[Federal Register Volume 60, Number 81 (Thursday, April 27, 1995)]
[Rules and Regulations]
[Pages 20874-20876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10403]
[[Page 20873]]
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Part IV
Department of Labor
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Pension and Welfare Benefits Administration
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29 CFR Parts 2560 and 2570
Delinquent Filer Voluntary Compliance Program; Final Rule
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules
and Regulations
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[[Page 20874]]
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2560 and 2570
RIN 1210-AA49
Employee Retirement Income Security Act of 1974; Administration
and Enforcement, Delinquent Filer Voluntary Compliance Program
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Rule related notice, reduced civil penalty.
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SUMMARY: This Notice announces the implementation of a new Delinquent
Filer Voluntary Compliance Program by the Department of Labor's Pension
and Welfare Benefits Administration (PWBA). This Program is intended to
encourage, through the assessment of reduced civil penalties,
delinquent plan administrators to comply with their annual reporting
obligations under Title I of the Employee Retirement Income Security
Act of 1974, as amended, (ERISA).
EFFECTIVE DATE: April 27, 1995.
FOR FURTHER INFORMATION CONTACT: PWBA's Delinquent Filer Voluntary
Compliance Program Hotline, (202) 219-8776 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Executive Order 12866 Statement
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the
Department must determine whether the regulatory action is
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. Under section 3(f), the 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.
Pursuant to the terms of the Executive Order, the Department has
determined that this program creates a novel method for statutory
compliance that will reduce paperwork and regulatory compliance burdens
on businesses, including small businesses and organizations, and make
better use of scarce federal resources, in accord with the mandates of
the Paperwork Reduction Act, the Regulatory Flexibility Act, and the
President's priorities. Therefore, this notice is ``significant'' and
subject to OMB review.
Regulatory Flexibility Act Statement
The Regulatory Flexibility Act of 1980 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.
Given the existing requirement on small businesses to file the Form
5500 Series Annual Return/Reports, we believe this delinquency program
imposes no significant additional burden on small entities. First, no
entity is required to file under this program. Thus, unless a plan
sponsor chooses to take advantage of the relief offered by this
program, this program would not impose any increased burden on small
entities that sponsor pension and welfare benefit plans. Second, the
additional documentation that would be required to be submitted under
this program is minimal. Third, the program offers a substantial
reduction in the penalties that might otherwise be imposed on the
entities, including small entities, that participate in the program. A
second tier of requirements, in the form of further reduced penalties,
has been provided for small plans (those filing Form 5500-C).
Paperwork Reduction Act Statement
Public reporting burden for this collection of information is
estimated to average 21 minutes per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. If you have any comments regarding this
estimate or any other aspect of this information collection, including
suggestions for reducing this burden, please send them to the
Department of Labor, Office of IRM Policy, Room N-1301 (1210-0XXX), 200
Constitution Avenue, NW, Wash., DC 20210, and to Allison Herron Eydt,
PWBA Desk Officer, Office of Management and Budget, Room 10235, New
Executive Office Building, Washington, DC 20507.
Section 1--Background
The Secretary of Labor has the authority, under section 502(c)(2)
of ERISA, to assess civil penalties of up to $1,000 a day against plan
administrators who fail or refuse to file complete and timely annual
reports (Form 5500 Series Annual Return/Reports) as required under
section 101(b)(4) of ERISA and the Secretary's regulations codified in
29 CFR Part 2520. Pursuant to 29 CFR 2560.502c-2 and 2570.60 et seq.,
PWBA has maintained a program for the assessment of civil penalties for
noncompliance with the annual reporting requirements. Under this
program, plan administrators filing annual reports after the date on
which the report was required to be filed may be assessed $50 per day
for each day an annual report is filed after the date on which the
annual report(s) was required to be filed, without regard to any
extensions for filing. Plan administrators who fail to file an annual
report may be assessed a penalty of $300 per day, up to $30,000 per
year, until a complete annual report is filed. Penalties are applicable
to each annual report required to be filed under Title I of ERISA. The
Department may, in its discretion, waive all or part of a civil penalty
assessed under section 502(c)(2) upon a showing by the administrator
that there was reasonable cause for the failure to file a complete and
timely annual report.
The Department has determined that the possible assessment of the
above described civil penalties may deter certain delinquent filers
from voluntarily complying with the annual reporting requirements under
Title I of ERISA. In an effort to encourage annual reporting
compliance, therefore, the Department has decided to implement the
Delinquent Filer Voluntary Compliance (DFVC) Program, described herein,
under which administrators otherwise subject to the assessment of
higher civil penalties will be permitted to pay reduced civil penalties
for voluntarily complying with the annual reporting requirements under
Title I of ERISA.
Section 2--The Delinquent Filer Voluntary Compliance (DFVC) Program
.01 General. The DFVC Program is intended to afford eligible plan
administrators (described in subsection .02 of this Section) the
opportunity to avoid the assessment of civil penalties otherwise
applicable to administrators who fail to file timely annual reports for
plan years beginning on or after January [[Page 20875]] 1, 1988.
Eligible administrators may avail themselves of the DFVC Program by
complying with the filing requirements and paying the civil penalties
specified in Section 3 or Section 4, as appropriate, of this Notice.
.02 Eligibility for DFVC Program. The DFVC Program is available
only to a plan administrator who complies with each of the requirements
of Section 3 or Section 4, as appropriate, of this Notice prior to the
date on which the administrator:
(a) is notified in writing, pursuant to 29 CFR 2560.502c-2, of the
Department's intention to assess a civil penalty under section
502(c)(2) of ERISA for failure to file a timely annual report; or
(b) is otherwise notified in writing by the Department of a failure
to file a timely annual report under Title I of ERISA.
.03 Effective date. The DFVC Program described herein shall be
effective April 27, 1995. The Department of Labor intends the DFVC
Program to be of indefinite duration; however, the Program may be
modified from time to time or terminated in the sole discretion of the
Department upon publication of notice in the Federal Register.
Section 3--Administrators Filing Annual Reports
.01 Plan administrators electing to file a late Form 5500 Series
Annual Report under the DFVC Program shall:
(a) File with the Internal Revenue Service. Except as provided in
Section 3.02, file a complete Form 5500 or Form 5500-C (but not the
Form 5500-R), as appropriate, with all required schedules and
attachments, by entering at the top center of the first page of the
Form, in red, bold print ``DFVC Program'' and mailing the complete
Form, along with all required schedules and attachments, to the
Internal Revenue Service Center designated in the Form 5500 Series
instructions. Do not send checks paying penalties under the DFVC
Program to the Internal Revenue Service Center.
Note: If a joint employer-union board of trustees or committee
is the administrator, at least one employer representative and one
union representative must sign the Form.
Current forms and instructions can be obtained by dialing 1-800-
TAX-FORM (this is a toll-free number). For prior years, obtain the most
current form available. If necessary, mark through the year at the top
of the first page and enter the appropriate prior year in red bold
print.
(b) File with the U.S. Department of Labor and Pay Applicable
Penalty Amount. Send a signed and dated copy of the first page of the
Form 5500 Series Annual Report filed with the Internal Revenue Service
and a check payable to the ``U.S. Department of Labor'' in the amount
of the applicable penalty, as determined under Section 3.03, to: DFVC
Program, Pension and Welfare Benefits Administration, P.O. Box 277025,
Atlanta, GA 30384-7025.
The items that are required to be sent to the Department pursuant
to this Section 3.01(b) (i.e., the completed first page of the Form
5500 Series annual report as well as the check made payable to the U.S.
Department of Labor) also should contain the notation, in red, bold
print ``DFVC Program''. The notation should be located at the top
center of each item.
.02 A plan administrator who filed a complete Form 5500 Series
Annual Report, including all required schedules and attachments, with
appropriate Internal Revenue Service Center prior to the effective date
of this DFVC Program, but after the due date for the report, shall only
be required to comply with the provision of paragraph (b) of Section
3.01 and, therefore, shall not be required to refile the Form 5500
Series Annual Report with the Internal Revenue Service Center solely
for purposes of the DFVC Program.
.03 For each annual report filed under this Section 3, the
applicable penalty amount shall be determined as follows:
(a) In the case of an annual report which is filed on or before
twelve (12) months after the date on which the annual report was due
(without regard to any extensions), $50 per day for each day the annual
report is filed after the date on which the annual report was due
(without regard to any extensions), up to a maximum of $2,500 for From
5500 filers and $1,000 for Form 5500-C filers; or
(b) In the case of an annual report which is filed more than twelve
(12) months after the date on which the annual report was due (without
regard to any extensions), $5,000 for Form 5500 filers and $2,000 for
Form 5500-C filers.
Note: The plan administrator is personally liable for the
payment of civil penalties assessed under section 502(c)(2) of
ERISA. Therefore, civil penalties, including penalties paid under
this DFVC Program, may not be paid from the assets of an employee
benefit plan.
.04 Annual reports that are filed with the IRS pursuant to the
DFVC Program may be subject to the usual edit checks. Plan
administrators will have an opportunity to correct deficiencies, in
accordance with the procedures described in 29 CFR 2560.502c-2. The
failure to correct deficiencies in accordance with these procedures may
result in the assessment of further penalties.
PWBA has prepared a booklet, ``The Trouble-Shooter's Guide To
Filing ERISA Annual Reports,'' to assist in preparing the Form 5500
Series. The booklet explains how forms are processed and how to avoid
potential filing errors. Copies are available by written request to:
U.S. Department of Labor, Pension and Welfare Benefits Administration,
Room N-5656, 200 Constitution Ave. N.W., Washington, D.C. 20210.
Section 4--Administrators Electing To File Statements for
Apprenticeship and Training Plans or ``Top Hat'' Plans
.01 Administrators of apprenticeship and training plans, described
in 29 CFR 2520.104-22, and administrators of pension plans for a select
group of management or highly compensated employees, described in 29
CFR 2520.104-23(a) (``top hat plans''), who elect to file the
applicable statement(s), described in Secs. 2520.104-22, and 2520.104-
23, respectively, as a condition of relief from the annual reporting
requirements may, in lieu of filing any past due annual report and
paying otherwise applicable civil penalties, comply with the following
filing requirements:
(a) Send Form and Pay Applicable Penalty Amount to the U.S.
Department of Labor. For purposes of this requirement, plan
administrators must complete items 1a-1c, 2a-2c, 5a-5c, 6a or 6b (as
applicable) of the first page of the Form 5500 Annual Report and enter
at the top center of the Form, in red, bold print, either
``Apprenticeship and Training Plan/DFVC Program'' or ``Top Hat Plan/
DFVC Program'', as appropriate. For purposes of completing item 5c, the
plan number for all top hat plans should be 888, and the plan number
for all apprenticeship and training plans should be 999. The plan
administrator must sign and date the Form.
Note: If a joint employer-union board of trustees or committee
is the administrator, at least one employer representative and one
union representative must sign the Form.
Send the first page of the completed Form 5500 Annual Report, and a
check payable to the ``U.S. Department of Labor'' for the applicable
penalty amount, as determined under section 4.01(c), to: DFV Program,
Pension and Welfare Benefits Administration, P.O. Box 277025, Atlanta,
GA 30384-7025. [[Page 20876]]
The check that is made payable to the U.S. Department of Labor also
should contain the notation, in red, bold print ``DFVC Program.'' The
notation should be located at the top center of the check.
(b) File Applicable Statement with the U.S. Department of Labor.
Prepare and file a statement meeting the requirements of
Secs. 2520.104-22, or 2520.104-23, as appropriate.
The apprenticeship and training plan statement described in
Sec. 2520.104-22 must be sent to: Apprenticeship and Training Plan
Exemption, Pension and Welfare Benefits Administration, Room N-5638,
U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC
20210.
The ``top hat'' statement described in Sec. 2520.104-23 must be
sent to: Top Hat Plan Exemption, Pension and Welfare Benefits
Administration, Room N-5638, U.S. Department of Labor, 200 Constitution
Avenue NW., Washington, DC 20210.
Note: A plan sponsor maintaining more than one ``top hat'' plan
is not required to file a separate statement for each such plan. See
Sec. 2520.104-23(b).
(c) Applicable penalty amount. For purposes of the statements filed
under this Section 4, the applicable penalty amount is $2,500, without
regard to the number of plans maintained by the same plan sponsor for
which statements are filed pursuant to Section 4.01(b) and without
regard to the number of plan participants covered under such plan or
plans.
Note: The plan administrator is personally liable for the
payment of civil penalties assessed under section 502(c)(2) of
ERISA, therefore, civil penalties, including penalties paid under
this DFVC Program, may not be paid from the assets of an employee
benefit plan.
(d) Multiple ``top hat'' plans. In the case of plan sponsors
maintaining more than one pension plan for a select group of management
or highly compensated employees described in Sec. 2520.104-23, the plan
administrator shall, for purposes of the DFVC Program, be required to
send a copy of the first page of the Form 5500, completed in accordance
with Section 4.01(a), without regard to the number of such plans
maintained by the plan sponsor, provided that each plan maintained by
the sponsor is clearly identified on the first page of the Form 5500 or
attachment thereto filed with the Department of Labor.
.02 Administrators who have complied with the requirements of this
Section 4 shall be considered as having elected compliance with the
exemption(s) and/or alternative method of compliance prescribed in
Secs. 2520.104-22, or 2520.104-23, as appropriate, for all subsequent
plan years.
.03 Acceptance by the Department of a filing and penalty payment
made pursuant to this Section 4 does not represent a determination by
the Department of Labor as to the status of the arrangement as a plan
or particular type of plan under Title I or ERISA or a determination by
the Department of Labor that the provisions of Secs. 2520.104-22, or
2520.104-23 have been satisfied.
Section 5--Waiver of Right to Notice and Abatement of Assessment
.01 Payment of a penalty under the terms of this DFVC Program
constitutes a waiver of an administrator's right both to receive notice
of assessment under 29 CFR 2560.502c-2 from the Department and to
contest the Department's Assessment of the penalty amount. It should
also be noted that payment of a penalty under the DFVC Program does not
preclude the assessment of non-filing or late-filing penalties by other
Federal agencies, including the Internal Revenue Service and the
Pension Benefit Guaranty Corporation.
.02 The Internal Revenue Code (Code) and regulations thereunder
require information to be filed on the Form 5500 Series Annual Return/
Report and provides penalties for failing to timely file. Under the
Code, these penalties apply unless it is shown that the failure to
timely file is due to reasonable cause. If the late filing of a Form
5500 Series Annual Return/Report required by the Code may be due to
reasonable cause, a cover letter, demonstrating that the failure to
timely file was due to reasonable cause, should be attached to the
completed Form 5500 Series Annual Return/Report that is filed with the
IRS.
Signed at Washington, DC, this 24th day of April, 1995.
Olena Berg,
Assistant Secretary, Pension and Welfare Benefits Administration.
[FR Doc. 95-10403 Filed 4-26-95; 8:45 am]
BILLING CODE 4510-29-M