Removal of Interpretive Bulletins and Regulations Relating to ERISA

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Parts 2509, 2520 and 2550

RIN 1210-AA51

Removal of Interpretive Bulletins and Regulations Relating to

ERISA

AGENCY: Pension and Welfare Benefits Administration, DOL.

ACTION: Final rule.

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SUMMARY: This rule removes from the Code of Federal Regulations certain

interpretive bulletins and regulations (or portions thereof) under the

Employee Retirement Income Security Act of 1974 (ERISA), that the

Department of Labor (the Department) believes are obsolete

(collectively, the obsolete regulations). The obsolete regulations

generally provided transitional relief for plan sponsors, plan

administrators, and others subject to the requirements of title I of

ERISA, in coming into compliance with ERISA's requirements in the first

several years following ERISA's enactment in 1974. Because the election

periods or dates of applicability under these rules have expired, the

Department believes that the regulations are no longer needed. In other

instances, the obsolete regulations are unnecessary because they merely

provide notice of a rescission or withdrawal of prior guidance or

regulations, or were rendered ineffective by a subsequent Supreme Court

decision.

EFFECTIVE DATE: July 1, 1996.

FOR FURTHER INFORMATION CONTACT: Katherine D. Lewis, Office of

Regulations and Interpretations, Pension and Welfare Benefits

Administration, U.S. Department of Labor, Rm. N-5669, 200 Constitution

Avenue, N.W., Washington, D.C. 20210 (telephone (202) 219-7461), or

Vicki Shteir-Dunn, Plan Benefits Security Division, Office of the

Solicitor, U.S. Department of Labor, Rm. N-4611, 200 Constitution Ave.,

N.W., Washington, D.C. 20210 telephone (202) 219-8610).

SUPPLEMENTARY INFORMATION: In accordance with the President's Executive

Order No. 12866 of September 1993, ``Regulatory Planning and Review,''

and the President's directive of March 4, 1995, ``Regulatory

Reinvention Initiative,'' the Department has undertaken to identify and

eliminate regulations which are no longer needed. Pursuant to a review

of regulations under the Employee Retirement Income Security Act of

1974 (ERISA), the Department identified 28 interpretive bulletins and

regulations (or portions thereof) which it believes to be obsolete.

Nearly all of these interpretive bulletins and regulations were issued

over fifteen years ago. This rule removes these interpretive bulletins,

regulations and paragraphs of regulations from the Code of Federal

Regulations, and makes conforming amendments where necessary to

accommodate the removal of identified provisions. In order to ensure

that members of the public had the opportunity to comment, the

Department initially published this rule in the Federal Register (61 FR

14690, April 3, 1996) as a notice of proposed rulemaking. The

Department received one public comment, which was fully supportive of

the proposal.

The rule removes the obsolete regulations prospectively, as of the

date of publication of this final rule, and has no effect on their

legal effectiveness prior to that date. Following is a brief

description of each of the obsolete interpretive bulletins and

regulations (or portions thereof) removed by the Department. All of

these items were in title 29 of the Code of Federal Regulations.

I. Part 2509--Interpretive Bulletins Relating to the Employee

Retirement Income Security Act of 1974

This rule removes interpretive bulletins 75-1, 75-7, 76-2 and 76-3

from subchapter A, part 2509 of the Code of Federal Regulations (29 CFR

Secs. 2509.75-1, 2509.75-7, 2509.76-2 and 2509.76-3). In addition, the

rule removes paragraph (b) of interpretive bulletin 75-2 (29 CFR

2509.75-2).

Interpretive bulletin 75-1 outlined and clarified section 414(c)(4)

of ERISA, which provided that sections 406 and 407(a) of ERISA

(relating to prohibited transactions) are not applicable to the

provision of certain services between a plan and a party in interest

before June 30, 1977, if certain conditions described in that section

are met. Interpretive bulletin 75-7 supplemented interpretive bulletin

75-1 and provided examples of its application. Interpretive bulletins

76-2 and 76-3 merely gave notice of the rescission or withdrawal of

earlier guidance relating to the definition of ``seasonal industries,''

a matter now under the jurisdiction of the Internal Revenue Service

pursuant to Reorganization Plan No. 4 of 1978. Paragraph (b) of

interpretive bulletin 75-2 took the position that consideration paid

for a contract or policy of insurance issued to a plan would not be

considered plan assets if placed in the general account of the issuing

insurance company, and therefore could not give rise to

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prohibited transactions. This interpretation may no longer be relied on

as a result of the December 13, 1993 Supreme Court decision in John

Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 114

S. Ct. 517 (1993), and therefore, has no force or effect.

II. Part 2520--Rules and Regulations for Reporting and Disclosure

The rule removes ten regulations and provisions of two other

regulations from subchapter C, part 2520 of the Code of Federal

Regulations (29 CFR Part 2520), pertaining to reporting and disclosure

under ERISA.

From subpart C of Part 2520, the rule removes Sec. 103-6(b)(1)(ii),

which defined the current value of plan assets for purposes of

schedules of reportable transactions for plan years beginning in 1975.

The remainder of Sec. 103-6(b)(1) is revised to eliminate the reference

to Sec. 103-6(b)(1)(ii), and to otherwise conform to this change. The

rule also removes Sec. 103-7. This regulation, which provided special

accounting rules for plans filing the annual report for plan years

beginning in 1975, applied only with respect to plan years beginning in

1975 and not to any subsequent plan years.

The rule removes the following seven regulations from subpart D of

part 2520. The Department's regulation at Sec. 104-2 postponed the

effective date of annual reporting requirements for non-calendar year

plans and extended the reporting requirements under prior legislation

for such plans until the end of the first plan year beginning after

January 1, 1975. The Department's regulation at Sec. 104-3 deferred

certain reporting and disclosure requirements for welfare plans, and

provided an alternative method of compliance for pension plans, until

May 30, 1976. The Department's regulation at Sec. 104-5 deferred, until

no later than November 16, 1977, the application of certain reporting

and disclosure requirements relating to the summary plan description

for welfare plans. The Department's regulation at Sec. 104-6 provided

an alternative method of compliance for pension plans which elected to

defer the summary plan description reporting and disclosure

requirements. The availability of the deferral expired on November 16,

1977. The Department's regulation at Sec. 104-28 provided an extension

of time for filing and disclosure of the initial summary plan

description for certain employee benefit plans that became subject to

part 1 of title I of ERISA on or before July 17, 1977. The Department's

regulation at Sec. 104-45 provided a temporary exemption and

alternative method of compliance with respect to the requirement to

report insurance fees and commissions for insured plans with fewer than

100 participants. The regulation applied only to annual reports

required to be filed for the plan years beginning in 1975 and 1976.

From subpart F of part 2520, the rule removes and reserves certain

paragraphs of Sec. 104b-2 and Sec. 104b-4, and removes Secs. 104b-5 and

104b-12.

With respect to Sec. 104b-2, the rule revises paragraphs (b)(1) and

(b)(2), and removes and reserves paragraphs (c), (d), (e), (f) and (h).

Paragraphs (b)(1) and (b)(2) establish the periods within which updated

summary plan descriptions must be furnished to participants and

beneficiaries receiving benefits under the plan (which differ depending

on whether there have been amendments to the plan). In both cases, the

periods for providing an updated summary plan description are no later

than 210 days after the end of the plan year within which occurs the

later of a date certain (November 16, 1983 or November 16, 1987) or a

period of years after the last date a change in the information

required to be disclosed by section 102 of ERISA or Sec. 102-3 would

have been reflected in the most recently distributed summary plan

description. The rule revises paragraphs (b)(1) and (b)(2) to eliminate

the references to the dates certain.

Paragraph (c) of Sec. 104b-2 pertained to plans making elections

under Secs. 2520.104-5 and 2520.104-6, for which the election periods

expired in 1977. Paragraph (d) of the regulation provided an

alternative method of compliance for plans using a Form EBS-1 with a

print date of April 1975 as the summary plan description. The Form EBS-

1 was eliminated in 1976. Paragraph (e) of the regulation provided an

alternative method of compliance with ERISA's summary plan description

requirements for plans which filed and disclosed an initial summary

plan description on or before May 30, 1976, in reliance upon earlier

guidance of the Department. The availability of the alternative method

of compliance was conditioned on the disclosure by such plans, prior to

November 16, 1977, of a statement of ERISA rights which complied with

Sec. 2520.102-3(t). Paragraph (f) of the regulation provided an

alternative method of compliance for plans which were not described in

paragraphs (d) or (e) and which met certain requirements. The

alternative method of compliance under paragraph (f) expired on

November 16, 1977. Paragraph (h) of the regulation merely referred to

Secs. 2520.104-5 and 2520.104-6, both of which authorized alternative

methods of compliance which expired on November 16, 1977.

With respect to Sec. 104b-4, the rule removes paragraph (d). This

paragraph required certain plans to furnish information to certain

classes of participants or beneficiaries by November 16, 1977.

The rule also removes Sec. 104b-5 and Sec. 104b-12. The

Department's regulation at Sec. 104b-5 created a new disclosure

document, the ``ERISA Notice'', for use as an interim disclosure

document by welfare and pension benefit plans electing to use the

deferral until November 16, 1977 provided under Secs. 2520.104-5 and

2520.104-6. The Department's regulation at Sec. 104b-12 provided

multiemployer plans lacking records of covered participants with

optional methods of distributing the first summary annual report to

participants covered under the plan. The regulation generally applied

to reports distributed before February 15, 1977.

III. Part 2550--Rules and Regulations for Fiduciary Responsibility

The rule removes eight regulations from subchapter F, part 2550 of

title 29 of the Code of Federal Regulations, pertaining to fiduciary

responsibility under ERISA. These include Secs. 407a-3, 407a-4, 407c-3,

414b-1, 414c-1, 414c-2, 414c-3 and 414c-4, all of which provided

transitional relief for the first several years following ERISA's

enactment.

The Department's regulation at Sec. 407a-3 provided plan

administrators with prospective guidance clarifying the meaning of

section 407(a)(3)(B) of ERISA. This guidance assisted plan

administrators in determining whether their plans held qualifying

employer securities and/or qualifying employer real property the fair

market value of which, on any date between January 1, 1975 and December

31, 1984, did not exceed ten percent of the fair market value of the

plan's assets, and thus would not be subject to the ten percent holding

limitation contained in section 407(a)(3)(A) of ERISA. The period for

which plan administrators needed such prospective guidance was from

January 1, 1975 until December 31, 1984. Accordingly, the need for such

guidance no longer exists.

The Department's regulation at Sec. 407a-4 clarified the

requirements of section 407(a)(4) of ERISA, which required that plans

divest, by December 31, 1979, 50 percent of the qualifying employer

securities and qualifying real property which they would be required to

divest before January 1, 1985, under

[[Page 33849]]

section 407(a)(3) or 407(c) of ERISA. Accordingly, the transactions

addressed by the regulation were transactions that were required to

occur on or before December 31, 1979.

The Department's regulation at Sec. 407c-3 described an election

plans could make, prior to January 1, 1976, to utilize an alternate

method of calculating the value of employer securities for purposes of

satisfying the limitations of section 407(a)(3) of ERISA on the holding

of such securities or real property. The regulation also provided that

after making such an election, and before January 1, 1985, the plan

could not acquire any real property.

The Department's regulation at Sec. 414b-1 provided guidance to

plans applying to the Department of Labor, in accordance with section

414(b)(1) of ERISA, for postponement, until no later than January 1,

1976, of the effective date of certain provisions of ERISA.

Applications for such postponement generally had to be submitted to the

Department on or before December 31, 1974.

The Department's regulations at Secs. 414c-1, 414c-2, and 414c-3

provided guidance concerning transitional rules relating to certain

types of transactions prior to June 30, 1984, after which the rules

became inapplicable. Specifically, Sec. 414c-1 related to certain loans

or other extensions of credit prior to June 30, 1984; Sec. 414c-2

related to certain leases or joint uses of property prior to June 30,

1984; and Sec. 414c-3 related to certain sales, exchanges, or other

dispositions of property prior to June 30, 1984. The Department's

regulation at Sec. 414c-4 provided guidance regarding a transitional

rule relating to the provision of certain services until June 30, 1977,

after which the rule became inapplicable.

Executive Order 12866

The Department has determined that this regulatory action is not a

``significant rule'' within the meaning of Executive Order 12866

concerning Federal regulations, because it is not likely to result in:

(1) An annual effect on the economy of $100 million or more, or an

adverse and material effect on a sector of the economy, productivity,

competition, jobs, the environment, public health or safety, or State,

local or tribal governments or communities; (2) the creation of a

serious inconsistency or interference with an action taken or planned

by another agency; (3) a material alteration in the budgetary impacts

of entitlement, grants, user fees, or loan programs or the rights and

obligations of recipients thereof; or (4) the raising of novel legal or

policy issues arising out of legal mandates, the President's

priorities, or the principles set forth in Executive Order 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601 et. seq., requires

each Federal agency to perform a Regulatory Flexibility Analysis for

all rules that are likely to have a significant economic impact on a

substantial number of small entities. Small entities include small

businesses, organizations, and governmental jurisdictions; under ERISA,

a ``small plan'' is one with less than 100 participants. ERISA section

104(a)(2), 29 U.S.C. 1024(a)(2).

The Assistant Secretary of the Pension and Welfare Benefits

Administration certifies that the modifications set forth in this rule

will not have a significant economic impact on a substantial number of

small entities. The reasons for this certification are as follows:

(1) The rule merely removes obsolete or unnecessary interpretive

bulletins and regulations (or portions thereof) from the Code of

Federal Regulations, and, where appropriate, makes conforming

amendments to accommodate such removal; and

(2) The rule does not impose any new requirements on any entity.

Paperwork Reduction Act

This rule is not subject to the requirements of the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501 et seq.) because it contains no

``collection of information'' as defined in 44 U.S.C. 3502(3).

List of Subjects

29 CFR Part 2509

Employee benefit plans, Pensions.

29 CFR Part 2520

Employee benefit plans, Pensions, Reporting and recordkeeping

requirements.

29 CFR Part 2550

Employee benefit plans, Pensions, Prohibited transactions.

Authority

For the reasons described in the preamble, parts 2509, 2520, and

2550 of chapter XXV of title 29 of the Code of Federal Regulations, are

amended as set forth below:

PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE

RETIREMENT INCOME SECURITY ACT OF 1974

1. The authority citation for part 2509 is revised to read as

follows:

Authority: 29 U.S.C. 1135. Sections 2509.75-10 and 2509.75-2

issued under 29 U.S.C. 1052, 1053, 1054. Secretary of Labor's Order

No. 1-87 (52 FR 13139).

Sec. 2509.75-1 [Removed]

2. Section 2509.75-1 is removed.

Sec. 2509.75-2 [Amended]

3. Section 2509.75-2 is amended by removing and reserving paragraph

(b).

Secs. 2509.75-7, 2509.76-2, 2509.76-3 [Removed]

4. Sections 2509.75-7, 2509.76-2 and 2509.76-3 are removed.

PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE

5. The authority citation for part 2520 continues to read as

follows:

Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2),

111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.

1021-25, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,

13-76, 1-87, and Labor Management Services Administration Order No.

2-6.

Subpart C--[Amended]

6. Section 2520.103-6 is amended by revising paragraph (b)(1) to

read as follows:

Sec. 2520.103-6 Definition of reportable transaction for Annual

Return/Report.

* * * * *

(b) Definitions. (1) Except as provided in paragraphs (c)(2) and

(d)(1)(vi) of this section (relating to assets acquired or disposed of

during the plan year), ``current value'' shall mean the current value,

as defined in section 3(26) of the Act, of plan assets as of the

beginning of the plan year, or the end of the previous plan year.

* * * * *

Sec. 2520.103-7 [Removed]

7. Section 2520.103-7 is removed.

Subpart D--[Amended]

Secs. 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6, 2520.104-28,

2520.104-45 [Removed and Reserved]

8. Sections 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6,

2520.104-28, and 2520.104-45 are removed and reserved.

Subpart F--[Amended]

9. Section 2520.104b-2 is amended by revising paragraph (b) to read

as follows:

Sec. 2520.104b-2 Summary plan description.

* * * * *

(b) Periods for furnishing updated summary plan description. (1)

For

[[Page 33850]]

purposes of the requirement to furnish the updated summary plan

description to each participant and each beneficiary receiving benefits

under the plan (other than beneficiaries receiving benefits under a

welfare plan) required by section 104(b)(1) of the Act, the

administrator of an employee benefit plan shall furnish such updated

summary plan description no later than 210 days following the end of

the plan year which occurs five years after the last date a change in

the information required to be disclosed by section 102 or 29 CFR

2520.102-3 would have been reflected in the most recently distributed

summary plan description (or updated summary plan description) as

described in section 102 of the Act.

(2) In the case of a plan to which no amendments have been made

between the end of the time period covered by the last distributed

summary plan description (or updated summary plan description),

described in section 102 of the Act, and the next occurring applicable

date described in paragraph (b)(1) of this section, for purposes of the

requirement to furnish the updated summary plan description to each

participant, and to each beneficiary receiving benefits under the plan

(other than beneficiaries receiving benefits under a welfare plan),

required by section 104(b)(1) of the Act, the administrator of an

employee benefit plan shall furnish such updated summary plan

description no later than 210 days following the end of the plan year

which occurs ten years after the last date a change in the information

required to be disclosed by section 102 or 29 CFR 2520.102-3 would have

been reflected in the most recently distributed summary plan

description (or updated summary plan description), as described in

section 102 of the Act.

* * * * *

Sec. 2520.104b-2 [Amended]

10. Paragraphs (c), (d), (e), (f) and (h) of Sec. 2520.104b-2 are

removed and reserved.

Sec. 2520.104b-4 [Amended]

11. Paragraph (d) of Sec. 2520.104b-4 is removed.

Secs. 2520.104b-5--2520.104b-12 [Removed]

12. Sections 2520.104b-5 and 2520.104b-12 are removed.

PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY

13. The authority citation for part 2550 is revised to read as

follows:

Authority: 29 U.S.C. 1135. Section 2550.401b-1 also issued under

sec. 102, Reorganization Plan No. 4 of 1978 (43 FR 47713, Oct. 17,

1978), effective December 31, 1978 (44 FR 1065, Jan. 3, 1979), 3

CFR, 1978 Comp., p. 332. Section 2550.404c-1 also issued under 29

U.S.C. 1104. Section 2550.407c-3 also issued under 29 U.S.C. 1107.

Section 2550.408b-1 also issued under sec. 102, Reorganization Plan

No. 4 of 1978 (43 FR 47713, Oct. 17, 1978), effective December 31,

1978 (44 FR 1065, Jan. 3, 1979), 3 CFR, 1978 Comp., p. 332, and 29

U.S.C. 1108(b)(1). Section 2550.412-1 also issued under 29 U.S.C.

1112. Secretary of Labor's Order No. 1-87 (52 FR 13139).

Secs. 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1, 2550.414c-1,

2550.414c-2, 2550.414c-3, 2550.414c-4 [Removed]

14. Sections 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1,

2550.414c-1, 2550.414c-2, 2550.414c-3, 2550.414c-4 are removed.

Signed at Washington, D.C., this 25th day of June, 1996.

Olena Berg,

Assistant Secretary for Pension and Welfare Benefits, U.S. Department

of Labor.

[FR Doc. 96-16594 Filed 6-28-96; 8:45 am]

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