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Rule2023-02652

Annual Reporting and Disclosure

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Published

February 24, 2023

Effective

April 25, 2023

Issuing agencies

Labor DepartmentEmployee Benefits Security Administration

Abstract

This document contains 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 amendments contained in this document conform the DOL reporting regulations to revisions 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 Final Forms Revisions (NFFR) jointly by DOL, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC). Conforming changes also are being made to the requirements for the summary annual report. The regulatory amendments in this rule and revisions in the NFFR affect employee benefit plans, plan sponsors, administrators, and service providers to plans subject to annual reporting requirements under ERISA and the Internal Revenue Code.

Full Text

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<title>Federal Register, Volume 88 Issue 37 (Friday, February 24, 2023)</title>
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[Federal Register Volume 88, Number 37 (Friday, February 24, 2023)]
[Rules and Regulations]
[Pages 11793-11814]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-02652]

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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: Final rule.

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SUMMARY: This document contains 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 amendments contained in this document conform the DOL
reporting regulations to revisions 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 Final Forms
Revisions (NFFR) jointly by DOL, the Internal Revenue Service (IRS),
and the Pension Benefit Guaranty Corporation (PBGC). Conforming changes
also are being made to the requirements for the summary annual report.
The regulatory amendments in this rule and revisions in the NFFR affect
employee benefit plans, plan sponsors, administrators, and service
providers to plans subject to annual reporting requirements under ERISA
and the Internal Revenue Code.

DATES:
Effective Date: This final rule is effective April 25, 2023.
Applicability Date: All regulatory amendments are applicable for
plan years beginning on or after January 1, 2023, for the 2023 Form
5500 Annual Return/Report of Employee Benefit Plan.

FOR FURTHER INFORMATION CONTACT: Janet Song, Florence Novellino 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).
Customer service information: Individuals interested in obtaining
information from the Department of Labor concerning Title I of ERISA
and employee benefit plans may call the EBSA Toll-Free Hotline at 1-
866-444-EBSA (3272) or visit the Department of Labor's website
(<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>).

SUPPLEMENTARY INFORMATION:

A. Background

Titles I and IV of the Employee Retirement Income Security Act of
1974 (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''), in accordance with their
instructions, generally satisfies these annual reporting
requirements.\1\
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\1\ References to the ``Form 5500 Annual Return/Report'' in this
final rule or in the accompanying NFFR may include, depending on the
context, the Form 5500 or the Form 5500-SF. As used in this
document, the term does not include the Form 5500-EZ, Annual Return
of A One Participant (Owners/Partners and Their Spouses or A Foreign
Plan) Retirement Plan (Form 5500-EZ). The Form 5500-EZ is a return
required under the Code, not Title I of ERISA.
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ERISA section 103 and 104 broadly set out annual financial
reporting requirements for employee benefit plans

[[Page 11794]]

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.\2\
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\2\ The Form 5500 Annual Return/Report filings are also
information collections for the Agencies, subject to a separate
clearance process under the Paperwork Reduction Act.
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In the United States, there are an estimated 2.5 million health
plans,\3\ an estimated 673,000 other welfare plans,\4\ and
approximately 747,000 private pension plans.\5\ These plans cover
roughly 152 million private sector workers, retirees, and
dependents,\6\ and have estimated assets of $12 trillion.\7\ 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 serves as the principal source of
information and data available to the Agencies concerning the
operations, funding, and investments of approximately 864,000 pension
and welfare benefit plans that file.\8\ 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. The Form 5500
Annual Return/Report also serves as the primary public disclosure
document for participating employers, plan participants and
beneficiaries, and the public to monitor the operations of plans,
including multiple-employer plans (MEPS) and group filing arrangements.
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.
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\3\ Source: U.S. Department of Labor, EBSA calculations using
the 2021 Medical Expenditure Panel Survey, Insurance Component
(MEPS-IC), the Form 5500 and 2019 Census County Business Patterns.
\4\ Source: U.S. Department of Labor, EBSA calculations using
non-health welfare plan Form 5500 filings and projecting non-filers
using estimates based on the non-filing health universe.
\5\ Source: U.S. Department of Labor, EBSA. Private Pension Plan
Bulletin: Abstract of 2020 Form 5500 Annual Reports.
\6\ Source: U.S. Department of Labor, EBSA calculations using
the Auxiliary Data for the March 2021 Annual Social and Economic
Supplement to the Current Population.
\7\ EBSA projected ERISA-covered pension, welfare, and total
assets based on the 2020 Form 5500 filings with the U.S. Department
of Labor (DOL), reported SIMPLE assets from the Investment Company
Institute (ICI) Report: The U.S. Retirement Market, Second Quarter
2022, and the Federal Reserve Board's Financial Accounts of the
United States Z1 September 9, 2022.
\8\ Estimates are based on 2020 Form 5500 filings. Welfare plans
with fewer than 100 participants that are unfunded or insured (do
not hold assets in trust) are generally exempt from filing a Form
5500. Therefore, while the DOL estimates there are 2.5 million
health plans and 673,000 non-health welfare plans, respectively only
63,000 and 21,000 of these plans filed a 2020 Form 5500.
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Recent legislative and regulatory changes affecting MEPs and
similar arrangements are spurring the current need to update the Form
5500 Annual Return/Report and related regulations. The Setting Every
Community Up for Retirement Enhancement Act of 2019 (SECURE Act)
included various provisions designed to improve the private employer-
based retirement system.\9\ 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 (PEPs).
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\9\ 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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On September 15, 2021, the Agencies published a notice of proposed
forms revisions (NPFR) proposing amendments to the Form 5500 Annual
Return/Report to implement annual reporting changes related to
legislative provisions in the SECURE Act focused on MEPs and defined
contribution group reporting arrangements (DCGs or DCG reporting
arrangements) but also included other proposed reporting improvements.
86 FR 51488 (Sep. 15, 2021). The DOL simultaneously published a notice
of proposed rulemaking (NPRM) setting forth proposed amendments to its
Title I annual reporting regulations to implement the proposed forms
revisions. 86 FR 51284 (Sep. 15, 2021). The NPFR and the NPRM are
collectively referred to as the September 2021 proposal in this rule
and the NFFR.
The Agencies received 114 comments on the September 2021 proposal.
The comments, which were all posted on the DOL's website, generally
focused on the proposed changes for the 2022 plan year forms and on
future rulemakings.
In December 2021, the DOL published a final forms revisions
rulemaking that set forth a narrow set of changes to the instructions
for the Form 5500 and Form 5500-SF, effective for plan years beginning
on or after January 1, 2021. 86 FR 73976 (Dec. 29, 2021). Those
instruction changes generally implemented annual reporting changes for
MEPs, including PEPs, that were described in the September 2021
proposal. That document is referred to herein as Final Rule Phase I.
In May 2022, the Agencies published a second final forms revisions
adopting certain aspects of the September 2021 proposal effective for
plan years beginning on or after January 1, 2022. 87 FR 31133 (May 23,
2022). Those forms and instruction revisions generally implemented
annual reporting changes for defined benefit plans on Schedules MB, SB
and R, but also added certain plan characteristics codes for MEPs,
including one to specifically identify PEPs, to the list of plan
characteristics that must be used to describe the plan on the annual
report. That document is referred to herein as Final Rule Phase II.
In Final Rule Phase II, the Agencies stated that the remaining
proposed changes to the Form 5500 Annual Return/Report that were set
forth in the September 2021 proposal would be addressed either in a
further final forms revisions notice, or possibly re-proposed with
modifications in a separate proposal as part of a broader range of
improvements to the annual reporting requirements.\10\
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\10\ As noted in the September 2021 proposal, DOL has a separate
regulatory project on its semi-annual agenda to in coordination with
the IRS and PBGC: (i) modernize the financial and other annual
reporting requirements on the Form 5500 Annual Return/Report; (ii)
continue an ongoing effort to make investment and other information
on the Form 5500 Annual Return/Report more data mineable; and (iii)
consider potential changes to group health plan annual reporting
requirements, among other improvements that would enhance the
Agencies' ability to collect employee benefit plan data in a way
that best meets the needs of compliance projects, programs, and
activities. See <a href="http://www.reginfo.gov">www.reginfo.gov</a> for more information.
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The Agencies' Notice of Final Forms Revisions (NFFR) published
concurrently in this issue of the Federal Register sets forth a
detailed discussion of form and instruction changes that relate to
these regulations. It also includes a discussion of elements from the
September 2021 proposal that are

[[Page 11795]]

being delayed for possible re-proposal as part of the Agencies'
initiative to propose a more broad-based set of improvements to the
Form 5500 Annual Return/Report. The discussions in the NFFR are
incorporated into this final rule notice. The revisions to the DOL's
reporting regulations being adopted in this document are needed for the
DOL to implement, for ERISA Title I purposes, various forms and
instructions revisions in the NFFR. The NFFR and this NFRM collectively
represent Final Rule Phase III of the September 2021 proposal.

B. Discussion of the Revisions to 29 CFR Part 2520

1. Section 2520.103-1(a)

Section 2520.103-1 generally describes the content of the Form 5500
Annual Return/Report and includes a description of the content for a
simplified report, limited exemption, or alternative method of
compliance for ERISA-covered employee welfare and pension benefit
plans, as applicable to satisfy annual reporting requirements under
Title I of ERISA. This final rule amends Sec. 2520.103-1(a) to add
text cross-referencing to the DCG and GIA reporting options in
Sec. Sec. 2520.104-46, 2520.104-51, 2520.104a-6 and 2520.104a-9. It
also adds a reference to ``section 202 of the SECURE Act'' in Sec.
2520.103-1(a)(2) as authority for the consolidated report option under
new Sec. Sec. 2520.103-14 and 2520.104-51 for 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 describe 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). This final rule amends Sec. 2520.103-1(b)(1),
(c)(1) and (c)(2)(i) to add a new multiple-employer plan schedule,
Schedule MEP, to the list of schedules and attachments required to be
included with the Form 5500 or Form 5500-SF, as applicable, filed for
MEPs.

3. 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. Consistent with the proposed
forms revisions to amend the Form 5500 Annual Return/Report published
by the Agencies in the September 2021 proposal, and the final forms
revisions published by the DOL in December 2021, this final rule adds
Sec. 2520.103-1(c)(2)(ii)(F) to state that MEPs that are PEPs as
described in ERISA section 3(43) 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. The final rule also adds 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 discussed in
more detail below.

4. Sections 2520.103-5, 2520.103-10, 2520.103-14, 2520.104-51,
2520.104a-5 and 2520.104a-9--Consolidated Form 5500 Annual Return/
Report for Plans Participating in a DCG Reporting Arrangement

The final rule amends 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, consolidated Form 5500 filing option that would satisfy the
annual reporting obligations for the defined contribution pension plans
participating in the DCG reporting arrangement.\11\ Under this final
rule, several conditions relating to the DCG reporting arrangement, the
participating plans, and the content of the Form 5500 filing must be
satisfied before the consolidated filing satisfies the annual reporting
requirements of the separate participating plans. The NFFR describes
those conditions in detail. The conditions also are set forth in the
new regulations at 29 CFR 2520.103-14 and 2520.104-51.
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\11\ The SECURE Act Section 202 uses the terms ``combined,''
``aggregated'' and ``consolidated'' to describe the reporting option
the IRS and DOL were directed to develop. This final rule and the
related forms revisions notice generally uses the term
``consolidated.''
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With respect to the content requirements for a DCG consolidated
Form 5500 filing, 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 DCG (Individual Plan
Information), Schedule G (Financial Transaction Schedules), Schedule H
(Financial Information), and supplemental schedules referred to in 29
CFR 2520.103-10 with information aggregated for all the participating
plans unless otherwise provided in the instructions to the Form 5500,
and an independent qualified public accountant (IQPA) report and
opinion for any individual participating plans that would be subject to
the audit requirement if filing a separate Form 5500.\12\ This would
include separate financial statements described in ERISA section
103(a)(3)(A) and Sec. 2520.103-1(b)(2) if such financial statements
are prepared in order for the IQPA to form the required opinions on the
individual participating plans subject to the audit requirement.
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\12\ After the final rule had been submitted to OMB on November
21, 2022, for review under Executive Order 12866, the SECURE Act 2.0
of 2022 (SECURE Act 2.0) was signed into law on December 29, 2022,
as Division T of the Consolidated Appropriations Act, 2023, H.R.
2617, as amended. The SECURE Act 2.0 includes a specific direction
to the DOL and the Treasury Department on audit requirements for the
DCG consolidated Form 5500 reporting option. Specifically, section
345 of SECURE Act 2.0 provides that with respect to the IQPA audit
provisions in section 103 of ERISA ``any opinions required by
section 103(a)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1023(a)(3)) shall relate only to each individual
plan which would otherwise be subject to the requirements of such
section 103(a)(3).'' This final rule and the related final forms
revisions being published concurrently include DCG plan-level audit
provisions that are consistent with the SECURE Act 2.0 direction.
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Paragraph (c) of Sec. 2520.103-14 makes 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 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 final rule adds a new Sec. 2520.104-51 that authorizes the DCG
reporting arrangement to file a 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

[[Page 11796]]

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 Sec. 2520.104-51; and (ii) the DCG
reporting arrangement has filed with the Secretary of Labor, in
accordance with new Sec. 2520.104a-9, a complete and accurate
consolidated annual report that meets the content requirements under
new Sec. 2520.103-14. To make clear that the DCG reporting arrangement
is a direct filing entity (DFE) that is submitting the consolidated
Form 5500 on behalf of the participating plans, 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, 2520.103-9, 2520.103-10 and elsewhere in
subparts C and D of 29 CFR part 2520, as applicable and unless stated
otherwise.
New Sec. 2520.104-51 also provides 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 meeting the
requirements set forth in ERISA section 403(a) (``common trustee'');
(B) the same one or more named fiduciaries designated in accordance
with the requirements set forth in ERISA section 402(a) (``common named
fiduciaries''), however, the employer/plan sponsor may 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; (C) a
designated administrator that is the same plan administrator for all
the participating plans (``common plan administrator''); and (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'') (certain
brokerage window arrangements would qualify as a common investment
option under this final rule); (iv) not hold any employer securities at
any time during the plan year, except this does not prohibit
investments in any employer's publicly traded securities held
indirectly within one or more ``common investments or investment
options'' available to participants and beneficiaries in all the DCG
plans; (v) either 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; and (vi) may not be a multiemployer plan or a MEP (including
association retirement plans, pooled employer plans and professional
employer organization plans (PEO plans)).
Further, new Sec. 2520.104-51 expressly states 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 ERISA,
including, for example, the provisions that require plan administrators
to 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)). Section 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 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 final rule requires that the same person sign the DCG
filing as the plan administrator for each participating plan.\13\
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\13\ The Department solicited comments in the September 2021
proposal 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).
None of the commenters responded to this request. The Department is
not addressing that issue in this final rule.
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New Sec. 2520.104a-9 provides, as would be the case for all of the
participating plans in the DCG reporting arrangement if they were
filing individually, that the consolidated Form 5500 for the DCG is due
no later than the end of the seventh (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 new regulation at Sec. 2520.104-51.
Conforming changes have been made to Sec. Sec. 2520.103-5 and
2520.104a-5 to add a reference to the new Sec. 2520.104a-9.
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 final rule on DCG reporting arrangements meets those conditions,
especially given the statutory direction in the SECURE Act to create
such a reporting option.
As discussed below and in the NFFR, the final rule does not include
an option under which a ``small'' DCG could file as a small plan, as
the DOL solicited comments regarding the merits of this option and
there were no commenters supporting a simplified reporting option for
``small'' DCG reporting arrangements. Accordingly, this final rule does
not include an option under which such a ``small'' DCG could file as a
small plan, and Sec. 2520.103-1(c)(2)(ii) has been amended
accordingly.

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 is updating this regulation 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. This includes adding
a requirement to the DOL's regulation that plans 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. For plans participating in a DCG reporting arrangement,
the regulation includes new language that plans in DCG reporting
arrangements would use to advise participants that the plan
participates in a reporting arrangement that files a consolidated Form
5500 Annual Report and explains that the SAR includes aggregate
information on all the participating plans from the consolidated Form
5500. The text also

[[Page 11797]]

notes that the DCG's consolidated Form 5500 includes a separate
Schedule DCG that provides specific plan level information for each
individual plan. The 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. 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 Date

All regulatory amendments are applicable for plan years beginning
on or after January 1, 2023, for plans beginning with the 2023 Form
5500 Annual Return/Report of Employee Benefit Plan.

D. Regulatory Impact Analysis

1. Background and Need for Regulatory Action

The Form 5500 Annual Return/Report is the primary 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, 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.
In general terms these rules and form changes are: (1) adding a DCG
consolidated reporting option; (2) adding Schedule MEP to collect MEP
information; (3) adding certain new Code compliance questions; (4)
changing the methodology for counting participants in defined
contribution plans for purposes of determining eligibility for small
plan reporting options; (5) Schedule H Breakout Categories for
Administrative Expenses; (6) defined benefit plan reporting
improvements on schedules SB; and (7) miscellaneous and conforming
changes to forms and instructions.\14\
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\14\ These changes are described in more detail previously in
this document and in the concurrently publishing separate final rule
that adds new regulations at 29 CFR 2520.103-14 and 2520.104-51,
pursuant to section 110 of ERISA.
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The DOL has examined the effects of these amendments as required by
Executive Order 12866,\15\ Executive Order 13563,\16\ the Congressional
Review Act,\17\ the Paperwork Reduction Act of 1995,\18\ the Regulatory
Flexibility Act,\19\ section 202 of the Unfunded Mandates Reform Act of
1995,\20\ and Executive Order 13132.\21\
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\15\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\16\ Improving Regulation and Regulatory Review, 76 FR 3821
(Jan. 21, 2011).
\17\ 5 U.S.C. 804(2) (1996).
\18\ 44 U.S.C. 3506(c)(2)(A) (1995).
\19\ 5 U.S.C. 601 et seq. (1980).
\20\ 2 U.S.C. 1501 et seq. (1995).
\21\ Federalism, 64 FR 43255 (Aug. 10, 1999).
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2. Executive Orders 12866 and 13563 Statement

Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to 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 importance of quantifying both costs and
benefits, of reducing costs, of harmonizing and streamlining rules, and
of promoting flexibility. It also requires federal agencies to develop
a plan under which the agencies will periodically review their existing
significant regulations to make the agencies' regulatory programs more
effective or less burdensome in achieving their regulatory objectives.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to the requirements of the executive order and review by the
Office of Management and Budget (OMB). 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 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.
OMB has determined that this rule is economically significant
within the meaning of section 3(f)(1) of the Executive order.
Therefore, the DOL has provided an assessment of the potential costs,
benefits, and transfers associated with these final rules. In
accordance with the provisions of Executive Order 12866, this rule was
reviewed by OMB. Pursuant to the Congressional Review Act, OMB has
designated this rule as a ``major rule,'' as defined by 5 U.S.C.
804(2).

3. Affected Entities

The SECURE Act amendments first authorized PEPs to begin operating
beginning on January 1, 2021, and early adopted PEPs will have done
their first filings of Form 5500 starting in July 2022. Similarly, DCG
reporting arrangements are a new filing option that will start with the
2023 plan year; thus, the first such consolidated filings will not
begin until July 2024. Thus, there is little historical Form 5500
information that the DOL can use 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 these
final rules.
The DOL nonetheless presents an overview of potentially affected
entities and an approach to evaluating the possible impacts of these
final rules and form changes in the following sections. In evaluating
costs and benefits, the DOL took account of the fact that various types
of plans could be affected by more than one of the changes.
i. Defined Contribution Pension Plans
In 2020, there were 700,034 defined contribution plans with 110.4
million total participants and 85.3 million active participants. Plans
with fewer than 100 total participants (small plans) account for 87.6
percent of plans.\22\
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\22\ Employee Benefits Security Administration, Private Pension
Plan Bulletin, Abstract of 2020 Form 5500 Annual Report (2020). The
2020 Form 5500 data set is the most recent available because Form
5500 filings for the 2020 reporting year generally are not required
to be filed for calendar year plans until July through October of
2021, and the deadline for fiscal year plans may extend well into
2022. 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.

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[[Page 11798]]

ii. 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. In 2020 there were 531,872 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 some fraction of these plans may find it advantageous
to join a DCG for filing purposes.
iii. 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.\23\ In
2020, there were 4,791 MEPs filing a Form 5500, of which 182 were
defined benefit pension plans and 4,609 were defined contribution
pension plans. There were 7.3 million participants reported as covered
by these plans.\24\
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\23\ See, e.g., 2020 Form 5500 instructions at 14.
\24\ Employee Benefits Security Administration, Private Pension
Plan Bulletin, Abstract of 2020 Form 5500 Annual Reports (September
2022).
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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). Plan year 2020 is the first
year that a significant number of association retirement plans would
file a Form 5500.\25\ The 2020 and 2021 forms do not have a way to
identify those plans, therefore, the DOL does not have information on
how many reporting MEPs are association retirement plans. The final
forms revisions provide a way to identify these plans for the 2023 Form
filings.
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\25\ The DOL's final association retirement plan regulation, at
29 CFR 2510.3-55, published July 31, 2019, clarified, and expanded
the types of arrangements that could be treated as MEPs under Title
I of ERISA to include plans established and maintained by a bona
fide group or association of employers (association retirement
plans) and by a professional employer organization (PEO plans).
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Professional Employer Organizations (PEOs) Plan
A PEO MEP is a defined contribution pension plan sponsored by a
bona fide professional employer organization (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.\26\ Plan year 2020 is the first year that a
significant number of PEO MEPs would file a Form 5500. The 2020 and
2021 forms do not have a way to identify those plans, therefore, the
DOL does not have information on how many reporting MEPs are PEO MEPs.
The final forms revisions provide a way to identify these plans for the
2023 Form filings.
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\26\ National Association of Professional Employee
Organizations, Industry Statistics: (Accessed 10/3/2022), <a href="https://www.napeo.org/what-is-a-peo/aboutthe-peo-industry/industry-statistics">https://www.napeo.org/what-is-a-peo/aboutthe-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/defaultsource/white-papers/2021-white-paperfinal.pdf?sfvrsn=6dde35d4_2">www.napeo.org/docs/defaultsource/white-papers/2021-white-paperfinal.pdf?sfvrsn=6dde35d4_2</a>.
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Pooled Employer Plans (PEPs)
The SECURE Act amended section 3(2) of ERISA and added section
3(43) to ERISA authorizing 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 PEPs 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.\27\ By the end of year 2021, 71 entities filed the
Form PR to register as pooled plan providers with approximately 3 PEPs
per provider. These are the providers assumed most likely to provide
these services for the year 2021.\28\
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\27\ 85 FR 72934, 72949 (Nov. 16, 2016).
\28\ Department of Labor, Form PR at <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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Due to the timing of Form 5500 filing deadlines, complete data from
the plan year 2021 filings, which contain information on how many
employers are participating in PEPs and the number of participants
covered by these, are not available. Therefore, the DOL must rely on
other sources and professional judgement to estimate their numbers.\29\
The DOL attempted to review available public information on PEPs 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 there are a variety of approaches in how
PEPs are offered, and a variation in the number of employers that have
joined a PEP. 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 PEPs, the Form PR does not collect information on the
number of employers participating in their PEPs or the number of
employees covered by each plan. One pooled plan provider was reported
in another source as having 2,000 employers that joined their PEP,
whereas other providers reported five to 10 employers had joined their
PEPs.
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\29\ Form 5500 Annual Return/Report is due the last day of the
seventh month after the plan year ends, which for calendar year
plans (plans that begin on January 1st of the year) is July 31st.
There is also an available 3-month filing extension that most plans
utilize. This extension pushes the filing deadline to the end of
October for calendar year plans.
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iv. 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 plan documents when
necessary.\30\ Of the 646,111 defined contribution pension plans that
reported code 3D, 574,231 are reported as small plans, defined as
having fewer than 100 participants each. Of these small defined
contribution plans, 531,872 file the Form 5500-SF, cover approximately
11.1 million participants, and hold approximately $0.8 trillion in
assets.
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\30\ IRS website at <a href="https://www.irs.gov/retirement-plans/preapproved-retirement-plans">https://www.irs.gov/retirement-plans/preapproved-retirement-plans</a> (last updated March 17, 2022).
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The DOL expects that Form 5500-SF small pension plan filers are the
most likely candidates to join a DCG or a PEP; however, the DOL lacks
information on

[[Page 11799]]

the number of plans that would join a DCG or a PEP.
v. Plans Affected by Change in Participant Count Methodology for
Determining Eligibility for Small Plan Simplified Reporting Option for
Defined Contribution Pension Plans
A change in the participant count methodology for defined
contribution pension plans to determine whether the plan is a ``large
plan'' (generally, a plan that 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, is adopted in the final rules.
Currently, the plan size measure for this annual reporting purpose 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 employee has not
elected to participate and does not have an account balance. The final
rules change this methodology and instead counts only the number of
participants at the beginning of the plan year with an account balance.
Current Form 5500 filings collect the number of participants at the
end of the plan year with an account balance and does not collect such
a figure for the beginning of the plan year. Accordingly, the DOL used
the end of plan year number of participants with account balance to
estimate the number of plans impacted by this change. Using the current
definitions of large and small plans, there are 86,744 large defined
contribution plans and 613,290 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 participant count methodology yields
estimated 68,057 large and 631,976 small defined contribution plans.
This results in an estimated 18,699 defined contribution plans
experiencing a cost savings by filing as small plans, which allow the
possibility of exemption from the IQPA audit and report requirements
and from including required financial statements and Schedules of
Assets as part of their annual report.
vi. Defined Benefit Pension Plans
In 2020, there were 46,577 defined benefit plans with 31.9 million
total participants and 12 million active participants. There were
45,032 single-employer defined benefit plans and 1,363 multiemployer
defined benefit plans.\31\
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\31\ Employee Benefits Security Administration, Private Pension
Plan Bulletin, Abstract of 2020 Form 5500 Annual Reports (September
2022).
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3. Benefits

i. Benefits of Establishing PEPs
The SECURE Act established a new type of ERISA-covered defined
contribution pension plan, the PEP, which is established and maintained
by a pooled plan provider that meets the conditions of the statute. By
creating the PEP 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 below,
PEPs need to provide ERISA section 103(g) participating employer
information, including certain basic information regarding the pooled
plan provider. Potential increased reporting costs for those employers
choosing to offer retirement benefits to their employees through
participating in a PEP would be offset by other cost reductions or
business benefits relative to not having to administer an individual
plan as further discussed below.
By participating in a PEP, 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 PEP, including hiring and
monitoring the ERISA section 3(38) investment managers. Similarly,
operating efficiency for participating employers are expected because
the pooled plan provider handles the administrative tasks such as
participant communications, plan recordkeeping, submitting the Form
5500, and complying with plan audits.
Also, as they are expected to be professional plan providers, it is
anticipated that a pooled plan provider, relative to a small employer,
would be better equipped to ensure that more accurate and complete data
is reported to the Agencies on the Form 5500. Further, as discussed in
the regulatory impact analysis to the regulation establishing the Form
PR, PEPs should benefit from scale advantages, including the ability to
obtain lower fees for investment options.\32\ The marginal costs for
PEPs would shrink and fixed costs would be shared amongst the PEPs
through pooled plan providers resulting in direct economic
efficiencies.
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\32\ 85 FR at 72949-72950.
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This concept is supported by research conducted by Szapiro, that
found 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.
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\33\ Szapiro, Aron, ``Pooled Employer Plans: Paperwork or
Panacea.'' Accessible at <a href="https://team.rebelfinancial.com/wp-content/uploads/2020/09/As_PEPs_Come_of_Age_What_Can_Their_Forebearers_Tell_us_About_how_They_Will_Work.pdf">https://team.rebelfinancial.com/wp-content/uploads/2020/09/As_PEPs_Come_of_Age_What_Can_Their_Forebearers_Tell_us_About_how_They_Will_Work.pdf</a>.
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Another potential outcome is that, due to increases in economic
efficiency, small businesses may be better able to compete with larger
companies in recruiting and retaining workers due to a competitive
employee benefit package.
Finally, PEPs 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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\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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ii. Benefits of Establishing the Schedule MEP
A benefit the new Schedule MEP provides is a unified vehicle to
report information related to SECURE Act provisions, including
information unique to MEPs. The participating employer information
collected pursuant to section 103(g) of ERISA becomes data capturable,
and available at a publicly viewable website containing images of the
Form 5500 and related data sets. This public data will help protect
plan participants and beneficiaries by allowing for improved

[[Page 11800]]

analysis for oversight and research purposes by the government, the
regulated community, and other interested stakeholders.
iii. Benefits of DCGs
The updated Form 5500 annual reporting requirements that allow for
consolidated reporting, pursuant to section 202 of the SECURE Act,
provides eligible defined contribution pension 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 an 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 Schedule DCG provides individual plan-level information for
those defined contribution pension plans whose annual reporting
requirements 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 that is
expected to be a professional service provider filing on behalf of a
group, the DOL expects an increase in the likelihood that more accurate
and complete data is reported to the Agencies. As a result, there may
be an increase in annual reporting compliance and compliance with
applicable ERISA requirements in general.
Additionally, the Schedule DCG will help compare individual plan
participation and aggregate asset and liability information from year
to year. The Schedule DCG includes many of the questions that are
currently required on the Form 5500-SF, and for large plans and small
plans that do not meet the audit waiver conditions, questions regarding
the required individual IQPA report and financial statements that must
be filed with the Schedule DCG for each individual plan. While this
requirement reduces the cost saving of filing as a DCG, the 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.
iv. Benefits of Changes to Participant Count Methodology for
Determining Eligibility for Small Plan Simplified Reporting Option for
Defined Contribution Pension Plans
The rule redefines the 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.
Defined contribution pension plans, including 401(k) plans and
403(b) plans, under these final rules, will determine whether they must
file as a large plan based on the number of participants with account
balances as of the beginning of the plan year. This revises the
previous measurement method, which included the total number of
eligible participants at the beginning of the plan year, regardless of
individual account activity. Since the size of the plan is a major
factor in determining whether a plan must attach an IQPA report, this
change is expected to reduce administration costs for the plans that
are now able to exempt itself from the IQPA audit and report
requirements.
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 might be required to bear the cost of an
audit based on eligible, but not participating employees being counted
toward the audit threshold. Specifically, 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.\35\ This could add to the participant count the
number of employees who are eligible to, but who elect not to
participate in a plan, which could impact whether a plan needs to file
as a large plan. The change in counting methodology will result in
excluding from the participant count those long-term, part time workers
who are eligible to participate in a plan, but have not in fact elected
to, make contributions to the plan.
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\35\ Under section 125 of SECURE Act 2.0, this three year
measurement period is reduced to two years with the effect that
long-term, part-time workers must be treated as meeting the time in
service requirements to participate in Code section 401(k) qualified
cash or deferred arrangements and, as added by section 125 of the
SECURE Act 2.0, Code section 403(b) plans once they have worked two
consecutive years (with at least 500 hours of service per year),
effective for plan years starting on or after January 1, 2025.
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The DOL expects that excluding from the participant count
participants who are eligible to participate but do not have an account
balance at the beginning of the plan year will reduce expenses of
establishing and maintaining a retirement plan, and consequently
encourage more employers to offer workplace-based retirement savings
plans to their employees.
v. Benefits of Schedule H Breakout Categories for Administrative
Expenses
The final forms revisions update Schedule H to add new breakout
categories to the ``Administrative Expenses'' category of the Income
and Expenses section of the Schedule H balance sheet. The data element
breakouts for Administrative Expenses will now be ``Salaries and
allowances,'' ``Contract administrator fees,'' ``Other recordkeeping
fees,'' ``Independent Qualified Public Accountant (IQPA) fees,''
``Investment advisory and investment management fees,'' ``Bank or trust
company trustee/custodial fees,'' ``Actuarial fees,'' ``Legal fees,''
``Valuation/appraisal fees,'' ``Other Trustee fees/expenses,'' and
``Other expenses.'' The changes to how plan expenses are reported
brings greater transparency to plan transactions, makes decisions on
plan costs more observable to plan participants, and enhances the
efficiency of the Agencies' enforcement efforts. 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 a leading source of data used in this research program.
Breaking out the administrative expenses also aids in conducting
research as the individual plan expenses are observable.
vi. Benefits of Adding Internal Revenue Code-Based Questions for the
2023 Form 5500s
Several questions are being added to the 2023 Form 5500s to help
identify plans that are more likely to experience compliance issues,
and help the IRS more effectively conduct investigations. The rule adds
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

[[Page 11801]]

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 allows the IRS 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 final forms revisions 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 allows the IRS to identify 401(k) plans that use
ADP testing for examination over plans that have designed-based safe
harbors. This question will also help the IRS perform pre-audit
analysis, and for design-based safe harbor plans allow the IRS 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.
The final forms revisions 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.\36\
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\36\ IRS is making a parallel update to the Form 5500-EZ, which
is solely in the jurisdiction of the IRS.
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This question is meant to 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 will also assist IRS in
determining whether to select a plan for examination as a late amender
for changes in the law.
vii. Benefits of Defined Benefit Plan/Title IV Questions for the 2023
Form 5500s
Changes to the Form 5500 Schedules SB and R are intended to clarify
instructions, simplify reporting methods, and enhance the usability of
data collected regarding asset allocation.

4. Cost Estimates and Savings

This rule makes important changes to the requirements currently in
effect. Some of these changes affect the distribution between the small
and large size classes for plans filing the annual report to change.
The DOL estimates that a total of 23,533 small plans and 842 large
plans would opt to join either a DCG or a PEP, and therefore have their
filing requirement fulfilled by these entities. The DOL also estimates
that 18,699 large plans would be redefined and file as small plans due
to the change in the participant count methodology for determining when
a defined contribution plan may file as a small plan.
The DOL anticipates that the costs for plans to satisfy their
annual reporting obligations will typically decrease under these
regulations relative to the current regime.\37\ As shown in Table 1
below, the aggregate annual cost of such reporting under the current
regulations and forms is estimated to be $505.5 million annually,
shared across the approximately 864,100 filers subject to the filing
requirement. The DOL estimates that the regulations and forms revisions
in this rule impose an annual burden of $474.1 million on approximately
839,400 filers, for a total decrease of $94.7 million. Most of this
decrease ($63.3 million) is from audit cost savings and the remainder
($31.4 million) results from other reporting efficiencies.
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\37\ 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.

Table 1--The Final Rule Reduces Overall Filing Cost by Roughly $95 Million
[Estimated burden change by type of filer, all changes]
----------------------------------------------------------------------------------------------------------------
Number of Number of
filers under filers under Aggregate cost Aggregate cost Aggregate cost
Type of plan current final under current under final change
(thousands) (thousands) (millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 148.8 129.4 $261.2 $227.6 -$33.6
Small Plans..................... 705.6 700.1 232.9 231.3 -1.5
DFEs............................ 9.7 9.9 11.4 15.2 3.8
Form Changes.................... 864.1 839.4 505.5 474.1 -31.4
Audit Cost Changes.............. .............. .............. .............. .............. -63.3
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Total Changes............... .............. .............. .............. .............. -94.7
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

To estimate the net change in cost burden, because of the
interaction of the 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 estimated accumulated changes.
The other tables below show estimates for individual changes from the
same baseline prior to the enactment of any of these rules or
revisions; therefore, the tables cannot be added to arrive at the
estimates in Table 1.
i. Schedule MEP and PEPs
The new Schedule MEP will be filed by all MEPs, including PEPs, and
includes participating employer

[[Page 11802]]

information already filed as an attachment, as well as limited specific
reporting requirements for PEPs. This change also results in the
information on participating employers being machine-readable.
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 PEPs that have yet to file a Form 5500. The impacts
of the recent DOL rulemaking concerning association retirement plans
and PEO MEPs also carries some uncertainty regarding the number of MEPs
that may be affected. By the end of year 2021, 71 entities filed the
Form PR to register as pooled plan providers with approximately 3 PEPs
per provider. These are the providers assumed most likely to provide
these services for the year 2021. Therefore, for purposes of this
analysis, the DOL assumes there to be a total of 202 PEPs. As it is the
case with MEPs, joining a PEP translates into less plan maintenance
expenditures due to economies of scale. Additionally, the DOL believes
the information requested on the Schedule MEP is already 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 PEPs, with variation depending on
the number of participating employers.
Although the DOL does not know how many plans would decide to offer
benefits through a PEP, the current average number of participating
employers in a MEP is a reasonable proxy for PEPs that may be
established in the future. DOL data suggests that MEPs, on average,
have 11 participating employers, nine employers with fewer than 100
participants (small) and two employers with 100 or more participants
(large). The DOL uses this information in its estimates for PEPs.
Combined with one pooled plan provider registrant that has already
listed 2,000 participating employers, it is estimated that a total of
3,369 small participating plans and 842 large participating plans would
provide benefits through PEPs.\38\ The DOL assumes this would result in
a direct decrease of 3,369 defined contribution Form 5500-SF filers and
a decrease of 563 Form 5500 defined contribution filers. As Table 2
shows this results in an expected reporting cost reduction of $2
million (not including the audit cost reduction in Table 1) and a total
reduction of individual filers from 864,100 to 860,100 filers. The
reduction in filers due to single filers joining a PEP would be
partially offset by an increase in filings by the PEP themselves. This
total reduction considers both changes to the number of filings. There
is, however, considerable uncertainty in this estimate of a net impact
on filings because of the uncertainty regarding the number of PEPs and
the resulting increase in PEP filings.
---------------------------------------------------------------------------

\38\ For the calculation of the total number of participating
employers in PEPs, it is first assumed that 80 percent of all the
employers who would participate in a PEP 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 2,000 employers (which would
then be divided in 1,600 small participating plans and 400 large
participating plans) and to the other 201 pooled plan providers
assumed to be created. It is also assumed that each of these other
201 pooled plan providers would be servicing 11 employers each.
Therefore, the total number of small plans participating in a PEP is
estimated as: 1,600 + (201 x 11 x 0.8) = 3,369 (rounded). Similarly,
the total number of large participating plans is estimated as: 400 +
(201 x 11 x 0.2) = 842 (rounded).

Table 2--PEPs and Schedule MEP Generate Approximately $2 Million in Savings
[Estimated burden change by type of filer. Introduction of PEPs and schedule MEP filing]
----------------------------------------------------------------------------------------------------------------
Number of Number of
filers under filers under Aggregate cost Aggregate cost Aggregate cost
Type of plan current final under current under final change
(thousands) (thousands) (millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 148.8 148.1 $261.2 $260.1 -$1.1
Small Plans..................... 705.6 702.2 232.9 231.9 -0.9
DFEs............................ 9.7 9.7 11.4 11.4 0.0
-------------------------------------------------------------------------------
Overall Total............... 864.1 860.1 505.5 503.5 -2.0
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

ii. DCG Filings
As discussed above, a DCG filing for a group of plans likely
reduces reporting burden as only one Form 5500 is filed and signed by a
common plan administrator, eliminating the need for separate
administrators from participating plans. However, the burden from the
consolidated Form 5500 filed by the DCG, including the Schedule DCG to
report individual plan information for each participating plans may
offset some or all of these savings. In 2020, there were 531,872 small
defined contribution plans that file the Form 5500-SF and reported the
plan characteristic code 3D; 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.\39\ The DOL sought comments on these
assumptions but did not receive any that warranted adjustments to these
estimates.\40\
---------------------------------------------------------------------------

\39\ As noted above, 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.''
\40\ 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 531,872 small
defined contribution plans mentioned above, there are 1,813 pre-
approved plans.\41\ The DOL does not know if every pre-approved plan
will file on behalf of these 531,872 plans. These pre-approved filers
are the likeliest entities to file as a DCG. Although the DOL lacks
sufficient information to confidently estimate how many DCGs will form,
the 71 entities that have filed the Form PR to register as a pooled
plan provider, and that would provide these services

[[Page 11803]]

for the year 2021, 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
(142) would form in the first year as the number of pooled plan
providers (71).
---------------------------------------------------------------------------

\41\ <a href="https://www.irs.gov/retirement-plans/preapproved-retirement-plans">https://www.irs.gov/retirement-plans/preapproved-retirement-plans</a>.
---------------------------------------------------------------------------

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
service providers that do so may choose to be moved into DCG filings,
while others may change service providers because they don't want to
comply with the additional filing obligations placed on DCG filers. For
purposes of this analysis, we assume that half of the plans currently
associated with a pre-approved plan provider that decide to file as a
DCG are offered and accept the DCG requirements to stay with the same
provider. The DOL uses these assumptions to estimate that 142 DCGs with
a total of 20,827 small plans will have their annual return/report
filing obligation satisfied by the filing of a DCG Form 5500.\42\
---------------------------------------------------------------------------

\42\ Average number of ERISA plans per pre-approved plan =
531,872/1,813 = 293.4. Estimate of total number of ERISA plans
filing as part of a DCG = (2 x 71 = 142) x 293.4*0.5 [ap] 20,827.
---------------------------------------------------------------------------

As described above, the consolidated return/report to be filed by
the DCG to satisfy the annual reporting requirements of participating
plans is required to include a Schedule DCG for each participating
plan. The cost calculation must consider this cost on a per
participating plan basis. The DOL believes that once individual plans
join a DCG, the average cost of filing a Schedule DCG, which would be
done for each of the estimated 20,164 participating plans, would be
lower than the cost of filing a Form 5500-SF separately, which was the
cost 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 a schedule
DCG, the DOL expects an overall cost reduction of $2.1 million. This
cost reduction assumes, as a 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 864,100 to 843,400. The reduction in Form
5500-SF filers would be partially offset by an increase in DFE filings,
which reflects the introduction of DCGs as filing entities. This total
reduction considers both changes in the number of filings.

Table 3--DCG Implementation Saves Approximately $2 Million
[Estimated burden change by type of filer. Introduction of DCGs and schedule DCG filing]
----------------------------------------------------------------------------------------------------------------
Number of Number of
filers under filers under Aggregate cost Aggregate cost Aggregate cost
Type of plan current final under current under final change
(thousands) (thousands) (millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 148.8 148.8 $261.2 $261.2 $0.0
Small Plans..................... 705.6 684.8 232.9 227.1 -5.8
DFEs............................ 9.7 9.9 11.4 15.2 3.8
-------------------------------------------------------------------------------
Overall Total............... 864.1 843.4 505.5 503.4 -2.1
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

iii. Revised Expense Reporting on the Schedule H
These final rules revise the Schedule H to collect more detailed
information on plan expenses to allow for more transparency,
accountability, and increase the usefulness of the data in regulating
employee benefit plans. The revision does not request any additional
information, instead recategorizing the information that is already
reported on Schedule C and Schedule H; therefore, the DOL believes the
cost of this change to be de minimis.
iv. Changes to Participant Count Methodology for Determining
Eligibility for Small Plan Simplified Reporting Option for Defined
Contribution Pension Plans
The regulation changes the method of counting participants for
purposes of determining when a defined contribution plan may file as a
small plan, which also factors into whether the plan may be exempt from
the IQPA audit requirement. Specifically, plans are directed to count
only 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 participate in the plan. This is
facilitated through the Form 5500 and Form 5500-SF which asks for the
number of participants with account balances at the beginning of the
plan year, for defined contribution pension plans only.
This change reduces costs for plans. The additional question
imposes little burden as the number of participants with account
balances at the end of year is already tracked and reported; but to the
defined contribution pension plans which now qualify as a small plan,
the savings could be significant. EBSA estimates that the reporting
burden of all required schedules for a small pension plan is, on
average, approximately $330 while the same estimate for a large pension
plan is around $1,756.
These plans and their participants may no longer have the
protections provided by the audit, which could result in an increased
risk of errors and

[[Page 11804]]

fraud; however, there are conditions for small plans to be eligible for
the audit waiver that are designed to address those potential risks.
For small pension plans to be eligible for the audit waiver they
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. Consistent with the DOL's goal of encouraging pension
plan establishment and maintenance, particularly in the small business
community, the DOL 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 these final rules,
consistent with the existing regulatory conditions for the small plan
audit waiver, the DOL 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 19,541 large
plans filing under the final rules and form changes, 842 large
participating plans that could provide benefits through PEPs, and
18,699 defined contribution plans due to the changing definition of who
can file as a small plan. Further, an estimated 10,714 of these plans
currently provide the IQPA report and audited financial statements and
would therefore save in audit costs.\43\ The DOL estimates that there
could be an audit cost reduction of $7,500 for each one of these 10,714
plans. Plans may still conduct an audit, even if there is no
requirement. It is estimated that 25 percent of plans may still conduct
an audit.\44\ 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 approximate the cost savings.\45\ This results in an
estimated cost savings of $60.3 million annually for the 8,036 plans
(10,714 * 0.75) that will no longer be required to, and choose not to,
conduct an audit. The DOL received a single comment on this estimate
which suggested a range of $8,000 to $15,000 for a single-employer plan
IQPA. Given the wide range of costs noted, both within the comment
received and the referenced materials the DOL based its initial
estimate on, the cost savings could be substantially higher than what
the DOL uses as an estimate. These cost savings are reported in Table 1
above.
---------------------------------------------------------------------------

\43\ To estimate the number of large plans currently providing
the IQPA report and audited financial statements the DOL identified
those large plans that would have been most likely to be redefined
as small plans and to have filed the Schedule H in 2020, as
estimated on the 2020 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 Form 5500 as a large
plan with a Schedule H in a given year.
\44\ See <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>.
\45\ 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/">www.paychex.com/retirement-services/</a> pooled-employer-plans (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 18,699 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 4, the DOL estimates that this
redefinition of small and large plan alone would translate into a
decrease of filing costs of $27.3 million, with a reduction from
148,800 to 130,100 in large plan filers.

Table 4--Plans Switching Filing Size Class Generates an Estimated $27 Million in Cost Savings
[Estimated burden change by type of filer. Changes to filing exemptions and requirements for small plans]
----------------------------------------------------------------------------------------------------------------
Number of Number of
filers under filers under Aggregate cost Aggregate cost Aggregate cost
Type of plan current final under current under final change
(thousands) (thousands) (millions) (millions) (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans..................... 148.8 130.1 261.2 228.7 -$32.5
Small Plans..................... 705.6 724.3 232.9 238.1 5.2
DFEs............................ 9.7 9.7 11.4 11.4 0.0
-------------------------------------------------------------------------------
Overall Total............... 864.1 864.1 505.5 478.2 -27.3
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

v. Internal Revenue Code and ERISA Title IV Changes
The regulation 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 have close at hand and
expect that reporting this information would result in a de minimis
marginal burden.
5. Assumptions, Methodology, and Uncertainty
The cost and burden associated with the annual reporting
requirements 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 11805]]

i. 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, which assumes the future will resemble the present,
absent the final regulations and forms revisions. The DOL does not
include a separate one-time transition cost for learning or updating
systems during the first year in which the reporting changes apply.
Cost to read instructions is already included in the estimates of the
burden. The changes would largely apply requirements currently in
effect for large MEPs to PEPs and DCGs. The financial services
providers and recordkeepers that service 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 PEPs 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 providers
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.
Further, it is not anticipated that the limited number of
additional questions for (1) defined benefit pension plans, and (2)
Code related questions for pension plans related to existing compliance
obligations, will entail material start-up or learning costs. The
changes largely apply existing requirements in the context of a new
schedule for some filers and as an attachment to current filings for
others.
ii. 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.\46\ 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.
---------------------------------------------------------------------------

\46\ The MPR report can be accessed at <a href="https://mathematica.org/publications/estimates-of-the-">https://mathematica.org/publications/estimates-of-the-</a> burden-for-filing-form-5500-the-
change-in-burden-from-the-1997-to-the-1999-forms. 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 form 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.
The DOL used historical counts of Form 5500 Annual Return/Report
filers tabulated by type and reported characteristics to estimate filer
counts for pension plans, welfare plans, and DFEs.
The DOL modeled its approach to calculating burden on the approach
used during the 2009 forms revision and the 2016 modernization
proposal.\47\ 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.
---------------------------------------------------------------------------

\47\ 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. Each of these
major plan types was further subdivided into multiemployer and single-
employer plans.\48\
---------------------------------------------------------------------------

\48\ For purposes of this analysis, multiple-employer plans were
treated as single-employer plans.
---------------------------------------------------------------------------

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; 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).
The costs for each of the forms and schedules that are part of the
Form 5500 Annual Return/Report were also estimated separately. 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 for each item also
is tallied and allocated accordingly.
The reporting burden for each type of plan is estimated considering
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 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

[[Page 11806]]

to estimate the relative burdens placed on different categories of
filers. Burden estimates were adjusted for the final 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 Form 5500
Annual Return/Report 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 and
schedules 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.\49\ The DOL estimated
the burden impact of changes in the numbers of filings and of changes
made to the various form and the schedules. The burden estimates use
data from the Form 5500 Annual Return/Report for plan year 2020, which
is the most recent year for which complete data is available.
---------------------------------------------------------------------------

\49\ 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
situation. Counts of these filings are adjusted to reflect what they
would have filed if they had chosen to file the Form 5500-SF.
---------------------------------------------------------------------------

iii. Uncertainty
The SECURE Act created PEPs and directed the DOL and the Department
of the Treasury to make available a consolidated reporting option for
defined contribution pension plans that meet certain requirements. Due
to these final rules designed to implement the SECURE Act, as well as
the new Schedule DCG and Schedule MEP, which requires MEPs to indicate
the MEP type by checkbox (association retirement plans, PEO plans,
PEPs, and other MEPs), the DOL assumes that these entities will
identify the type of entity when they file a Form 5500 with the
applicable new schedules. 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 PEO plans) 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 which lists plans
they are forming, they do not report the number of participating
employers. Some of the first PEPs to be created would be filing the
2021 Form 5500 series. The submission of the 2021 Forms is underway but
not complete. As previously stated, due to the filing deadlines the
2021 Form 5500 dataset is not complete, therefore the DOL is relying on
alternative sources and professional judgement to estimate PEPs. The
DOL has identified 646,111 defined contribution plans that reported
code 3D, of which 531,872 are considered small defined contribution
plans filing the Form 5500-SF as possible plans that could join a DCG
or a PEP. 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.
The SECURE Act 2.0, which passed at the end of 2022, allows for the
formation of 403(b) PEPs. There is a great deal of uncertainty in how
to estimate the impact of this change in the statute due to the lack of
data on any such arrangement within the 403(b) universe of plans, and
the fact that it is likely that few plans or providers are positioned
to act in the short term. Using the estimates from PEP creation
discussed earlier in the analysis (which may not be representative of
403(b) plan/provider), an estimate of roughly 140 employers joining a
403(b) PEPs in future years can be derived by scaling the estimate of
the number of employers joining a PEP presented earlier by the ratio of
403(b) plans (20,732) to 401(l)-type plans (621,509).
The Agencies requested information during the proposed rule stage
that would help improve its estimates of the numbers of affected
entities, employers, and the burdens they would experience, but did not
receive comments that would help improve its estimates.
iv. Alternatives
As described above, the DOL changes to Title I annual reporting
requirements are primarily 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> Retaining the proposed requirement of auditing both a DCG
trust and plan level audit.
<bullet> Not requiring a plan-level audit and instead requiring
just an audit of the DCG's trust. Retaining the proposed ``eligible
plan asset'' restriction on investments for plans that are part of a
DCG. Retaining the proposed requirement that small plans that are part
of a DCG must satisfy the small plan audit waiver but not by virtue of
enhanced bonding. Not permitting any brokerage windows in DCGs. Not
allowing direct or indirect holding of employer securities.\50\ The
cost (or savings) for each of these items, individually or in
combination, is difficult to disentangle from the whole given that each
of the items interacts with the others. However, as a point of
reference, the combination of changes from the proposed rule to the
final, which many of the alternatives represent, results in an
additional cost savings of $0.7 million annually, $2.3 million as
adopted vs. $2.6 million as proposed.
---------------------------------------------------------------------------

\50\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 1, SECURE Act
Section 202 DCG Reporting Arrangements, paragraph (b) Eliminating
the Single DCG Trust, DCG Trust Audit, and ``Eligible Plan Assets''
Requirements for All Investments in DCG reporting.
---------------------------------------------------------------------------

<bullet> Including more or fewer questions on the Schedule DCG and
the Schedule MEP.\51\
---------------------------------------------------------------------------

\51\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 1, SECURE Act
Section 202 DCG Reporting Arrangements, paragraph (c) Content
Requirement for DCG Form 5500 and Subsection 2 Schedule MEP
(Multiple-Employer Pension Plan Information) and MEP Reporting.
---------------------------------------------------------------------------

<bullet> Including more or fewer questions for defined benefit
plans on issues under Title IV of ERISA or questions for retirement
plans on Code compliance issues.\52\
---------------------------------------------------------------------------

\52\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 3 Internal
Revenue Code Compliance Questions and Subsection 5 Additional
Defined Benefit Plan Reporting Improvements.
---------------------------------------------------------------------------

<bullet> Not adding new content elements to the Schedules of Assets
and requiring the Schedules of Assets to be filed in a data-capturable
format.\53\ At the

[[Page 11807]]

proposal stage at 86 FR 51284 this change was estimated as $41 million.
---------------------------------------------------------------------------

\53\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 6, Schedule H
Schedules of Assets Changes and Breakout Categories for
Administrative Expenses, paragraph (a) Deferring Schedules of Asset
Changes for re-proposal as part of DOL's general Form 5500
improvement project.
---------------------------------------------------------------------------

<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.\54\ Not making this change, as noted in Table 4, would
lead to $27.3 million per year higher costs.
---------------------------------------------------------------------------

\54\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 4,
Participant-Count Methodology for Determining Eligibility for Small
Plan Simplified Reporting Options for Individual Account 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-SF or Form 5500, Schedule A (if applicable), Schedule I, Schedule
R (if applicable)--no IQPA audit, and no detailed supplemental
schedules.\55\ According to the 2021 Form 5500 instructions, the
estimated time a defined contribution plan may expect to save by filing
as a small plan versus a large plan, depending on the combinations of
forms required, is up to 24 hours of labor, which is a 75% reduction in
resources.\56\
---------------------------------------------------------------------------

\55\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 1, SECURE Act
Section 202 DCG Reporting Arrangements, paragraph (c) Content
Requirement for DCG Form 5500.
\56\ Instructions for Form 5500 Annual Return/Report of Employee
Benefit Plan, Pg. 79 at <a href="https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2021-instructions.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2021-instructions.pdf</a>.
---------------------------------------------------------------------------

<bullet> Requiring non-plan MEWAs and/or non-group health MEWA
plans to report the participating plan information on the Form M-1 and
Form 5500, respectively.\57\
---------------------------------------------------------------------------

\57\ See accompanying final forms revisions document being
published concurrently in the Federal Register from the Agencies
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY
INFORMATION, Section D, Overview of Final Form and Instruction
Changes and Discussion of Public Comments, Subsection 1, Subsection
2 Schedule MEP (Multiple-Employer Pension Plan Information) and MEP
Reporting.
---------------------------------------------------------------------------

6. Paperwork Reduction Act Statement

In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44
U.S.C. 3506(c)(2)(A)), the Agencies solicited comments concerning the
information collection request (ICR) included in the revision of the
Form 5500 Annual Return/Report.\58\ At the same time, the Agencies also
submitted an information collection request (ICR) to the Office of
Management and Budget (OMB), in accordance with 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

\58\ 86 FR 51488.
---------------------------------------------------------------------------

The Agencies did not receive comments that specifically addressed
the paperwork burden analysis of the information collection requirement
contained in the proposed rule.
In connection with publication of the final regulations and final
forms revision, the Agencies are submitting an ICRs to OMB requesting a
revision of the collections of information under OMB Control Numbers
1210-0110 (DOL), 1545-1610 (IRS), 1212-0057 (PBGC) and 1210-0040 (DOL
for SAR) reflecting the final regulations and instruction changes being
finalized in this document. The accompanying Notice of Final 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 Summary Annual Report ICR. A copy
of the ICRs may be obtained by contacting the person listed in the PRA
Addressee section below. The Agencies will notify the public when OMB
approves the ICRs.
A copy of the ICRs may be obtained by contacting the PRA addressee
shown. PRA ADDRESSEE: Address requests for copies of the ICRs to James
Butikofer, Office of Research and Analysis, U.S. Department of Labor,
Employee Benefits Security Administration, 200 Constitution Avenue NW,
Room N-5655, Washington, DC 20210 or email: <a href="/cdn-cgi/l/email-protection#5b3e39283a75342b291b3f3437753c342d"><span class="__cf_email__" data-cfemail="086d6a7b692667787a486c6764266f677e">[email&#160;protected]</span></a>. ICRs
submitted to OMB also are available at <a href="http://www.RegInfo.gov">http://www.RegInfo.gov</a>.

7. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) \59\ 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 \60\ and are likely to have a significant economic impact
on a substantial number of small entities. Unless the head of an agency
determines that a final rule will not have a significant economic
impact on a substantial number of small entities, section 604 of the
RFA requires the agency to present a final regulatory flexibility
analysis (FRFA) of the final rule. The DOL has determined that this
final rule and final forms revisions are likely to have a significant
economic impact on a substantial number of small entities. Therefore,
the DOL has prepared a FRFA.
---------------------------------------------------------------------------

\59\ 5 U.S.C. 601 et seq. (1980).
\60\ 5 U.S.C. 551 et seq. (1946).
---------------------------------------------------------------------------

For purposes of this FRFA, an entity is considered a small entity
if it is an employee benefit plan with fewer than 100 participants.\61\
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 FRFA
is found in

[[Page 11808]]

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 and
has a memorandum of understanding with the Office of Advocacy to use
the standard.\62\ The DOL sought comment on the appropriateness of
continuing to use this size standard and did not receive any comments
on the appropriateness of the size standard.
---------------------------------------------------------------------------

\61\ 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 final rules on small
plans is an appropriate substitute for evaluating the effect on
small entities.
\62\ Memorandum received from the U.S. Small Business
Administration, Office of Advocacy on July 10, 2020.
---------------------------------------------------------------------------

The following subsections address specific components of an FRFA,
as required by the RFA.
i. Need for, and Objectives of the Rule
The DOL is publishing separately today in the Federal Register a
notice of final rulemaking, which conform the regulations to the forms
and instruction changes being adopted in this notice of final forms
revisions. The 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. Therefore, it is incumbent on the Agencies to
revise their reporting requirements from time to time to keep pace with
such changes. The final forms revisions, and associated DOL regulatory
amendments are intended to implement the reporting requirements
required by the SECURE Act, taking into account certain recent changes
in markets, other laws, and technology, many of which are referred to
above in this document.
ii. Public Comments Received
The Agencies received 114 comments on the proposals. The Form 5500
Annual Return/Report and regulations provide for simplified reporting
for small plans. These final forms revisions and final regulations
provide additional filing options and benefits to small plans.
Provisions particularly benefiting small plans include DCGs
consolidated reporting option, the change in the participant count
methodology for definition of a small defined contribution plan, and
reporting for PEPs using the Schedule MEP. Comments for these topics
are extensively discuss in sections I.D.1, I.D.2, and I.D.4 of the
notice of final forms revisions.
Comments received did not directly address the initial regulatory
flexibility analysis (IRFA) nor did the Chief Counsel of Advocacy file
a comment on the IRFA.
iii. Affected Small Entities
The rule changes 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. Specifically, the change allows defined
contribution 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 allows an estimated
18,699 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--The Majority of Plans Being Reclassified as Small Plans Hold Less Than $10 Million in Plan Assets
[Distribution of large DC pension plans to be redefined as small filers, by type of plan and amount of assets,
2020]
----------------------------------------------------------------------------------------------------------------
Single- Multiemployer Multiple-
Amount of assets Total employer plans plans employer plans
----------------------------------------------------------------------------------------------------------------
Total........................................... 18,699 18,350 28 321
None or not reported............................ 100 100 .............. ..............
$1-24K.......................................... 278 275 .............. 3
25-49K.......................................... 163 163 .............. ..............
50-99K.......................................... 285 285 .............. ..............
100-249K........................................ 717 708 .............. 9
250-499k........................................ 992 980 .............. 12
500-999K........................................ 1,908 1,885 2 21
1-2.49M......................................... 5,083 4,996 3 85
2.5-4.9M........................................ 4,981 4,890 2 89
5-9.9M.......................................... 3,124 3,047 1 76
10-24.9M........................................ 939 914 1 23
25-49.9M........................................ 75 70 1 3
50-74.9M........................................ 25 19 6 ..............
75-99.9M........................................ 7 6 1 ..............
100-149.9M...................................... 6 3 2 1
150-199.9M...................................... 4 1 3 ..............
200-249.9M...................................... 5 3 2 ..............
250-499.9M...................................... 5 2 3 ..............
500-999.9M...................................... 1 1 .............. ..............
1-2.49B......................................... 2 1 1 ..............
----------------------------------------------------------------------------------------------------------------

As described in the regulatory impact analysis above, the DOL
estimates that 142 DCGs will form in the first year, filing for 20,827
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 new Schedule DCG for each individual participating plan,

[[Page 11809]]

would satisfy the reporting requirements for these plans.
There also may be some cases in which sponsors of small defined
contribution plans decide to participate in a PEP, which would result
in small plans being terminated and merged into the PEP and no longer
filing a Form 5500 or Form 5500-SF. Small employers without a plan
could also decide to join a PEP. As discussed above, the DOL is
estimating that 3,369 small employers/plans will join a PEP.\63\
---------------------------------------------------------------------------

\63\ For the calculation of the total number of participating
employers in PEPs, it is first assumed that 80 percent of all the
employers who would participate in a PEP 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 2,000 employers (which would
then be divided in 1,600 small participating plans and 400 large
participating plans) and to the other 201 pooled plan providers
assumed to be created. It is also assumed that each of these other
201 pooled plan providers would be servicing 11 employers each.
Therefore, the total number of small plans participating in a PEP is
estimated as: 1,600 + (201 x 11 x 0.8) = 3,369 (rounded).
---------------------------------------------------------------------------

Due to the change in the participant count methodology for defined
contribution plans, approximately 631,976 defined contribution pension
plans covering fewer than 100 participants with account balances are
eligible to comply with annual reporting requirements applicable to
small plans, whereas before the change in the participant count
methodology approximately 613,290 defined contribution plans were
filing as small plans. In total, the DOL estimates there would be now
678,553 small plans where previously were 652,934. Estimates of the
number of small pension plans are based on 2020 Form 5500 filing data.
v. Impact of the Rule
While many small plans could experience a reduced burden as a
result of the final changes, the 18,699 large plans filing under the
current participant count methodology, but who will file as small plans
under the new participant count methodology, are the ones who would
experience a significant impact.
Specifically, due to the change in the participant count
methodology, 18,699 defined contribution plans are re-defined as small
plans and eligible for an audit waiver. An estimated 10,714 of those
affected plans currently provide the IQPA report and audited financial
statements that would save in audit costs under these final rule and
final forms revisions.\64\ 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 Form 5500
Annual Return/Report. As described earlier in this document,\65\ the
DOL estimates that there could be an audit cost reduction of $7,500 for
each one of these 10,714 plans. Nevertheless, 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. These plans would no
longer be required to file the Schedule H, but may need to file the
Schedule I. It is possible that affected plans may qualify to file Form
5500-SF, which would further reduce the filing burden; however, the
DOL's estimate assumes only a change from Schedule H to Schedule I for
the affected plans. The difference in burden between filing Schedule H
and Schedule I is estimated to be $587 per year.\66\
---------------------------------------------------------------------------

\64\ To estimate the number of large plans currently providing
the IQPA report and audited financial statements the DOL identified
the large plans which (1) are most likely to be redefined as small
plans, and (2) have filed Schedule H in 2020, as estimated on the
2020 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 as a large plan in a given year.
\65\ See fns. 47-49 supra.
\66\ The methodology DOL uses results in estimates that it will
take a pension plan approximately 8 hours to file a Schedule H,
compared to approximately two hours to file a Schedule I for
comparable plans. The Department multiplies the difference by a
labor rate of accountants and auditors of $108.4. For a description
of the Department's methodology for calculating wage rates, see:
<a href="https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf</a>. For a
discussion of the burden estimating methodology see the
``Methodology'' section starting, supra.
---------------------------------------------------------------------------

Table 6 above shows that number of plans by the amount of assets in
the plans. This shows an estimate of 4,443 plans (those with less than
$1 million in assets) that would see a costs savings of about one
percent of plan assets.\67\
---------------------------------------------------------------------------

\67\ Plan asset data reflects data reported on 2020 Form 5500
filings.
---------------------------------------------------------------------------

The establishment of DCGs, the use of Schedules DCG ($168 per
plan), Schedule MEP ($18 for most MEPs and $25 per PEP), 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.\68\
---------------------------------------------------------------------------

\68\ The Department uses a labor rate of accountants and
auditors of $108.4. For a description of the Department's
methodology for calculating wage rates, see: <a href="https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf">https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf</a>.
---------------------------------------------------------------------------

vi. Duplicate, Overlapping, or Relevant Federal Rules
The DOL us unaware of any relevant Federal rules for small plans
that duplicate, overlap, or conflict with these regulations.
vii. Description of Steps Taken To Minimize the Impact on Small
Entities
These final 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 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 can elect 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. Since the majority of small plans required to file an
ERISA annual report cover fewer than 25 participants, the simplified
reporting option also constitutes the DOL'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 DOL, in developing the final 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 PEPs and other MEPs, did not
expand small plan reporting requirements. We generally limited the
information collection to consolidating information collected on the
Schedule MEP that is already reported elsewhere by MEPs on the current
Form 5500, as discussed elsewhere in this preamble and in the separate
notice of final rulemaking being published with this notice. Overall,
the DOL believes that the final 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.

[[Page 11810]]

8. 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.\69\ For
purposes of the Unfunded Mandates Reform Act, as well as Executive
Order 12875,\70\ this final rule and final forms revisions do not
include any Federal mandate that the DOL expects would result in such
expenditures by State, local, or tribal governments, or the private
sector.
---------------------------------------------------------------------------

\69\ 2 U.S.C. 1501 et seq. (1995).
\70\ Enhancing the Intergovernmental Partnership, 58 FR 58093
(Oct. 28, 1993).
---------------------------------------------------------------------------

9. 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.\71\ 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.
---------------------------------------------------------------------------

\71\ Federalism, supra note 6.
---------------------------------------------------------------------------

In the DOL's view, these final regulations and final forms
revisions 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.
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 being 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.

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
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) introductory text,
(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) Except as provided in Sec. Sec. 2520.104-43, 2520.104-51,
2520.104a-6, and 2520.104a-9, the administrator of a plan required to
file an annual report in accordance with section 104(a)(1) of the Act
shall include with the annual report the information prescribed in
paragraph (a)(1) of this section or in the simplified report, limited
exemption or alternative method of compliance described in paragraph
(a)(2) of this section.
* * * * *
(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 an
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 MEP (Multiple-Employer Plan), Schedule MB
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan
Actuarial Information), Schedule SB (Single-Employer Defined Benefit
Plan Actuarial Information), 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. 2520.104-43, 2520.104-44, 2520.104-51,
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 MEP (Multiple-Employer Plan), Schedule MB
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan
Actuarial Information), Schedule SB (Single-Employer Defined Benefit
Plan Actuarial Information) and Schedule R (Retirement Plan
Information). See the instructions for this form.
(2)(i) The annual report of an employee pension benefit plan or

[[Page 11811]]

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 MEP (Multiple-Employer Pension Plan),
Schedule MB (Multiemployer Defined Benefit Plan and Certain Money
Purchase Plan Actuarial Information) and Schedule SB (Single-Employer
Defined Benefit 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 that is a pooled
employer plan described in section 3(43) of the Act; 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 paragraph (a);
0
b. Redesignate paragraph (c) as paragraph (d); and
0
c. Add a new paragraph (c).
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 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.
* * * * *
(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
(including 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 (including 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
held in the DCG reporting arrangement's trust or trusts for the
individual plans that report in the DCG, 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 group (DCG) reporting arrangements.

(a) General. A defined contribution group reporting arrangement as
described in Sec. 2520.104-51(c) (``DCG reporting arrangement'' or
``DCG'') 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.
(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
DCG (Individual Plan Information), Schedule G (Financial Transaction
Schedules), Schedule H (Financial Information), and other applicable
financial schedules referred to in Sec. 2520.103-10, completed in
accordance with the instructions for the form.
(2) Where some or all of the assets of plans participating in the
DCG 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 DCG's annual report is made is required to be furnished by such
account or trust under Sec. 2520.103-5(c). Although the statement of
assets and liabilities referred to in Sec. 2520.103-5(c) shall be
considered part of the DCG's consolidated annual report, such statement
of assets and liabilities need not be filed with the DCG's annual
report. See Sec. Sec. 2520.103-3 and 2520.103-4 for 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.''
(3)(i) Except for employee pension benefit plans that cover fewer
than 100 participants at the beginning of the plan year that meet the
conditions for being eligible for a waiver of the audit and accountant
opinion requirements in section 103(a)(3)(A) of the Act pursuant to
Sec. 2520.104-46, the Schedule DCG for each participating plan shall
include:
(A) A report of an independent qualified public accountant for the
participating plan that meets the requirements in Sec. 2520.103-
1(a)(5).
(B) Separate financial statements meeting the requirements of Sec.
2520.103-1(b)(2) 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 this
paragraph.
(C) Notes to the financial statements described in paragraph (b)(1)
or (b)(3)(i)(B) of this section, which contain the information set
forth in Sec. 2520.103-1(b)(3).
(ii) For purposes of this section, an employee pension benefit plan
described in Sec. 2520.103-1(d) will be treated as a plan that covers
fewer than 100 participants as of the beginning of the plan year.
(d) Electronic filing requirement. See Sec. 2520.104a-2 and the
instructions for the Form 5500 ``Annual Return/Report

[[Page 11812]]

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 each
plan's records. A single copy of the DCG consolidated Form 5500 filing,
that includes all schedules and attachments maintained by the common
plan administrator on behalf of all the plans will satisfy this
requirement.

0
6. Add Sec. 2520.104-51 to read as follows:

Sec. 2520.104-51 Alternative method of compliance for defined
contribution group (DCG) reporting arrangements.

(a) General. Under the authority of section 110 of the Act and
section 202 of the SECURE Act, the administrator of an employee pension
benefit plan which meets the requirements of paragraph (b) of this
section is not required to file a separate annual report with the
Secretary of Labor as required by section 104(a)(1) of the Act.
(b) Application. (1) This alternative method of compliance applies
only to an individual account or defined contribution pension plan for
a plan year in which:
(i) Such plan participates in a defined contribution 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 terms ``DCG reporting
arrangement,'' ``DCG'' 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, 2520.103-9, 2520.103-10
and elsewhere in subpart C of this part and this subpart, as
applicable.
(c) Defined contribution group (DCG) reporting arrangement. An
arrangement is a ``DCG reporting arrangement'' or ``DCG'' for purposes
of this section only if all plans relying on the DCG consolidated
annual report described in paragraph (b)(1)(ii) of this section--
(1) Are individual account plans or defined contribution plans as
defined in section 3(34) of the Act;
(2) Have--
(i) The same trustee meeting the requirements set forth in section
403(a) of the Act (``common trustee'');
(ii) The same one or more named fiduciaries designated in
accordance with the requirements set forth in section 402(a) of the Act
(``common named fiduciaries''), except that nothing in this paragraph
(c)(2)(ii) precludes an individual employer from acting as an
additional named fiduciary with respect to the individual plan it
sponsors, provided that the other named fiduciaries are the same and
common to all plans;
(iii) A designated plan administrator as defined in section
3(16)(A) of the Act that is the same plan administrator and common to
all plans (``common plan administrator''); and
(iv) Plan years beginning on the same date (``common plan year'');
(3)(i) Provide the same investments or investment options to
participants and beneficiaries in all the plans (``common investments
or common investment options'');
(ii) A single dedicated brokerage window provided by the same
designated registered broker-dealer common to all plans that restricts
participant and beneficiary investments solely to assets with a readily
determinable fair market value as described in Sec. 2520.103-
1(c)(2)(ii)(C) will be treated as a common investment option for
purposes of this paragraph (c)(3);
(4) Do not hold any employer securities at any time during the plan
year, except that nothing in this paragraph (c)(4) prohibits
investments in any employer's publicly traded securities within the
otherwise ``same investment option'' described in paragraph (c)(3);
(5) Are either audited by an independent qualified public
accountant (IQPA) or satisfy the audit waiver conditions in Sec.
2520.104-46;
(6) Are not a multiemployer plan; and
(7) Are 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).
(d) Limitations. The alternative method of compliance set out in
this section does not relieve the administrator of a 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) introductory 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 group
(DCG) reporting arrangements.

(a) General. A defined contribution group (DCG) reporting
arrangement described in Sec. 2520.104-51(c) that files a consolidated
annual report for all the plans participating in the DCG reporting
arrangement in accordance with the terms of paragraphs (b) and (c) of
this section shall be deemed to have filed such a report in accordance
with Sec. 2520.104a-9 for purposes of Sec. 2520.104-51.
(b) Date of filing. The consolidated annual report shall be filed
within seven months after the close of the common plan year of all the
plans participating in the DCG reporting arrangement, unless extended.
See ``When to file'' instructions of the Form 5500 Annual Return/
Report.
(c) Where to file. The consolidated 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. Amend Sec. 2520.104b-10 by:
0
a. In paragraph (d)(3):
0
i. Revising the section ``Summary Annual Report for (name of plan)'';
0
ii. In the section ``Your Rights to Additional Information'':
0
A. Add paragraphs 11 and 12;
0
B. Revise the last undesignated paragraph; and
0
c. Removing the appendix to the section; and
0
d. Adding table 1 at the end of the section.

[[Page 11813]]

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 or 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)
that provides specific plan level information for each individual plan,
as well as an accountant's report regarding your individual plan,
unless the plan is eligible for a small plan audit waiver under
Department of Labor regulations. 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

* * * * *
11. a Schedule DCG for plans participating in a consolidated group
Form 5500 filing that includes your plan sponsor's name, EIN, plan
administrator's name, EIN and telephone number, total number of
participants in your plan, and basic financial information about the
plan.)
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 employers
participating in the MEP and, for defined contribution pension plans
only, the aggregate account balance for each of the employers
participating in the MEP.)
* * * * *
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.
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.
7. 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 defined
contribution 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.

[[Page 11814]]

13. Individual plan information Schedule DCG........... Not applicable......... 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-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)].
6. Change in net assets.......... Sch. H--Subtract 1l Sch. I--Subtract 1c Line 7c--Subtract [Col.
[Col. (a)] from 1l [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.
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 February, 2023.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration, U.S.
Department of Labor.
[FR Doc. 2023-02652 Filed 2-23-23; 8:45 am]
BILLING CODE 4510-29-P

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