[Federal Register Volume 61, Number 65 (Wednesday, April 3, 1996)]
[Proposed Rules]
[Pages 14690-14694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7878]



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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]
BILLING CODE 4510-29-M