2c.............. Line 8b.
sum of 2a(3), 2b(4)(C)
and 2c from 2d.
8. Total plan expenses........... Sch. H-2j.............. Sch. I-2j.............. Line 8h.
9. Administrative expenses....... Sch. H-2i(5)........... Sch. I-2h.............. Line 8f.
10. Benefits paid................ Sch. H-2e(4)........... Sch. I-2e.............. Line 8d.
[[Page 51310]]
11. Other expenses............... Sch. H--Subtract the Sch. I-2i.............. Line 8g.
sum of 2e(4) & 2i(5)
from 2j.
----------------------------------------------------------------------------------------------------------------
Signed at Washington, DC, this 2nd day of September, 2021.
Ali Khawar,
Acting Assistant Secretary, Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2021-19713 Filed 9-14-21; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on September 15, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.