Removal of Interpretive Bulletins and Regulations Relating to the Employee Retirement Income Security Act of 1974

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 the

Employee Retirement Income Security Act of 1974

AGENCY: Pension and Welfare Benefits Administration, Department of

Labor.

ACTION: Proposed rule.

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SUMMARY: This document contains a notice of a proposal to remove from

the Code of Federal Regulations certain interpretive bulletins and

regulations (or portions thereof) under the Employee Retirement Income

Security Act of 1974 (ERISA, 29 U.S.C. 1001, et. seq.) that the

Department of 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

[[Page 14691]]

needed. In other instances, the obsolete regulations are unnecessary

because they merely provide notice of a rescission or withdrawal of

prior guidance or regulations, or were rendered ineffective by a

subsequent Supreme Court decision.

DATES: Comments must be received by June 3, 1996.

ADDRESSES: All written comments and requests for a public hearing

(preferably three copies) should be sent to: Pension and Welfare

Benefits Administration, Office of Regulations and Interpretations,

Room N-5669, 200 Constitution Avenue, N.W., Washington, D.C. 20010.

This notice, as well as all comments received from interested persons,

will be available for public inspection in the Public Disclosure Room,

Pension and Welfare Benefits Administration, U.S. Department of Labor,

Room N-5638, 200 Constitution Ave., N.W., Washington, D.C. 20210.

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

Regulations and Interpretations, Pension and Welfare Benefits

Administration, U.S. Department of 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 April 24, 1995, ``Regulatory

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

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

of regulations under the Employee Retirement Income Security Act of

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

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

Nearly all of these interpretive bulletins and regulations were issued

over fifteen years ago. This document proposes the removal of these

interpretive bulletins, regulations and paragraphs of regulations from

the Code of Federal Regulations. In order to ensure that members of the

public have the opportunity to comment on the proposed removal, the

Department is publishing this notice as a notice of proposed

rulemaking.

The proposal would remove the obsolete regulations prospectively,

as of the date of publication of a final rule, and would have no effect

on their legal effectiveness prior to that date. Following is a brief

description of each of the obsolete interpretive bulletins and

regulations (or portions thereof) proposed for removal by the

Department. All of these items are presently contained in title 29 of

the Code of Federal Regulations.

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

Retirement Income Security Act of 1974

The Department is proposing to remove interpretive bulletins 75-1,

75-7, 76-2 and 76-3 from subchapter A, part 2509 of the Code of Federal

Regulations (29 CFR Secs. 2509.75-1, 2509.75-7, 2509.76-2 and 2509.76-

3). In addition, the Department is proposing to remove paragraph (b) of

interpretive bulletin 75-2 (29 CFR 2509.75-2).

Interpretive bulletin 75-1 outlines and clarifies section 414(c)(4)

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

(relating to prohibited transactions) are not applicable to the

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

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

are met. Interpretive bulletin 75-7 supplemental interpretive bulletin

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

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

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

a matter now under the jurisdiction of the Internal Revenue Service

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

interpretive bulletin 75-2 took the position that consideration paid

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

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

insurance company, and therefore could not give rise to prohibited

transactions. This interpretation may no longer be relied on as a

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

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

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

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

The Department is proposing to remove ten regulations and

provisions of two other regulations from subchapter C, part 2520 of the

Code of Federal Regulations (29 CFR Part 2520), pertaining to reporting

and disclosure under ERISA.

From subpart C of Part 2520, the Department proposes to remove

Sec. 103-6(b)(1)(ii), which defined the current value of plan assets

for purposes of schedules of reportable transactions for plan years

beginning in 1975. The remainder of Sec. 103-6(b)(1) would be revised

to eliminate the reference to Sec. 103-6(b)(1)(ii), and to otherwise

conform to this change. The Department also proposes to remove

Sec. 103-7. This regulation, which provided special accounting rules

for plans filing the annual report for plan years beginning in 1975,

applied only with respect to plan years beginning in 1975 and not to

any subsequent plan years.

The Department proposes to remove the following seven regulations

from subpart D of part 2520. The Department's regulation at Sec. 104-2

postponed the effective date of annual reporting requirements for non-

calendar year plans and extended the reporting requirements under prior

legislation for such plans until the end of the first plan year

beginning after January 1, 1975. This regulation does not apply to

subsequent plan years. The Department's regulation at Sec. 104-3

deferred certain reporting and disclosure requirements for welfare

plans, and provided an alternative method of compliance for pension

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

deferred, until no later than November 16, 1977, the application of

certain reporting and disclosure requirements relating to the summary

plan description for welfare plans. The Department's regulation at

Sec. 104-6 provided an alternative method of compliance for pension

plans which elected to defer the summary plan description reporting and

disclosure requirements. The availability of the deferral expired on

November 16, 1977. The Department's regulation at Sec. 104-28 provided

an extension of time for filing and disclosure of the initial summary

plan description for certain employee benefit plans that became subject

to part 1 of title I of ERISA on or before July 17, 1977. The

regulation does not apply to any subsequent summary plan descriptions.

The Department's regulation at Sec. 104-45 provided a temporary

exemption and alternative method of compliance with respect to the

requirement to report insurance fees and commissions for insured plans

with fewer than 100 participants. The regulation applies only to annual

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

1976, and does not apply to annual reports filed for subsequent plan

years.

[[Page 14692]]

From subpart F of part 2520, the Department proposes to remove and

reserve certain paragraphs of Sec. 104b-2 and Sec. 104b-4, and to

remove Secs. 104b-5 and 104b-12.

With respect to Sec. 104b-2, the Department proposes to revise

paragraphs (b)(1) and (b)(2), and to remove and reserve paragraphs (c),

(d), (e), (f) and (h). Paragraphs (b)(1) and (b)(2) establish the

periods within which updated summary plan descriptions must be

furnished to participants and beneficiaries receiving benefits under

the plan (which differ depending on whether there have been amendments

to the plan). In both cases, the periods for providing an updated

summary plan description are no later than 210 days after the end of

the plan year within which occurs the later of a date certain (November

16, 1983 or November 16, 1987) or a period of years after the last date

a change in the information required to be disclosed by section 102 of

ERISA or Sec. 102-3 would have been reflected in the most recently

distributed summary plan description. The proposed revisions to

paragraphs (b)(1) and (b)(2) would eliminate the references to the

dates certain.

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

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

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

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

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

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

alternative method of compliance with ERISA's summary plan description

requirements for plans which filed and disclosed an initial summary

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

guidance of the Department. The availability of the alternative method

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

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

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

alternative method of compliance for plans which were not described in

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

alternative method of compliance under paragraph (f) expired on

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

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

methods of compliance which expired on November 16, 1977.

With respect to Sec. 104b-4, the Department proposes to remove

paragraph (d). This paragraph required certain plans to furnish

information to certain classes of participants or beneficiaries by

November 16, 1977.

The Department also proposes to remove Sec. 104b-5 and Sec. 104b-

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

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

document by welfare and pension benefit plans electing to use the

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

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

multiemployer plans lacking records of covered participants with

optional methods of distributing the first summary annual report to

participants covered under the plan. The regulation generally applied

to reports distributed before February 15, 1977.

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

The Department is proposing to remove eight regulations from

subchapter F, part 2550 of title 29 of the Code of Federal Regulations,

pertaining to fiduciary responsibility under ERISA. These include

Secs. 407a-3, 407a-4, 407c-3, 414b-1, 414c-1, 414c-2, 414c-3 and 414c-

4, all of which provide transitional relief for the first several years

following ERISA's enactment.

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

administrators with prospective guidance clarifying the meaning of

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

administrators in determining whether their plans held qualifying

employer securities and/or qualifying employer real property the fair

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

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

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

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

which plan administrators needed such prospective guidance was from

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

guidance no longer exists.

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

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

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

securities and qualifying real property which they would be required to

divest before January 1, 1985, under section 407(a)(3) or 407(c) of

ERISA. Accordingly, the transactions addressed by the regulation were

transactions that were required to occur on or before December 3,1

1979.

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

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

method of calculating the value of employer securities for purposes of

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

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

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

could not acquire any real property. There are no provisions in the

regulation that remain applicable after January 1, 1985.

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

plans applying to the Department of 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 relates to certain loans

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

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

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

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

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

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

after which the rule is inapplicable.

Executive Order 12866

The Department has determined that this proposed regulatory action

is not a ``significant rule'' within the meaning of Executive Order

12866 concerning Federal regulations, because it is not likely to

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

or an adverse and material effect on sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local or tribal governments or communities; (2) the

creation of a serious inconsistency or interference with an action

taken or planned by another agency; (3) a material alteration in the

budgetary impacts of entitlement, grants, user fees, or loan programs

or the rights and obligations of recipients thereof; or (4) the raising

of novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in Executive Order

12866.

[[Page 14693]]

Regulatory Flexibility Act

This proposal will not have a significant economic impact on a

substantial number of small employers.

Paperwork Reduction Act

This proposal is not subject to the requirements of the Paperwork

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

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

List of Subjects

29 CFR Part 2509

Employee benefit plans, Pensions.

29 CFR Part 2520

Employee benefit plans, Pensions, Reporting requirements.

29 CFR Part 2550

Employee benefit plans, Pensions, Prohibited transactions.

Authority

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

2550 of Chapter XXV of Title 29 of the Code of Federal Regulations, are

proposed to be amended as set forth below:

PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE

RETIREMENT INCOME SECURITY ACT OF 1974

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

follows:

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

also issued under 29 U.S.C. 1052, 1053, 1054. Secretary of 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 Secs. 2509.75-7, 2509.76-2, 2509.76-3 are removed.

PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE

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

follows:

Authority: Secs. 101, 102, 103, 204, 105, 109, 110, 111(b)(2), ,

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

1021-25, 1029-31, 1135); Secretary of Labor's Order No. 27-74, 13-

76, 1-87, and Labor Management Services Administration Order No. 2-

6.

Subpart C of Part 2520--[Amended]

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

read as follows:

Sec. 2520.103-6 Definition of reportable transaction for Annual

Return/Report.

* * * * *

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

(d)(1)(vi) (relating to assets acquired or disposed of during the plan

year), ``current value'' shall mean the current value, as defined in

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

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

* * * * *

7. Subpart C of part 2520 is amended by removing Sec. 2520.103-7.

Subpart D of Part 2520--[Amended]

8. Subpart D of part 2520 is amended by removing Secs. 2520.104-2,

2520.104-3, 2520.104-5, 2520.104-6, 2520.104-28, and 2520.104-45.

Subpart F of Part 2520--[Amended]

9. Section 2520.104b-2 is amended by revising paragraphs (b)(1) and

(b)(2) to read as follows:

Sec. 2520.104b-2 Summary plan description.

* * * * *

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

For purposes of the requirement to furnish the updated summary plan

description to each participant and each beneficiary receiving benefits

under the plan (other than beneficiaries receiving benefits under a

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

administrator of an employee benefit plan shall furnish such updated

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

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

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

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

summary plan description (or updated summary plan description) as

described in section 102 of the Act.

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

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

summary plan description (or updated summary plan description),

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

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

requirement to furnish the updated summary plan description to each

participant, and to each beneficiary receiving benefits under the plan

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

reburied by section 204(b)(1) of the Act, the administrator of an

employee benefit plan shall furnish such updated summary plan

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

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

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

been reflected in the most recently distributed summary plan

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

section 102 of the Act.

* * * * *

Sec. 2520.104b-2 [Amended]

10. Subpart F of part 2520 is amended by removing and reserving

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

Sec. 2520.104b-4 [Amended]

11. Subpart F of part 2520 is amended by removing paragraph (d) of

Sec. 2520.104b-4.

Secs. 2520.1046-5, 2520.104b-12 [Amended]

12. Subpart F of part 2520 is amended by removing Secs. 2520.104b-5

and 2520.104b-12.

PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY

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

follows:

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

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

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

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

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

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

2550.408b-1 also issued under sec. 102 Reorganization Plan No. 4 of

1978 (43 FR 47713, Oct. 17, 1978), effective December 31, 1978 (44

FR 1065, Jan. 3, 1979), 3 CFR 1978 Comp., 332, reprinted in 5 U.S.C.

app. at 1163 (1982), and under 29 U.S.C. 1108(b)(1). Section

2550.412-1 also issued under 29 U.S.C. 1112. Secretary of 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]

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

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

[[Page 14694]]

Signed at Washington, DC, this 27th day of March, 1996.

Olena Berg,

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

of Labor.

[FR Doc. 96-7878 Filed 4-2-96; 8:45 am]

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