[Federal Register Volume 61, Number 22 (Thursday, February 1, 1996)]
[Notices]
[Pages 3735-3736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2140]



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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration


Annual Reporting and Disclosure Requirements

AGENCY: Pension and Welfare Benefits Administration, Department of 
Labor.

ACTION: Notice of Change to the 1995 Form 5500 Series and Request for 
Comment.

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SUMMARY: This document announces a change made by the Department of 
Labor to items 15h and 26h on the 1995 Form 5500-C/R, ``Return/Report 
of Employee Benefit Plan (With Fewer Than 100 Participants),'' filed by 
administrators of employee benefit plans under Part 1 of title I of the 
Employee Retirement Income Security Act of 1974 (ERISA). This change, 
and additional guidance in the instructions to all forms in the 1995 
5500 Series, relate to the handling of participant contributions by 
employers.

EFFECTIVE DATES: The change is incorporated in the 1995 Form 5500 
Series, and is effective for plan years beginning on or after January 
1, 1995.

ADDRESSES: Interested persons are invited to submit written comments to 
the Office of Regulations and Interpretations, Pension and Welfare 
Benefits Administration, Room N5669, U.S. Department of Labor, 200 
Constitution Ave NW., Washington, DC 20210. Attention: 1995 Form 5500 
Series Comments.

FOR FURTHER INFORMATION CONTACT:
Susan E. Rees, Plan Benefits Security Division, Office of the 
Solicitor, U.S. Department of Labor, Washington, DC, (202) 219-9141, or 
George M. Holmes, Jr., Office of Regulations and Interpretations, 
Pension and Welfare Benefits Administration, U.S. Department of Labor, 
Washington, DC, (202) 219-8515. These are not toll-free numbers.

SUPPLEMENTARY INFORMATION: As part of its effort to enhance the 
security and protection of participant contributions, the Department 
has modified items 15h and 26h on the 1995 Forms 5500-C/R to enable 
more effective monitoring of the handling of participant contributions 
by employers.\1\ Currently, item 15h of the 1994 Form 5500-CR, 
applicable to Form 5500-R filers, and item 26h of the 1994 Form 5500-C/
R, applicable to Form 5500-C filers, asks whether, during the plan 
year, the employer owed contributions to the plan that are more than 3 
months overdue, and if so, the amount. For the 1995 Form 5500-C/R, the 
Department has modified items 15h and 26h to focus on participant 
contributions due from the employer. As modified, item 15h and item 26h 
now ask whether, during the plan year, there were any participant 
contributions transmitted to the plan more than 31 days after receipt 
or withholding by the employer, and if so, the amount.

    \1\ Among other things, the Department has proposed an amendment 
to the participant contribution regulation to reduce the maximum 
amount of time an employer may hold participant contributions before 
such contributions constitute ``plan assets.'' See 29 CFR 
Sec. 2510.3-102 and proposed amendment thereto at 60 Fed. Reg. 66036 
(December 20, 1995).
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    In general, the Department believes that the information required 
to be reported in modified item 15h and 26h on the Form 5500-C/R is, or 
should be, readily available and easily accessible from the plan's and/
or the plan sponsor's records and, accordingly, should not result in 
any new or additional recordkeeping burdens on plans or employers. 
Further, as with the existing items 15h and 26h, an affirmative 
response to the modified items does not necessarily mean that the 
employer has violated ERISA. Lastly, this modification does not affect 
the administrators of plans with 100 or more participants filing the 
Form 5500 who, unlike Form 5500-C/R filers, are currently required to 
disclose on the Form 5500 detailed information about prohibited 
transactions involving delinquent participant contributions, and must 
have their plans audited annually by an independent qualified public 
accountant.\2\

    \2\ The instructions for the 1995 Form 5500 Series, including 
the Form 5500 and Form 5500-C/R, have been modified to remind filers 
that a failure to segregate participant contributions that 
constitute plan assets from an employer's general assets has 
prohibited transaction implications.
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Statutory Authority

    These forms and instructions are issued pursuant to the Secretary's 
general rulemaking authority under section 505 of ERISA, and under 

[[Page 3736]]
sections 104(a)(2)(A) and 104(a)(3) of Part 1 of title I of ERISA which 
authorize the Secretary to prescribe simplified reports. See 29 CFR 
2520.104-41.

Effective Date of the Forms

    The change to the Form 5500-C/R items 15h and 26h is effective for 
plan years beginning on or after January 1, 1995. The Department has 
determined that publication of the change as a proposal for comment 
prior to publication of the 1995 Form 5500 Series is impracticable and 
contrary to the public interest. The Department believes that reporting 
and disclosure of this information is important for the 1995 plan year, 
and, without incorporating the change immediately, the Department, and 
participants and beneficiaries, will not be able to monitor and take 
action on this information. The additional time needed to provide prior 
notice and opportunity for comment would delay printing and 
disseminating the 1995 Forms, creating administrative difficulties for 
filers, and ultimately would be detrimental to the interests of the 
participants and beneficiaries. Thus, the Department finds for good 
cause that this prompt action is necessary and permissible under 
section 553(b)(3)(B) of the Administrative Procedures Act (APA). The 
Department also has determined that good cause exists to waive the 30 
day pre-effective date requirement of section 553(b)(3)(D) of the APA.
    Although an opportunity to comment on the change has not been 
provided prior to the publication of the 1995 Form 5500 Series, the 
Department will consider public comment on the change for subsequent 
filing years.

Economic Impact

    The Department certifies that the change will not have a 
``significant economic impact on a substantial number of small 
entities'' within the meaning of the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq. The Department has also determined that this action 
is not a ``significant regulatory action'' within the meaning of 
Executive Order 12866 (58 FR 51735, Oct. 4, 1993).

Paperwork Reduction Act

    The collection of information contained in this modification to the 
1995 Form 5500 C/R has been submitted to the Office of Management and 
Budget for emergency processing under section 3507(d) of the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3507(d). OMB approval has been 
requested by February 6, 1996. For copies of the OMB submission, 
contact Mrs. Theresa O'Malley, U.S. Department of Labor, OASAM/DIRM, 
Room N-1301, 200 Constitution Ave. NW, Washington, D.C. 20210, 202-219-
5095 or via internet to [email protected].
    Comments are solicited on the Department's need for this 
information, specifically to: (1) Evaluate whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (2) evaluate the accuracy of the agency's 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumptions used; (3) 
enhance the quality, utility, and clarity of the information to be 
collected; and (4) minimize the burden of the collection of information 
on those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses. Persons wishing to comment on the 
collection of information should direct their comments to the Office of 
Information and Regulatory Affairs, OMB, Room 10235, NEOB, Washington, 
D.C. 20503, Attn: Desk Officer for PWBA. Comments must be filed with 
the Office of Management and Budget within 60 days of this publication. 
Although an opportunity to comment on the change has not been provided 
prior to the publication of the 1995 Form 5500 Series, the Department 
will consider public comment on the change for subsequent filing years. 
A copy of any comments filed with the Office of Management and Budget 
should also be sent to the following address at the Department: Mrs. 
Theresa O'Malley, U.S. Department of Labor, OASAM/DIRM, Room N-1301, 
200 Constitution Ave. NW, Washington, D.C. 20210. For further 
information, contact Gerald B. Lindrew at 202-219-4782.
    Title: Annual Report/Form 5500 Series (1210-0016).
    Summary: Section 104(a)(1)(A) of ERISA requires plan administrators 
to file an annual report containing the information described in 
section 103 of ERISA. The Form 5500 Series provides a standard format 
for fulfilling that requirement.
    Needs and Uses: The change to the Forms 5500-C and R described here 
is calculated to enhance the security and protection of participant 
contributions and to enable more effective monitoring of the handling 
of participant contributions by employers.
    Respondents and Proposed Frequency of Response: The Department 
staff estimates that approximately 665,000 plans will file either Form 
5500-C or Form 5500-R for the 1995 plan year (of the estimated 822,000 
annual filers).
    Estimated Annual Burden: The change to the Forms described here 
substitute one yes/no/amount question for another in reference to 
contributions to the plan. It is the belief of the Department of Labor 
that the same business records should be reviewed as in previous years, 
so there should be no affect upon the recordkeeping burden of the 
respondent plans. Therefore, the Department's annual collection burden 
for the Form 5500 Series will remain at the previously budgeted 
1,014,000 hours.
    The Change to Form 5500-C/R: Form 5500-C, line 26h, and Form 5500-
R, line 15h, are modified to read as follows:

    During this plan year:
    Were any participant contributions transmitted to the plan more 
than 31 days after receipt or withholding by the employer?
    Yes{time}  No{time}  Amount ________
    Additional Guidance to the Form 5500-C/R Instructions:\3\

    \3\ The Department notes that similar guidance is provided for 
1995 Form 5500 items 27e and f, relating to nonexempt prohibited 
transactions.
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    An instruction for Form 5500-C, line 26h, and Form 5500-R, line 
15h, has been added as follows:
    Amounts paid by a participant or beneficiary to an employer and/or 
withheld by an employer for contribution to the plan are participant 
contributions that become plan assets as of the earliest date on which 
such contributions can reasonably be segregated from the employer's 
general assets (see 29 CFR 2510.3-102). An employer holding these 
assets after that date commingled with its general assets will have 
engaged in a prohibited use of plan assets (see ERISA section 406). If 
a nonexempt prohibited transaction occurred with respect to a 
disqualified person (see Code section 4975(e)(2)), file IRS Form 5330 
to pay any applicable excise tax on the transaction.

    Signed at Washington, DC, this 29th day of January 1996.
Alan D. Lebowitz,
Deputy Assistant Secretary for Program Operations, Pension and Welfare 
Benefits Administration, Department of Labor.
[FR Doc. 96-2140 Filed 1-31-96; 8:45 am]
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