[Federal Register Volume 88, Number 37 (Friday, February 24, 2023)]
[Rules and Regulations]
[Pages 11793-11814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02652]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2520

RIN 1210-AB97


Annual Reporting and Disclosure

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Final rule.

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SUMMARY: This document contains amendments to Department of Labor (DOL) 
regulations relating to annual reporting requirements under Title I of 
the Employee Retirement Income Security Act of 1974, as amended 
(ERISA). The amendments contained in this document conform the DOL 
reporting regulations to revisions to the Form 5500 Annual Return/
Report of Employee Benefit Plan and Form 5500-SF Short Form Annual 
Return/Report of Small Employee Benefit Plan being published in this 
issue of the Federal Register in a separate Notice of Final Forms 
Revisions (NFFR) jointly by DOL, the Internal Revenue Service (IRS), 
and the Pension Benefit Guaranty Corporation (PBGC). Conforming changes 
also are being made to the requirements for the summary annual report. 
The regulatory amendments in this rule and revisions in the NFFR affect 
employee benefit plans, plan sponsors, administrators, and service 
providers to plans subject to annual reporting requirements under ERISA 
and the Internal Revenue Code.

DATES: 
    Effective Date: This final rule is effective April 25, 2023.
    Applicability Date: All regulatory amendments are applicable for 
plan years beginning on or after January 1, 2023, for the 2023 Form 
5500 Annual Return/Report of Employee Benefit Plan.

FOR FURTHER INFORMATION CONTACT: Janet Song, Florence Novellino or 
Colleen Brisport Sequeda, Office of Regulations and Interpretations, 
Employee Benefits Security Administration, U.S. Department of Labor, 
(202) 693-8500 (this is not a toll-free number).
    Customer service information: Individuals interested in obtaining 
information from the Department of Labor concerning Title I of ERISA 
and employee benefit plans may call the EBSA Toll-Free Hotline at 1-
866-444-EBSA (3272) or visit the Department of Labor's website 
(www.dol.gov/agencies/ebsa).

SUPPLEMENTARY INFORMATION: 

A. Background

    Titles I and IV of the Employee Retirement Income Security Act of 
1974 (ERISA) and the Internal Revenue Code (Code), generally require 
pension and other employee benefit plans to file annual returns/reports 
concerning, among other things, the financial condition and operations 
of the plan. Filing a Form 5500 Annual Return/Report of Employee 
Benefit Plan (Form 5500) or, if eligible, a Form 5500-SF Short Form 
Annual Return/Report of Small Employee Benefit Plan (Form 5500-SF), 
together with any required schedules and attachments (together ``the 
Form 5500 Annual Return/Report''), in accordance with their 
instructions, generally satisfies these annual reporting 
requirements.\1\
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    \1\ References to the ``Form 5500 Annual Return/Report'' in this 
final rule or in the accompanying NFFR may include, depending on the 
context, the Form 5500 or the Form 5500-SF. As used in this 
document, the term does not include the Form 5500-EZ, Annual Return 
of A One Participant (Owners/Partners and Their Spouses or A Foreign 
Plan) Retirement Plan (Form 5500-EZ). The Form 5500-EZ is a return 
required under the Code, not Title I of ERISA.
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    ERISA section 103 and 104 broadly set out annual financial 
reporting requirements for employee benefit plans

[[Page 11794]]

under Title I of ERISA. The Form 5500 Annual Return/Report for Title I 
purposes is promulgated pursuant to DOL regulations under the ERISA 
provisions authorizing limited exemptions and simplified reporting and 
disclosure for welfare plans under ERISA section 104(a)(3), simplified 
annual reports under ERISA section 104(a)(2)(A) for pension plans that 
cover fewer than 100 participants, and alternative methods of 
compliance for all pension plans under ERISA section 110. The Form 5500 
Annual Return/Report, and related instructions and regulations, are 
also promulgated under the DOL's general regulatory authority in ERISA 
sections 109 and 505.\2\
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    \2\ The Form 5500 Annual Return/Report filings are also 
information collections for the Agencies, subject to a separate 
clearance process under the Paperwork Reduction Act.
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    In the United States, there are an estimated 2.5 million health 
plans,\3\ an estimated 673,000 other welfare plans,\4\ and 
approximately 747,000 private pension plans.\5\ These plans cover 
roughly 152 million private sector workers, retirees, and 
dependents,\6\ and have estimated assets of $12 trillion.\7\ The Form 
5500 Annual Return/Report is a critical enforcement, compliance, and 
research tool for the DOL, the Internal Revenue Service (IRS), and the 
Pension Benefit Guaranty Corporation (PBGC) (together ``Agencies''). 
The Form 5500 Annual Return/Report serves as the principal source of 
information and data available to the Agencies concerning the 
operations, funding, and investments of approximately 864,000 pension 
and welfare benefit plans that file.\8\ The Form 5500 Annual Return/
Report is also an important source of information and data for use by 
other Federal agencies, Congress, and the private sector in assessing 
employee benefit, tax, and economic trends and policies. The Form 5500 
Annual Return/Report also serves as the primary public disclosure 
document for participating employers, plan participants and 
beneficiaries, and the public to monitor the operations of plans, 
including multiple-employer plans (MEPS) and group filing arrangements. 
Accordingly, the Form 5500 Annual Return/Report is essential to each 
Agency's enforcement, research, and policy formulation programs, as 
well for the regulated community, which makes increasing use of the 
information as more capabilities develop to interact with the data 
electronically.
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    \3\ Source: U.S. Department of Labor, EBSA calculations using 
the 2021 Medical Expenditure Panel Survey, Insurance Component 
(MEPS-IC), the Form 5500 and 2019 Census County Business Patterns.
    \4\ Source: U.S. Department of Labor, EBSA calculations using 
non-health welfare plan Form 5500 filings and projecting non-filers 
using estimates based on the non-filing health universe.
    \5\ Source: U.S. Department of Labor, EBSA. Private Pension Plan 
Bulletin: Abstract of 2020 Form 5500 Annual Reports.
    \6\ Source: U.S. Department of Labor, EBSA calculations using 
the Auxiliary Data for the March 2021 Annual Social and Economic 
Supplement to the Current Population.
    \7\ EBSA projected ERISA-covered pension, welfare, and total 
assets based on the 2020 Form 5500 filings with the U.S. Department 
of Labor (DOL), reported SIMPLE assets from the Investment Company 
Institute (ICI) Report: The U.S. Retirement Market, Second Quarter 
2022, and the Federal Reserve Board's Financial Accounts of the 
United States Z1 September 9, 2022.
    \8\ Estimates are based on 2020 Form 5500 filings. Welfare plans 
with fewer than 100 participants that are unfunded or insured (do 
not hold assets in trust) are generally exempt from filing a Form 
5500. Therefore, while the DOL estimates there are 2.5 million 
health plans and 673,000 non-health welfare plans, respectively only 
63,000 and 21,000 of these plans filed a 2020 Form 5500.
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    Recent legislative and regulatory changes affecting MEPs and 
similar arrangements are spurring the current need to update the Form 
5500 Annual Return/Report and related regulations. The Setting Every 
Community Up for Retirement Enhancement Act of 2019 (SECURE Act) 
included various provisions designed to improve the private employer-
based retirement system.\9\ Among other things, the SECURE Act included 
changes designed to simplify retirement plan administration for certain 
eligible defined contribution plans and added provisions to the Code 
relating to MEPs, including MEPs with pooled plan providers, and 
adopted provisions under Title I of ERISA that designated these MEPs 
with pooled plan providers as pooled employer plans (PEPs).
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    \9\ The SECURE Act was enacted on December 20, 2019, as Division 
O of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-
94).
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    On September 15, 2021, the Agencies published a notice of proposed 
forms revisions (NPFR) proposing amendments to the Form 5500 Annual 
Return/Report to implement annual reporting changes related to 
legislative provisions in the SECURE Act focused on MEPs and defined 
contribution group reporting arrangements (DCGs or DCG reporting 
arrangements) but also included other proposed reporting improvements. 
86 FR 51488 (Sep. 15, 2021). The DOL simultaneously published a notice 
of proposed rulemaking (NPRM) setting forth proposed amendments to its 
Title I annual reporting regulations to implement the proposed forms 
revisions. 86 FR 51284 (Sep. 15, 2021). The NPFR and the NPRM are 
collectively referred to as the September 2021 proposal in this rule 
and the NFFR.
    The Agencies received 114 comments on the September 2021 proposal. 
The comments, which were all posted on the DOL's website, generally 
focused on the proposed changes for the 2022 plan year forms and on 
future rulemakings.
    In December 2021, the DOL published a final forms revisions 
rulemaking that set forth a narrow set of changes to the instructions 
for the Form 5500 and Form 5500-SF, effective for plan years beginning 
on or after January 1, 2021. 86 FR 73976 (Dec. 29, 2021). Those 
instruction changes generally implemented annual reporting changes for 
MEPs, including PEPs, that were described in the September 2021 
proposal. That document is referred to herein as Final Rule Phase I.
    In May 2022, the Agencies published a second final forms revisions 
adopting certain aspects of the September 2021 proposal effective for 
plan years beginning on or after January 1, 2022. 87 FR 31133 (May 23, 
2022). Those forms and instruction revisions generally implemented 
annual reporting changes for defined benefit plans on Schedules MB, SB 
and R, but also added certain plan characteristics codes for MEPs, 
including one to specifically identify PEPs, to the list of plan 
characteristics that must be used to describe the plan on the annual 
report. That document is referred to herein as Final Rule Phase II.
    In Final Rule Phase II, the Agencies stated that the remaining 
proposed changes to the Form 5500 Annual Return/Report that were set 
forth in the September 2021 proposal would be addressed either in a 
further final forms revisions notice, or possibly re-proposed with 
modifications in a separate proposal as part of a broader range of 
improvements to the annual reporting requirements.\10\
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    \10\ As noted in the September 2021 proposal, DOL has a separate 
regulatory project on its semi-annual agenda to in coordination with 
the IRS and PBGC: (i) modernize the financial and other annual 
reporting requirements on the Form 5500 Annual Return/Report; (ii) 
continue an ongoing effort to make investment and other information 
on the Form 5500 Annual Return/Report more data mineable; and (iii) 
consider potential changes to group health plan annual reporting 
requirements, among other improvements that would enhance the 
Agencies' ability to collect employee benefit plan data in a way 
that best meets the needs of compliance projects, programs, and 
activities. See www.reginfo.gov for more information.
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    The Agencies' Notice of Final Forms Revisions (NFFR) published 
concurrently in this issue of the Federal Register sets forth a 
detailed discussion of form and instruction changes that relate to 
these regulations. It also includes a discussion of elements from the 
September 2021 proposal that are

[[Page 11795]]

being delayed for possible re-proposal as part of the Agencies' 
initiative to propose a more broad-based set of improvements to the 
Form 5500 Annual Return/Report. The discussions in the NFFR are 
incorporated into this final rule notice. The revisions to the DOL's 
reporting regulations being adopted in this document are needed for the 
DOL to implement, for ERISA Title I purposes, various forms and 
instructions revisions in the NFFR. The NFFR and this NFRM collectively 
represent Final Rule Phase III of the September 2021 proposal.

B. Discussion of the Revisions to 29 CFR Part 2520

1. Section 2520.103-1(a)

    Section 2520.103-1 generally describes the content of the Form 5500 
Annual Return/Report and includes a description of the content for a 
simplified report, limited exemption, or alternative method of 
compliance for ERISA-covered employee welfare and pension benefit 
plans, as applicable to satisfy annual reporting requirements under 
Title I of ERISA. This final rule amends Sec.  2520.103-1(a) to add 
text cross-referencing to the DCG and GIA reporting options in 
Sec. Sec.  2520.104-46, 2520.104-51, 2520.104a-6 and 2520.104a-9. It 
also adds a reference to ``section 202 of the SECURE Act'' in Sec.  
2520.103-1(a)(2) as authority for the consolidated report option under 
new Sec. Sec.  2520.103-14 and 2520.104-51 for defined contribution 
group (DCG) reporting arrangements.

2. Sections 2520.103-1(b)(1) and 2520.103-1(c)(1)

    Paragraphs (b) and (c) of Sec.  2520.103-1 generally describe the 
contents of the annual report for large plans (generally those with 100 
or more participants) and small plans (generally those with fewer than 
100 participants). This final rule amends Sec.  2520.103-1(b)(1), 
(c)(1) and (c)(2)(i) to add a new multiple-employer plan schedule, 
Schedule MEP, to the list of schedules and attachments required to be 
included with the Form 5500 or Form 5500-SF, as applicable, filed for 
MEPs.

3. Section 2520.103-1(c)(2)(ii)

    Paragraph (c) of Sec.  2520.103-1 describes the conditions under 
which an eligible small plan (generally with fewer than 100 
participants) may file the Form 5500-SF. Consistent with the proposed 
forms revisions to amend the Form 5500 Annual Return/Report published 
by the Agencies in the September 2021 proposal, and the final forms 
revisions published by the DOL in December 2021, this final rule adds 
Sec.  2520.103-1(c)(2)(ii)(F) to state that MEPs that are PEPs as 
described in ERISA section 3(43) are not permitted to use the Form 
5500-SF regardless of whether the plan meets the size and other 
requirements for filing a Form 5500-SF. The final rule also adds a new 
Sec.  2520.103-1(c)(2)(ii)(G) to provide a similar prohibition on 
filing the Form 5500-SF for DCG reporting arrangements, as discussed in 
more detail below.

4. Sections 2520.103-5, 2520.103-10, 2520.103-14, 2520.104-51, 
2520.104a-5 and 2520.104a-9--Consolidated Form 5500 Annual Return/
Report for Plans Participating in a DCG Reporting Arrangement

    The final rule amends ERISA annual reporting regulations to 
implement the SECURE Act section 202 directive to the Secretary of 
Labor to jointly with the Secretary of the Treasury provide for a 
single, consolidated Form 5500 filing option that would satisfy the 
annual reporting obligations for the defined contribution pension plans 
participating in the DCG reporting arrangement.\11\ Under this final 
rule, several conditions relating to the DCG reporting arrangement, the 
participating plans, and the content of the Form 5500 filing must be 
satisfied before the consolidated filing satisfies the annual reporting 
requirements of the separate participating plans. The NFFR describes 
those conditions in detail. The conditions also are set forth in the 
new regulations at 29 CFR 2520.103-14 and 2520.104-51.
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    \11\ The SECURE Act Section 202 uses the terms ``combined,'' 
``aggregated'' and ``consolidated'' to describe the reporting option 
the IRS and DOL were directed to develop. This final rule and the 
related forms revisions notice generally uses the term 
``consolidated.''
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    With respect to the content requirements for a DCG consolidated 
Form 5500 filing, paragraph (b) of Sec.  2520.103-14 provides that the 
consolidated DCG report would be required to include a Form 5500 
``Annual Return/Report of Employee Benefit Plan'' and various 
statements or schedules based on the characteristics and operations of 
the participating plans, including Schedule A (Insurance Information), 
Schedule C (Service Provider Information), Schedule D (DFE/
Participating Plan Information), Schedule DCG (Individual Plan 
Information), Schedule G (Financial Transaction Schedules), Schedule H 
(Financial Information), and supplemental schedules referred to in 29 
CFR 2520.103-10 with information aggregated for all the participating 
plans unless otherwise provided in the instructions to the Form 5500, 
and an independent qualified public accountant (IQPA) report and 
opinion for any individual participating plans that would be subject to 
the audit requirement if filing a separate Form 5500.\12\ This would 
include separate financial statements described in ERISA section 
103(a)(3)(A) and Sec.  2520.103-1(b)(2) if such financial statements 
are prepared in order for the IQPA to form the required opinions on the 
individual participating plans subject to the audit requirement.
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    \12\ After the final rule had been submitted to OMB on November 
21, 2022, for review under Executive Order 12866, the SECURE Act 2.0 
of 2022 (SECURE Act 2.0) was signed into law on December 29, 2022, 
as Division T of the Consolidated Appropriations Act, 2023, H.R. 
2617, as amended. The SECURE Act 2.0 includes a specific direction 
to the DOL and the Treasury Department on audit requirements for the 
DCG consolidated Form 5500 reporting option. Specifically, section 
345 of SECURE Act 2.0 provides that with respect to the IQPA audit 
provisions in section 103 of ERISA ``any opinions required by 
section 103(a)(3) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1023(a)(3)) shall relate only to each individual 
plan which would otherwise be subject to the requirements of such 
section 103(a)(3).'' This final rule and the related final forms 
revisions being published concurrently include DCG plan-level audit 
provisions that are consistent with the SECURE Act 2.0 direction.
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    Paragraph (c) of Sec.  2520.103-14 makes clear that the DCG 
reporting arrangement must comply with the electronic filing 
requirements that apply to all plan filers and direct filing entities 
(DFE). See Sec.  2520.104a-2 and the instructions for the Form 5500 
Annual Return/Report for electronic filing requirements. In addition, 
the paragraph emphasizes that the common plan administrator of all the 
participating plans that is filing the consolidated Form 5500 must 
maintain an original copy, with all required signatures, as part of its 
records (which also would be treated as records of each of the 
participating plans).
    The final rule adds a new Sec.  2520.104-51 that authorizes the DCG 
reporting arrangement to file a consolidated report as an alternative 
method of compliance under ERISA section 110 for defined contribution 
pension plans that participate in DCG reporting arrangements. 
Specifically, filing of a complete and accurate consolidated Form 5500 
for the DCG reporting arrangement would relieve the administrator of 
each individual participating defined contribution pension plan that 
meets the requirements of paragraph (b) of Sec.  2520.104-51 of the 
obligation to file an individual annual report under Title I of ERISA. 
This alternative method of compliance would be available only for

[[Page 11796]]

a defined contribution pension plan in a plan year in which (i) such 
plan participates in a DCG reporting arrangement that meets the 
conditions of paragraph (c) of Sec.  2520.104-51; and (ii) the DCG 
reporting arrangement has filed with the Secretary of Labor, in 
accordance with new Sec.  2520.104a-9, a complete and accurate 
consolidated annual report that meets the content requirements under 
new Sec.  2520.103-14. To make clear that the DCG reporting arrangement 
is a direct filing entity (DFE) that is submitting the consolidated 
Form 5500 on behalf of the participating plans, Sec.  2520.104-51(b)(2) 
provides that that the term ``DCG reporting arrangement'' shall be used 
in place of the term ``plan'' where it appears in Sec. Sec.  2520.103-
3, 2520.103-4, 2520.103-6, 2520.103-9, 2520.103-10 and elsewhere in 
subparts C and D of 29 CFR part 2520, as applicable and unless stated 
otherwise.
    New Sec.  2520.104-51 also provides that the reporting relief for 
individual plans would apply only if all plans participating in the DCG 
reporting arrangement: (i) are individual account plans or defined 
contribution plans; (ii) have--(A) the same trustee meeting the 
requirements set forth in ERISA section 403(a) (``common trustee''); 
(B) the same one or more named fiduciaries designated in accordance 
with the requirements set forth in ERISA section 402(a) (``common named 
fiduciaries''), however, the employer/plan sponsor may be a named 
fiduciary of each employer's own plan, provided that the other named 
fiduciaries under the plans are the same and common to all plans; (C) a 
designated administrator that is the same plan administrator for all 
the participating plans (``common plan administrator''); and (D) plan 
years beginning on the same date (``common plan year''); (iii) provide 
the same investments or investment options to participants and 
beneficiaries (``common investments or investment options'') (certain 
brokerage window arrangements would qualify as a common investment 
option under this final rule); (iv) not hold any employer securities at 
any time during the plan year, except this does not prohibit 
investments in any employer's publicly traded securities held 
indirectly within one or more ``common investments or investment 
options'' available to participants and beneficiaries in all the DCG 
plans; (v) either be audited by an IQPA, or be eligible for the waiver 
of the annual examination and report of an IQPA under 29 CFR 2520.104-
46; and (vi) may not be a multiemployer plan or a MEP (including 
association retirement plans, pooled employer plans and professional 
employer organization plans (PEO plans)).
    Further, new Sec.  2520.104-51 expressly states that the 
alternative method of complying with the Title I annual reporting 
requirements would not relieve the administrator of the individual 
participating plans from any other requirement of Title I of ERISA, 
including, for example, the provisions that require plan administrators 
to furnish copies of the summary plan description to participants and 
beneficiaries (ERISA section 104(b)(1)), furnish certain documents to 
the Secretary of Labor upon request (ERISA section 104(a)(6)), and 
furnish a copy of a Summary Annual Report (SAR) to participants and 
beneficiaries of the plan (ERISA section 104(b)(3)). Section 2520.104-
51(c)(2)(iii) provides that all plans participating in a DCG reporting 
arrangement must have a designated common plan administrator that is 
the same plan administrator for all the participating plans. The SECURE 
Act was not explicit on whether this was intended to require the same 
person to be the plan administrator under ERISA section 3(16)(A) for 
the purpose of meeting the annual reporting requirements for each 
participating plan or was intended to require that the same person be 
the plan administrator of each participating plan for all purposes 
under ERISA. The final rule requires that the same person sign the DCG 
filing as the plan administrator for each participating plan.\13\
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    \13\ The Department solicited comments in the September 2021 
proposal on whether the final rule should address whether individual 
plans participating in a DCG may have a separate statutory 
administrator responsible for other duties ERISA assigns to the plan 
administrator (e.g., distribution of summary plan descriptions). 
None of the commenters responded to this request. The Department is 
not addressing that issue in this final rule.
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    New Sec.  2520.104a-9 provides, as would be the case for all of the 
participating plans in the DCG reporting arrangement if they were 
filing individually, that the consolidated Form 5500 for the DCG is due 
no later than the end of the seventh (7th) month after the end of the 
common plan year that all the plans must have in order to participate 
in a DCG reporting arrangement pursuant to the requirement in section 
202 of the SECURE Act and the new regulation at Sec.  2520.104-51. 
Conforming changes have been made to Sec. Sec.  2520.103-5 and 
2520.104a-5 to add a reference to the new Sec.  2520.104a-9.
    As noted above, section 110 of ERISA permits the DOL to prescribe 
for pension plans alternative methods of complying with any of the 
reporting and disclosure requirements if the Secretary finds that: (1) 
the use of the alternative method is consistent with the purposes of 
ERISA and it provides adequate disclosure to plan participants and 
beneficiaries, and adequate reporting to the Secretary; (2) application 
of the statutory reporting and disclosure requirements would increase 
costs to the plan or impose unreasonable administrative burdens with 
respect to the operation of the plan; and (3) the application of the 
statutory reporting and disclosure requirements would be adverse to the 
interests of plan participants in the aggregate. The DOL believes that 
the final rule on DCG reporting arrangements meets those conditions, 
especially given the statutory direction in the SECURE Act to create 
such a reporting option.
    As discussed below and in the NFFR, the final rule does not include 
an option under which a ``small'' DCG could file as a small plan, as 
the DOL solicited comments regarding the merits of this option and 
there were no commenters supporting a simplified reporting option for 
``small'' DCG reporting arrangements. Accordingly, this final rule does 
not include an option under which such a ``small'' DCG could file as a 
small plan, and Sec.  2520.103-1(c)(2)(ii) has been amended 
accordingly.

5. Section 2520.104b-10

    Section 2520.104b-10 sets forth the requirements for the Summary 
Annual Report (SAR) appendix and prescribes formats for such reports. 
The DOL is updating this regulation to reflect the new filing option 
for DCG reporting arrangements and the addition of the new Schedule MEP 
and Schedule DCG to the 5500 Annual Report/Return. This includes adding 
a requirement to the DOL's regulation that plans provide a brief 
description of the plan based on the plan characteristic codes listed 
for the plan on the Form 5500, including whether it is a defined 
contribution or defined benefit plan, and whether the plan is a pooled 
employer plan, another type of multiple-employer plan, a single-
employer plan, or a plan participating in a DCG reporting arrangement, 
respectively. For plans participating in a DCG reporting arrangement, 
the regulation includes new language that plans in DCG reporting 
arrangements would use to advise participants that the plan 
participates in a reporting arrangement that files a consolidated Form 
5500 Annual Report and explains that the SAR includes aggregate 
information on all the participating plans from the consolidated Form 
5500. The text also

[[Page 11797]]

notes that the DCG's consolidated Form 5500 includes a separate 
Schedule DCG that provides specific plan level information for each 
individual plan. The new regulatory language also includes text for 
plans to use that states a copy of the Schedule DCG and the Schedule 
MEP are available on request, as applicable. Finally, the new SAR 
language would state that a copy of the Form 5500 annual report filed 
for the plan or DCG is available online from EBSA via a DOL website at 
www.efast.dol.gov.

C. Applicability Date

    All regulatory amendments are applicable for plan years beginning 
on or after January 1, 2023, for plans beginning with the 2023 Form 
5500 Annual Return/Report of Employee Benefit Plan.

D. Regulatory Impact Analysis

1. Background and Need for Regulatory Action

    The Form 5500 Annual Return/Report is the primary source of 
information and data available to the Agencies concerning the 
operations, funding, and investments of pension and welfare benefit 
plans covered by ERISA and the Code. Accordingly, the Form 5500 Annual 
Return/Report is essential to each Agency's enforcement, research, and 
policy formulation programs and is a source of information and data for 
use by other Federal agencies, Congress, and the private sector in 
assessing employee benefit, tax, and economic trends and policies. The 
Form 5500 Annual Return/Report also serves as the primary means by 
which the operations of plans can be monitored by plan participants and 
beneficiaries and the general public. As discussed earlier in this 
document, the SECURE Act included various provisions designed to 
improve the private employer-based retirement system by seeking to make 
it easier for businesses to offer retirement plans, and for individuals 
to save for retirement, through the creation of new plan structure and 
reporting options. These new structures will require new annual 
reporting, which has resulted in the need to update the Form 5500 
Annual Return/Report and related regulations.
    In general terms these rules and form changes are: (1) adding a DCG 
consolidated reporting option; (2) adding Schedule MEP to collect MEP 
information; (3) adding certain new Code compliance questions; (4) 
changing the methodology for counting participants in defined 
contribution plans for purposes of determining eligibility for small 
plan reporting options; (5) Schedule H Breakout Categories for 
Administrative Expenses; (6) defined benefit plan reporting 
improvements on schedules SB; and (7) miscellaneous and conforming 
changes to forms and instructions.\14\
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    \14\ These changes are described in more detail previously in 
this document and in the concurrently publishing separate final rule 
that adds new regulations at 29 CFR 2520.103-14 and 2520.104-51, 
pursuant to section 110 of ERISA.
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    The DOL has examined the effects of these amendments as required by 
Executive Order 12866,\15\ Executive Order 13563,\16\ the Congressional 
Review Act,\17\ the Paperwork Reduction Act of 1995,\18\ the Regulatory 
Flexibility Act,\19\ section 202 of the Unfunded Mandates Reform Act of 
1995,\20\ and Executive Order 13132.\21\
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    \15\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
    \16\ Improving Regulation and Regulatory Review, 76 FR 3821 
(Jan. 21, 2011).
    \17\ 5 U.S.C. 804(2) (1996).
    \18\ 44 U.S.C. 3506(c)(2)(A) (1995).
    \19\ 5 U.S.C. 601 et seq. (1980).
    \20\ 2 U.S.C. 1501 et seq. (1995).
    \21\ Federalism, 64 FR 43255 (Aug. 10, 1999).
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2. Executive Orders 12866 and 13563 Statement

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing and streamlining rules, and 
of promoting flexibility. It also requires federal agencies to develop 
a plan under which the agencies will periodically review their existing 
significant regulations to make the agencies' regulatory programs more 
effective or less burdensome in achieving their regulatory objectives.
    Under Executive Order 12866, ``significant'' regulatory actions are 
subject to the requirements of the executive order and review by the 
Office of Management and Budget (OMB). Section 3(f) of the executive 
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.
    OMB has determined that this rule is economically significant 
within the meaning of section 3(f)(1) of the Executive order. 
Therefore, the DOL has provided an assessment of the potential costs, 
benefits, and transfers associated with these final rules. In 
accordance with the provisions of Executive Order 12866, this rule was 
reviewed by OMB. Pursuant to the Congressional Review Act, OMB has 
designated this rule as a ``major rule,'' as defined by 5 U.S.C. 
804(2).

3. Affected Entities

    The SECURE Act amendments first authorized PEPs to begin operating 
beginning on January 1, 2021, and early adopted PEPs will have done 
their first filings of Form 5500 starting in July 2022. Similarly, DCG 
reporting arrangements are a new filing option that will start with the 
2023 plan year; thus, the first such consolidated filings will not 
begin until July 2024. Thus, there is little historical Form 5500 
information that the DOL can use to evaluate the number of affected 
entities. As a result, there is significant uncertainty regarding the 
DOL's ability to measure costs and benefits that may result from these 
final rules.
    The DOL nonetheless presents an overview of potentially affected 
entities and an approach to evaluating the possible impacts of these 
final rules and form changes in the following sections. In evaluating 
costs and benefits, the DOL took account of the fact that various types 
of plans could be affected by more than one of the changes.
i. Defined Contribution Pension Plans
    In 2020, there were 700,034 defined contribution plans with 110.4 
million total participants and 85.3 million active participants. Plans 
with fewer than 100 total participants (small plans) account for 87.6 
percent of plans.\22\
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    \22\ Employee Benefits Security Administration, Private Pension 
Plan Bulletin, Abstract of 2020 Form 5500 Annual Report (2020). The 
2020 Form 5500 data set is the most recent available because Form 
5500 filings for the 2020 reporting year generally are not required 
to be filed for calendar year plans until July through October of 
2021, and the deadline for fiscal year plans may extend well into 
2022. The User Guide for the 2018 Form 5500 Private Pension Plan 
Research File includes a discussion of the creation of the annual 
data set and timing of data extraction.

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[[Page 11798]]

ii. Defined Contribution Group (DCG) Reporting Arrangement
    As this is a new type of annual reporting method, the DOL does not 
have data on how many DCGs would be created nor the number of plans 
that would choose to satisfy their individual filing obligations by 
meeting the requirements for being part of a DCG, including the filing 
of a consolidated Form 5500 Annual Return/Report by the common plan 
administrator. In 2020 there were 531,872 small defined contribution 
plans that reported the plan characteristic code 3D in their Form 5500-
SF to indicate that they are intended to operate as pre-approved plans 
under sections 401, 403(a), and 4975(e)(7) of the Code. The DOL assumes 
that a DCG reporting option may suit their existing plan and business 
models and that some fraction of these plans may find it advantageous 
to join a DCG for filing purposes.
iii. Multiple-Employer Pension Plans
    A MEP, for Form 5500 reporting purposes, generally is a retirement 
plan maintained by two or more employers that are not members of the 
same controlled group or affiliated service group under Code section 
414(b), (c), or (m), and which is not a multiemployer plan.\23\ In 
2020, there were 4,791 MEPs filing a Form 5500, of which 182 were 
defined benefit pension plans and 4,609 were defined contribution 
pension plans. There were 7.3 million participants reported as covered 
by these plans.\24\
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    \23\ See, e.g., 2020 Form 5500 instructions at 14.
    \24\ Employee Benefits Security Administration, Private Pension 
Plan Bulletin, Abstract of 2020 Form 5500 Annual Reports (September 
2022).
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Association Retirement Plan
    An association retirement plan is a defined contribution MEP, 
sponsored by a bona fide group or association of employers that meets 
the conditions under 29 CFR 2510.3-55(b). Plan year 2020 is the first 
year that a significant number of association retirement plans would 
file a Form 5500.\25\ The 2020 and 2021 forms do not have a way to 
identify those plans, therefore, the DOL does not have information on 
how many reporting MEPs are association retirement plans. The final 
forms revisions provide a way to identify these plans for the 2023 Form 
filings.
---------------------------------------------------------------------------

    \25\ The DOL's final association retirement plan regulation, at 
29 CFR 2510.3-55, published July 31, 2019, clarified, and expanded 
the types of arrangements that could be treated as MEPs under Title 
I of ERISA to include plans established and maintained by a bona 
fide group or association of employers (association retirement 
plans) and by a professional employer organization (PEO plans).
---------------------------------------------------------------------------

Professional Employer Organizations (PEOs) Plan
    A PEO MEP is a defined contribution pension plan sponsored by a 
bona fide professional employer organization (PEO) that meets the 
conditions under 29 CFR 2510.3-55(c). According to the National 
Association of Professional Employer Organizations, there are 487 PEOs 
in the United States.\26\ Plan year 2020 is the first year that a 
significant number of PEO MEPs would file a Form 5500. The 2020 and 
2021 forms do not have a way to identify those plans, therefore, the 
DOL does not have information on how many reporting MEPs are PEO MEPs. 
The final forms revisions provide a way to identify these plans for the 
2023 Form filings.
---------------------------------------------------------------------------

    \26\ National Association of Professional Employee 
Organizations, Industry Statistics: (Accessed 10/3/2022), https://www.napeo.org/what-is-a-peo/aboutthe-peo-industry/industry-statistics. NAPEO had previously reported 904 PEOs but revised its 
methodology. An explanation of the revision is included on the NAPEO 
website. See The PEO Industry Footprint 2021, Laurie Bassi and Dan 
McMurrer, McBassi & Company at page 4 (May 2021) (available at 
www.napeo.org/docs/defaultsource/white-papers/2021-white-paperfinal.pdf?sfvrsn=6dde35d4_2.
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Pooled Employer Plans (PEPs)
    The SECURE Act amended section 3(2) of ERISA and added section 
3(43) to ERISA authorizing a new type of ERISA-covered defined 
contribution MEP referred to as a ``pooled employer plan'' to be 
operated by a ``pooled plan provider.'' In its 2020 final rule on 
Registration Requirements for Pooled Plan Providers, the DOL noted the 
uncertainty surrounding the number of PEPs that could be created based 
on the final rule, the number of employers that would participate in 
such plans, and the number of participants and beneficiaries that would 
be covered by them.\27\ By the end of year 2021, 71 entities filed the 
Form PR to register as pooled plan providers with approximately 3 PEPs 
per provider. These are the providers assumed most likely to provide 
these services for the year 2021.\28\
---------------------------------------------------------------------------

    \27\ 85 FR 72934, 72949 (Nov. 16, 2016).
    \28\ Department of Labor, Form PR at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-pr.
---------------------------------------------------------------------------

    Due to the timing of Form 5500 filing deadlines, complete data from 
the plan year 2021 filings, which contain information on how many 
employers are participating in PEPs and the number of participants 
covered by these, are not available. Therefore, the DOL must rely on 
other sources and professional judgement to estimate their numbers.\29\ 
The DOL attempted to review available public information on PEPs by 
looking at information included in the filed Forms PR, and by examining 
news articles and statements on the pooled plan provider's websites. 
That review indicated that there are a variety of approaches in how 
PEPs are offered, and a variation in the number of employers that have 
joined a PEP. While pooled plan providers are required to update the 
Form PR to advise the DOL and the IRS about the establishment and 
offering of new PEPs, the Form PR does not collect information on the 
number of employers participating in their PEPs or the number of 
employees covered by each plan. One pooled plan provider was reported 
in another source as having 2,000 employers that joined their PEP, 
whereas other providers reported five to 10 employers had joined their 
PEPs.
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    \29\ Form 5500 Annual Return/Report is due the last day of the 
seventh month after the plan year ends, which for calendar year 
plans (plans that begin on January 1st of the year) is July 31st. 
There is also an available 3-month filing extension that most plans 
utilize. This extension pushes the filing deadline to the end of 
October for calendar year plans.
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iv. Pre-Approved Pension Plans
    These are plans that reported plan characteristics code 3D when 
filing the Form 5500 Annual Return/Report. The code 3D indicates ``A 
pre-approved plan under sections 401, 403(a), and 4975(e)(7) of the 
Code that is subject to a favorable opinion letter from the IRS.'' A 
pre-approved retirement plan is a plan offered to employers by 
financial institutions and others that are authorized to sponsor pre-
approved plans. The pre-approved plan provider then makes the IRS-
approved plan available to adopting employers. Providers must make 
reasonable and diligent efforts to ensure that adopting employers of 
the plan have actually received, and are aware of, all plan amendments 
and that such employers complete and sign new plan documents when 
necessary.\30\ Of the 646,111 defined contribution pension plans that 
reported code 3D, 574,231 are reported as small plans, defined as 
having fewer than 100 participants each. Of these small defined 
contribution plans, 531,872 file the Form 5500-SF, cover approximately 
11.1 million participants, and hold approximately $0.8 trillion in 
assets.
---------------------------------------------------------------------------

    \30\ IRS website at https://www.irs.gov/retirement-plans/preapproved-retirement-plans (last updated March 17, 2022).
---------------------------------------------------------------------------

    The DOL expects that Form 5500-SF small pension plan filers are the 
most likely candidates to join a DCG or a PEP; however, the DOL lacks 
information on

[[Page 11799]]

the number of plans that would join a DCG or a PEP.
v. Plans Affected by Change in Participant Count Methodology for 
Determining Eligibility for Small Plan Simplified Reporting Option for 
Defined Contribution Pension Plans
    A change in the participant count methodology for defined 
contribution pension plans to determine whether the plan is a ``large 
plan'' (generally, a plan that covers 100 or more participants) for 
purposes of Form 5500 annual reporting requirements, including the 
requirement to include an IQPA report and other schedules generally 
applicable to large pension plans, is adopted in the final rules. 
Currently, the plan size measure for this annual reporting purpose is 
based on the total number of participants at the beginning of the plan 
year and expressly includes employees eligible to participate in a Code 
section 401(k) plan (``401(k) plan'') even if the employee has not 
elected to participate and does not have an account balance. The final 
rules change this methodology and instead counts only the number of 
participants at the beginning of the plan year with an account balance.
    Current Form 5500 filings collect the number of participants at the 
end of the plan year with an account balance and does not collect such 
a figure for the beginning of the plan year. Accordingly, the DOL used 
the end of plan year number of participants with account balance to 
estimate the number of plans impacted by this change. Using the current 
definitions of large and small plans, there are 86,744 large defined 
contribution plans and 613,290 small defined contribution plans. Using 
the number of participants at the end of the year with an account 
balance as a proxy for the new participant count methodology yields 
estimated 68,057 large and 631,976 small defined contribution plans. 
This results in an estimated 18,699 defined contribution plans 
experiencing a cost savings by filing as small plans, which allow the 
possibility of exemption from the IQPA audit and report requirements 
and from including required financial statements and Schedules of 
Assets as part of their annual report.
vi. Defined Benefit Pension Plans
    In 2020, there were 46,577 defined benefit plans with 31.9 million 
total participants and 12 million active participants. There were 
45,032 single-employer defined benefit plans and 1,363 multiemployer 
defined benefit plans.\31\
---------------------------------------------------------------------------

    \31\ Employee Benefits Security Administration, Private Pension 
Plan Bulletin, Abstract of 2020 Form 5500 Annual Reports (September 
2022).
---------------------------------------------------------------------------

3. Benefits

i. Benefits of Establishing PEPs
    The SECURE Act established a new type of ERISA-covered defined 
contribution pension plan, the PEP, which is established and maintained 
by a pooled plan provider that meets the conditions of the statute. By 
creating the PEP structure, the SECURE Act permitted multiple unrelated 
employers to participate without the need for any common interest among 
the employers (other than having adopted the plan). As discussed below, 
PEPs need to provide ERISA section 103(g) participating employer 
information, including certain basic information regarding the pooled 
plan provider. Potential increased reporting costs for those employers 
choosing to offer retirement benefits to their employees through 
participating in a PEP would be offset by other cost reductions or 
business benefits relative to not having to administer an individual 
plan as further discussed below.
    By participating in a PEP, employers could minimize their fiduciary 
responsibilities for ongoing administration and operation of the plan. 
Employers could benefit from reduced risk and liability because the 
pooled plan provider would bear most of the administrative and 
fiduciary responsibility for operating the PEP, including hiring and 
monitoring the ERISA section 3(38) investment managers. Similarly, 
operating efficiency for participating employers are expected because 
the pooled plan provider handles the administrative tasks such as 
participant communications, plan recordkeeping, submitting the Form 
5500, and complying with plan audits.
    Also, as they are expected to be professional plan providers, it is 
anticipated that a pooled plan provider, relative to a small employer, 
would be better equipped to ensure that more accurate and complete data 
is reported to the Agencies on the Form 5500. Further, as discussed in 
the regulatory impact analysis to the regulation establishing the Form 
PR, PEPs should benefit from scale advantages, including the ability to 
obtain lower fees for investment options.\32\ The marginal costs for 
PEPs would shrink and fixed costs would be shared amongst the PEPs 
through pooled plan providers resulting in direct economic 
efficiencies.
---------------------------------------------------------------------------

    \32\ 85 FR at 72949-72950.
---------------------------------------------------------------------------

    This concept is supported by research conducted by Szapiro, that 
found the per employer cost of a large MEP can be lower than the cost 
of a small single-employer plan.\33\ Specifically, the study finds that 
a MEP with $125 million and 80 participating companies cost 78 basis 
points, whereas a single-employer plan with $1.5 million cost 111 basis 
points. Thus, compared to single-employer plans, MEPS can be a more 
cost-efficient option for small employers.
---------------------------------------------------------------------------

    \33\ Szapiro, Aron, ``Pooled Employer Plans: Paperwork or 
Panacea.'' Accessible at https://team.rebelfinancial.com/wp-content/uploads/2020/09/As_PEPs_Come_of_Age_What_Can_Their_Forebearers_Tell_us_About_how_They_Will_Work.pdf.
---------------------------------------------------------------------------

    Another potential outcome is that, due to increases in economic 
efficiency, small businesses may be better able to compete with larger 
companies in recruiting and retaining workers due to a competitive 
employee benefit package.
    Finally, PEPs may enable participants to achieve better retirement 
outcomes. VanDerhei's research finds that the adoption of a MEP in 
which the members do not need to share a common interest, other than 
participating in the same plan, with a 25 percent opt-out rate among 
employees, results in an overall 1.4 percent reduction in the 
retirement savings deficit, compared to when a MEP is not adopted.\34\ 
The study also finds a 3.1 percent reduction in the retirement savings 
deficit for individuals working for employers with fewer than 100 
employees and 3.3 percent reduction in the retirement savings deficit 
for individuals working for employers with 100 to 500 employees.
---------------------------------------------------------------------------

    \34\ VanDerhei, Jack, ``How Much More Secure Does the SECURE Act 
Make American Workers: Evidence from EBRI's Retirement Security 
Projection Mode.'' EBRI Issue Brief No 501 (2020). VanDerhei refers 
to MEPs in which the members do not need to share a common interest 
as ``Open MEPs.'' (Available at https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_501_secure-20feb20.pdf?sfvrsn=db6f3d2f_4 (Accessed July 21, 2021.)).
---------------------------------------------------------------------------

ii. Benefits of Establishing the Schedule MEP
    A benefit the new Schedule MEP provides is a unified vehicle to 
report information related to SECURE Act provisions, including 
information unique to MEPs. The participating employer information 
collected pursuant to section 103(g) of ERISA becomes data capturable, 
and available at a publicly viewable website containing images of the 
Form 5500 and related data sets. This public data will help protect 
plan participants and beneficiaries by allowing for improved

[[Page 11800]]

analysis for oversight and research purposes by the government, the 
regulated community, and other interested stakeholders.
iii. Benefits of DCGs
    The updated Form 5500 annual reporting requirements that allow for 
consolidated reporting, pursuant to section 202 of the SECURE Act, 
provides eligible defined contribution pension plans with an 
alternative method of compliance with annual reporting requirements 
that would otherwise mandate a separate annual report for each plan.
    The consolidated reporting option for defined contribution pension 
plans also allows for more choice and flexibility in the reporting of 
information to the government. Eligible plans can choose, based on 
benefits and preferences, if they want to continue with the plan filing 
as an individual plan or as part of a DCG. Plans whose individual 
reporting obligations would be satisfied by a DCG annual return/report 
filing may see a reduction in reporting costs depending on their 
circumstances.
    The Schedule DCG provides individual plan-level information for 
those defined contribution pension plans whose annual reporting 
requirements would be satisfied by a DCG's consolidated filing. The 
uniformity of the DCG arrangement structure and the benefits of 
consolidated reporting may reduce the complexity and administrative 
burden of plans. Also, by having a common plan administrator that is 
expected to be a professional service provider filing on behalf of a 
group, the DOL expects an increase in the likelihood that more accurate 
and complete data is reported to the Agencies. As a result, there may 
be an increase in annual reporting compliance and compliance with 
applicable ERISA requirements in general.
    Additionally, the Schedule DCG will help compare individual plan 
participation and aggregate asset and liability information from year 
to year. The Schedule DCG includes many of the questions that are 
currently required on the Form 5500-SF, and for large plans and small 
plans that do not meet the audit waiver conditions, questions regarding 
the required individual IQPA report and financial statements that must 
be filed with the Schedule DCG for each individual plan. While this 
requirement reduces the cost saving of filing as a DCG, the Departments 
believe the information requested is consistent with the SECURE Act 
provision permitting the Departments to collect whatever plan level 
information is needed to perform adequate oversight and vital to 
provide to participants, beneficiaries, and the Departments information 
needed to adequately monitor the plans and keep track of their assets 
from year to year.
iv. Benefits of Changes to Participant Count Methodology for 
Determining Eligibility for Small Plan Simplified Reporting Option for 
Defined Contribution Pension Plans
    The rule redefines the method of counting covered participants for 
purposes of determining when a defined contribution plan may file as a 
small plan and whether the plan may be exempt from the IQPA audit 
requirements generally applicable to large defined contribution pension 
plans.
    Defined contribution pension plans, including 401(k) plans and 
403(b) plans, under these final rules, will determine whether they must 
file as a large plan based on the number of participants with account 
balances as of the beginning of the plan year. This revises the 
previous measurement method, which included the total number of 
eligible participants at the beginning of the plan year, regardless of 
individual account activity. Since the size of the plan is a major 
factor in determining whether a plan must attach an IQPA report, this 
change is expected to reduce administration costs for the plans that 
are now able to exempt itself from the IQPA audit and report 
requirements.
    Further, some stakeholders have suggested that section 112 of the 
SECURE Act could make it even more likely that a plan with a small 
number of active participants might be required to bear the cost of an 
audit based on eligible, but not participating employees being counted 
toward the audit threshold. Specifically, section 112 provides that, 
beginning January 1, 2024, long-term, part time workers that have 
reached the plan's minimum age requirement and have worked at least 500 
hours in each of three consecutive 12-months period must be permitted 
to make elective contributions to a section 401(k) qualified cash or 
deferred arrangement.\35\ This could add to the participant count the 
number of employees who are eligible to, but who elect not to 
participate in a plan, which could impact whether a plan needs to file 
as a large plan. The change in counting methodology will result in 
excluding from the participant count those long-term, part time workers 
who are eligible to participate in a plan, but have not in fact elected 
to, make contributions to the plan.
---------------------------------------------------------------------------

    \35\ Under section 125 of SECURE Act 2.0, this three year 
measurement period is reduced to two years with the effect that 
long-term, part-time workers must be treated as meeting the time in 
service requirements to participate in Code section 401(k) qualified 
cash or deferred arrangements and, as added by section 125 of the 
SECURE Act 2.0, Code section 403(b) plans once they have worked two 
consecutive years (with at least 500 hours of service per year), 
effective for plan years starting on or after January 1, 2025.
---------------------------------------------------------------------------

    The DOL expects that excluding from the participant count 
participants who are eligible to participate but do not have an account 
balance at the beginning of the plan year will reduce expenses of 
establishing and maintaining a retirement plan, and consequently 
encourage more employers to offer workplace-based retirement savings 
plans to their employees.
v. Benefits of Schedule H Breakout Categories for Administrative 
Expenses
    The final forms revisions update Schedule H to add new breakout 
categories to the ``Administrative Expenses'' category of the Income 
and Expenses section of the Schedule H balance sheet. The data element 
breakouts for Administrative Expenses will now be ``Salaries and 
allowances,'' ``Contract administrator fees,'' ``Other recordkeeping 
fees,'' ``Independent Qualified Public Accountant (IQPA) fees,'' 
``Investment advisory and investment management fees,'' ``Bank or trust 
company trustee/custodial fees,'' ``Actuarial fees,'' ``Legal fees,'' 
``Valuation/appraisal fees,'' ``Other Trustee fees/expenses,'' and 
``Other expenses.'' The changes to how plan expenses are reported 
brings greater transparency to plan transactions, makes decisions on 
plan costs more observable to plan participants, and enhances the 
efficiency of the Agencies' enforcement efforts. ERISA Section 513(a) 
authorizes and directs the Secretary of Labor and EBSA to conduct a 
research program on employee benefits. The Form 5500 Annual Return/
Report is a leading source of data used in this research program. 
Breaking out the administrative expenses also aids in conducting 
research as the individual plan expenses are observable.
vi. Benefits of Adding Internal Revenue Code-Based Questions for the 
2023 Form 5500s
    Several questions are being added to the 2023 Form 5500s to help 
identify plans that are more likely to experience compliance issues, 
and help the IRS more effectively conduct investigations. The rule adds 
a nondiscrimination and coverage test question to Form 5500 and Form 
5500-SF that was on the Schedule T before it was eliminated. The 
question

[[Page 11801]]

asks if the employer aggregated plans in testing whether the plan 
satisfied the nondiscrimination and coverage tests of Code sections 
401(a)(4) and 410(b).
    Adding this question allows the IRS to identify these plans for 
examination. This question is also helpful when performing pre-audit 
analysis and allows the IRS to narrow any inquiries for information 
that is requested from the plan sponsor. The restoration of this 
question also reflects the elimination of optional coverage and 
nondiscrimination demonstrations in the IRS determination letter 
process. See Rev. Proc. 2012-6, 2012-1 I.R.B. 235 and Announcement 
2011-82, 2011-52 I.R.B. 1052.
    The final forms revisions add a question to Form 5500 and Form 
5500-SF, for 401(k) plans asking whether the plan sponsor used the 
design-based safe harbor rules or the ``prior year'' ADP, or ``current 
year'' ADP test, or if it is not applicable. A plan that performs 
``prior year'' or ``current year'' ADP testing is more likely to have 
compliance issues than a plan with a ``designed-based safe harbor.'' 
Adding this question allows the IRS to identify 401(k) plans that use 
ADP testing for examination over plans that have designed-based safe 
harbors. This question will also help the IRS perform pre-audit 
analysis, and for design-based safe harbor plans allow the IRS to 
verify whether allocations of required safe harbor contributions comply 
with the terms of the plan; and whether proper notice requirement is 
satisfied on an annual basis.
    The final forms revisions add a question to Form 5500 and the Form 
5500-SF asking whether the employer is an adopter of a pre-approved 
plan that received a favorable IRS Opinion Letter, the date of the 
favorable Opinion Letter, and the Opinion Letter serial number.\36\
---------------------------------------------------------------------------

    \36\ IRS is making a parallel update to the Form 5500-EZ, which 
is solely in the jurisdiction of the IRS.
---------------------------------------------------------------------------

    This question is meant to help the IRS identify whether a plan 
sponsor has adopted a pre-approved plan, and to determine whether the 
plan was adopted timely in accordance with the Code section 401(b) 
remedial amendment period. This question will also assist IRS in 
determining whether to select a plan for examination as a late amender 
for changes in the law.
vii. Benefits of Defined Benefit Plan/Title IV Questions for the 2023 
Form 5500s
    Changes to the Form 5500 Schedules SB and R are intended to clarify 
instructions, simplify reporting methods, and enhance the usability of 
data collected regarding asset allocation.

4. Cost Estimates and Savings

    This rule makes important changes to the requirements currently in 
effect. Some of these changes affect the distribution between the small 
and large size classes for plans filing the annual report to change. 
The DOL estimates that a total of 23,533 small plans and 842 large 
plans would opt to join either a DCG or a PEP, and therefore have their 
filing requirement fulfilled by these entities. The DOL also estimates 
that 18,699 large plans would be redefined and file as small plans due 
to the change in the participant count methodology for determining when 
a defined contribution plan may file as a small plan.
    The DOL anticipates that the costs for plans to satisfy their 
annual reporting obligations will typically decrease under these 
regulations relative to the current regime.\37\ As shown in Table 1 
below, the aggregate annual cost of such reporting under the current 
regulations and forms is estimated to be $505.5 million annually, 
shared across the approximately 864,100 filers subject to the filing 
requirement. The DOL estimates that the regulations and forms revisions 
in this rule impose an annual burden of $474.1 million on approximately 
839,400 filers, for a total decrease of $94.7 million. Most of this 
decrease ($63.3 million) is from audit cost savings and the remainder 
($31.4 million) results from other reporting efficiencies.
---------------------------------------------------------------------------

    \37\ The DOL believes that the annual cost burden on filers 
would be higher still in the absence of the regulations enabling use 
of the Form 5500 Annual Return/Report in lieu of the statutory 
requirements. Without the Form 5500 Annual Return/Report, filers 
would not have the benefits of any regulatory exceptions, simplified 
reporting, or alternative methods of compliance, and standardized 
and electronic filing methods.

                   Table 1--The Final Rule Reduces Overall Filing Cost by Roughly $95 Million
                             [Estimated burden change by type of filer, all changes]
----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of
                                   filers under    filers under   Aggregate cost  Aggregate cost  Aggregate cost
          Type of plan                current          final       under current    under final       change
                                    (thousands)     (thousands)     (millions)      (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans.....................           148.8           129.4          $261.2          $227.6          -$33.6
Small Plans.....................           705.6           700.1           232.9           231.3            -1.5
DFEs............................             9.7             9.9            11.4            15.2             3.8
Form Changes....................           864.1           839.4           505.5           474.1           -31.4
Audit Cost Changes..............  ..............  ..............  ..............  ..............           -63.3
                                 -------------------------------------------------------------------------------
    Total Changes...............  ..............  ..............  ..............  ..............           -94.7
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

    To estimate the net change in cost burden, because of the 
interaction of the changes, the DOL has also analyzed the cost impact 
of the individual revisions on classes of filers. In doing so, the DOL 
took account of the fact that various types of plans would be affected 
by more than one revision and that the sequence of multiple revisions 
would create an interaction in the cumulative burden on those plans. 
The total changes in Table 1 show the estimated accumulated changes. 
The other tables below show estimates for individual changes from the 
same baseline prior to the enactment of any of these rules or 
revisions; therefore, the tables cannot be added to arrive at the 
estimates in Table 1.
i. Schedule MEP and PEPs
    The new Schedule MEP will be filed by all MEPs, including PEPs, and 
includes participating employer

[[Page 11802]]

information already filed as an attachment, as well as limited specific 
reporting requirements for PEPs. This change also results in the 
information on participating employers being machine-readable.
    As discussed in the affected entities section, estimates are 
available for MEPs that have filed a Form 5500 previously, but not for 
the newly created PEPs that have yet to file a Form 5500. The impacts 
of the recent DOL rulemaking concerning association retirement plans 
and PEO MEPs also carries some uncertainty regarding the number of MEPs 
that may be affected. By the end of year 2021, 71 entities filed the 
Form PR to register as pooled plan providers with approximately 3 PEPs 
per provider. These are the providers assumed most likely to provide 
these services for the year 2021. Therefore, for purposes of this 
analysis, the DOL assumes there to be a total of 202 PEPs. As it is the 
case with MEPs, joining a PEP translates into less plan maintenance 
expenditures due to economies of scale. Additionally, the DOL believes 
the information requested on the Schedule MEP is already available to 
plans, so the burden is primarily entering the information onto the 
form. The burden to file the Schedule MEP is estimated to average 10 
minutes for MEPs and 14 minutes for PEPs, with variation depending on 
the number of participating employers.
    Although the DOL does not know how many plans would decide to offer 
benefits through a PEP, the current average number of participating 
employers in a MEP is a reasonable proxy for PEPs that may be 
established in the future. DOL data suggests that MEPs, on average, 
have 11 participating employers, nine employers with fewer than 100 
participants (small) and two employers with 100 or more participants 
(large). The DOL uses this information in its estimates for PEPs. 
Combined with one pooled plan provider registrant that has already 
listed 2,000 participating employers, it is estimated that a total of 
3,369 small participating plans and 842 large participating plans would 
provide benefits through PEPs.\38\ The DOL assumes this would result in 
a direct decrease of 3,369 defined contribution Form 5500-SF filers and 
a decrease of 563 Form 5500 defined contribution filers. As Table 2 
shows this results in an expected reporting cost reduction of $2 
million (not including the audit cost reduction in Table 1) and a total 
reduction of individual filers from 864,100 to 860,100 filers. The 
reduction in filers due to single filers joining a PEP would be 
partially offset by an increase in filings by the PEP themselves. This 
total reduction considers both changes to the number of filings. There 
is, however, considerable uncertainty in this estimate of a net impact 
on filings because of the uncertainty regarding the number of PEPs and 
the resulting increase in PEP filings.
---------------------------------------------------------------------------

    \38\ For the calculation of the total number of participating 
employers in PEPs, it is first assumed that 80 percent of all the 
employers who would participate in a PEP are currently providing 
benefits through small plans, and that the remaining 20 percent 
through large plans. This distribution would apply to the registrant 
that has already exceptionally listed 2,000 employers (which would 
then be divided in 1,600 small participating plans and 400 large 
participating plans) and to the other 201 pooled plan providers 
assumed to be created. It is also assumed that each of these other 
201 pooled plan providers would be servicing 11 employers each. 
Therefore, the total number of small plans participating in a PEP is 
estimated as: 1,600 + (201 x 11 x 0.8) = 3,369 (rounded). Similarly, 
the total number of large participating plans is estimated as: 400 + 
(201 x 11 x 0.2) = 842 (rounded).

                   Table 2--PEPs and Schedule MEP Generate Approximately $2 Million in Savings
            [Estimated burden change by type of filer. Introduction of PEPs and schedule MEP filing]
----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of
                                   filers under    filers under   Aggregate cost  Aggregate cost  Aggregate cost
          Type of plan                current          final       under current    under final       change
                                    (thousands)     (thousands)     (millions)      (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans.....................           148.8           148.1          $261.2          $260.1           -$1.1
Small Plans.....................           705.6           702.2           232.9           231.9            -0.9
DFEs............................             9.7             9.7            11.4            11.4             0.0
                                 -------------------------------------------------------------------------------
    Overall Total...............           864.1           860.1           505.5           503.5            -2.0
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

ii. DCG Filings
    As discussed above, a DCG filing for a group of plans likely 
reduces reporting burden as only one Form 5500 is filed and signed by a 
common plan administrator, eliminating the need for separate 
administrators from participating plans. However, the burden from the 
consolidated Form 5500 filed by the DCG, including the Schedule DCG to 
report individual plan information for each participating plans may 
offset some or all of these savings. In 2020, there were 531,872 small 
defined contribution plans that file the Form 5500-SF and reported the 
plan characteristic code 3D; this type of plan may find it advantageous 
to adopt this new structure of providing benefits and therefore a 
fraction of them will join a DCG.\39\ The DOL sought comments on these 
assumptions but did not receive any that warranted adjustments to these 
estimates.\40\
---------------------------------------------------------------------------

    \39\ As noted above, code 3D indicates ``A pre-approved plan 
under sections 401, 403(a), and 4975(e)(7) of the Code that is 
subject to a favorable opinion letter from the IRS.''
    \40\ The DOL acknowledges that there could be other employers 
whose plans are outside the category of small defined contribution 
type, which currently file the Form 5500-SF and report plan 
characteristic 3D, that might also find an advantage in joining a 
DCG and therefore start providing benefits this way.
---------------------------------------------------------------------------

    The change in burden from allowing a DCG to file on behalf of plans 
is estimated in the following manner. Apart from the 531,872 small 
defined contribution plans mentioned above, there are 1,813 pre-
approved plans.\41\ The DOL does not know if every pre-approved plan 
will file on behalf of these 531,872 plans. These pre-approved filers 
are the likeliest entities to file as a DCG. Although the DOL lacks 
sufficient information to confidently estimate how many DCGs will form, 
the 71 entities that have filed the Form PR to register as a pooled 
plan provider, and that would provide these services

[[Page 11803]]

for the year 2021, may be suggestive of the number of entities 
currently seeking to take advantage of new structures to reduce plan 
administrative costs. Potential DCGs may be better positioned than 
pooled plan providers to commence operations as they already have 
client plans that could benefit from the savings and do not have to 
switch plans. Therefore, the DOL assumes that twice the number of DCGs 
(142) would form in the first year as the number of pooled plan 
providers (71).
---------------------------------------------------------------------------

    \41\ https://www.irs.gov/retirement-plans/preapproved-retirement-plans.
---------------------------------------------------------------------------

    With the availability of DCGs as an option, some service providers 
may discontinue their provision of individual Form 5500 filing 
services, and only offer to file as DCGs. Some plans that contract with 
service providers that do so may choose to be moved into DCG filings, 
while others may change service providers because they don't want to 
comply with the additional filing obligations placed on DCG filers. For 
purposes of this analysis, we assume that half of the plans currently 
associated with a pre-approved plan provider that decide to file as a 
DCG are offered and accept the DCG requirements to stay with the same 
provider. The DOL uses these assumptions to estimate that 142 DCGs with 
a total of 20,827 small plans will have their annual return/report 
filing obligation satisfied by the filing of a DCG Form 5500.\42\
---------------------------------------------------------------------------

    \42\ Average number of ERISA plans per pre-approved plan = 
531,872/1,813 = 293.4. Estimate of total number of ERISA plans 
filing as part of a DCG = (2 x 71 = 142) x 293.4*0.5 [ap] 20,827.
---------------------------------------------------------------------------

    As described above, the consolidated return/report to be filed by 
the DCG to satisfy the annual reporting requirements of participating 
plans is required to include a Schedule DCG for each participating 
plan. The cost calculation must consider this cost on a per 
participating plan basis. The DOL believes that once individual plans 
join a DCG, the average cost of filing a Schedule DCG, which would be 
done for each of the estimated 20,164 participating plans, would be 
lower than the cost of filing a Form 5500-SF separately, which was the 
cost incurred by a small plan before joining a DCG. Although the DOL 
does not know how much lower this new cost would be, it estimates that 
completing a Schedule DCG as part of the DCG's Form 5500 annual return/
report would take about 40 percent less time than completing a Form 
5500-SF for each individual plan.
    As Table 3 shows, assuming the number of DCGs and plans per DCG as 
described above, along with the estimated cost of filing a schedule 
DCG, the DOL expects an overall cost reduction of $2.1 million. This 
cost reduction assumes, as a baseline, the current definition of large 
and small plans, and would be the result of a decrease in the number of 
Form 5500-SF filers, from 864,100 to 843,400. The reduction in Form 
5500-SF filers would be partially offset by an increase in DFE filings, 
which reflects the introduction of DCGs as filing entities. This total 
reduction considers both changes in the number of filings.

                           Table 3--DCG Implementation Saves Approximately $2 Million
            [Estimated burden change by type of filer. Introduction of DCGs and schedule DCG filing]
----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of
                                   filers under    filers under   Aggregate cost  Aggregate cost  Aggregate cost
          Type of plan                current          final       under current    under final       change
                                    (thousands)     (thousands)     (millions)      (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans.....................           148.8           148.8          $261.2          $261.2            $0.0
Small Plans.....................           705.6           684.8           232.9           227.1            -5.8
DFEs............................             9.7             9.9            11.4            15.2             3.8
                                 -------------------------------------------------------------------------------
    Overall Total...............           864.1           843.4           505.5           503.4            -2.1
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

iii. Revised Expense Reporting on the Schedule H
    These final rules revise the Schedule H to collect more detailed 
information on plan expenses to allow for more transparency, 
accountability, and increase the usefulness of the data in regulating 
employee benefit plans. The revision does not request any additional 
information, instead recategorizing the information that is already 
reported on Schedule C and Schedule H; therefore, the DOL believes the 
cost of this change to be de minimis.
iv. Changes to Participant Count Methodology for Determining 
Eligibility for Small Plan Simplified Reporting Option for Defined 
Contribution Pension Plans
    The regulation changes the method of counting participants for 
purposes of determining when a defined contribution plan may file as a 
small plan, which also factors into whether the plan may be exempt from 
the IQPA audit requirement. Specifically, plans are directed to count 
only the number of participants/beneficiaries with account balances as 
of the beginning of the plan year, as compared to the current rule that 
counts all the employees eligible to participate in the plan. This is 
facilitated through the Form 5500 and Form 5500-SF which asks for the 
number of participants with account balances at the beginning of the 
plan year, for defined contribution pension plans only.
    This change reduces costs for plans. The additional question 
imposes little burden as the number of participants with account 
balances at the end of year is already tracked and reported; but to the 
defined contribution pension plans which now qualify as a small plan, 
the savings could be significant. EBSA estimates that the reporting 
burden of all required schedules for a small pension plan is, on 
average, approximately $330 while the same estimate for a large pension 
plan is around $1,756.
    These plans and their participants may no longer have the 
protections provided by the audit, which could result in an increased 
risk of errors and

[[Page 11804]]

fraud; however, there are conditions for small plans to be eligible for 
the audit waiver that are designed to address those potential risks.
    For small pension plans to be eligible for the audit waiver they 
must meet conditions related to investment assets, financial 
institutions holding plan assets, disclosures to participants and 
beneficiaries, and enhanced fidelity bonding for persons who handle 
certain assets. Consistent with the DOL's goal of encouraging pension 
plan establishment and maintenance, particularly in the small business 
community, the DOL concluded that engaging an accountant should not be 
the only means by which the security of small plan assets can be 
adequately protected. Rather, in developing these final rules, 
consistent with the existing regulatory conditions for the small plan 
audit waiver, the DOL attempted to balance the interest in providing 
secure retirement savings for participants and beneficiaries with the 
interest in minimizing costs and burdens on small pension plans and the 
sponsors of those plans.
    The DOL estimates that there could be a reduction of 19,541 large 
plans filing under the final rules and form changes, 842 large 
participating plans that could provide benefits through PEPs, and 
18,699 defined contribution plans due to the changing definition of who 
can file as a small plan. Further, an estimated 10,714 of these plans 
currently provide the IQPA report and audited financial statements and 
would therefore save in audit costs.\43\ The DOL estimates that there 
could be an audit cost reduction of $7,500 for each one of these 10,714 
plans. Plans may still conduct an audit, even if there is no 
requirement. It is estimated that 25 percent of plans may still conduct 
an audit.\44\ Data on the cost of an audit for these plans is not known 
and will vary based on plan size and complexity. An estimate of $7,500 
is used to approximate the cost savings.\45\ This results in an 
estimated cost savings of $60.3 million annually for the 8,036 plans 
(10,714 * 0.75) that will no longer be required to, and choose not to, 
conduct an audit. The DOL received a single comment on this estimate 
which suggested a range of $8,000 to $15,000 for a single-employer plan 
IQPA. Given the wide range of costs noted, both within the comment 
received and the referenced materials the DOL based its initial 
estimate on, the cost savings could be substantially higher than what 
the DOL uses as an estimate. These cost savings are reported in Table 1 
above.
---------------------------------------------------------------------------

    \43\ To estimate the number of large plans currently providing 
the IQPA report and audited financial statements the DOL identified 
those large plans that would have been most likely to be redefined 
as small plans and to have filed the Schedule H in 2020, as 
estimated on the 2020 Form 5500 Pension Research Files. Note that 
the 80 to 120 participant transition provision at 29 CFR 2520.103-
1(d) allows a plan that covers fewer than 100 participants to 
continue taking advantage of the simplified option or exemption, as 
applicable, until they reach 121 participants, therefore not all 
plans with 100 or more participants will file a Form 5500 as a large 
plan with a Schedule H in a given year.
    \44\ See https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms.
    \45\ A report by Mathematica suggests audit costs of between 
$3,000 and $30,000. Adjusted for inflation this would be about 
$5,000 to $50,000 in 2021 dollars. https://mathematica.org/publications/estimates-of-the-burden-for-filing-form-5500-the-change-in-burden-from-the-1997-to-the-1999-forms. See also 
www.paychex.com/retirement-services/ pooled-employer-plans (accessed 
July 21, 2021) which suggest $10,000 to $20,000. Additionally, 
conversations with stake holders suggest a range similar to the 
$10,000 to $20,000. As the affected plans are expected to be small, 
the low estimates are averaged ($5,000 and $10,000) to arrive at 
$7,500.
---------------------------------------------------------------------------

    As discussed above, there are an estimated 18,699 defined 
contribution plans that would now be able to file as a small plan. 
Other reporting cost savings for these plans are based on their filing 
the Form 5500-SF instead of the Form 5500 and the correspondent 
schedules. As shown in Table 4, the DOL estimates that this 
redefinition of small and large plan alone would translate into a 
decrease of filing costs of $27.3 million, with a reduction from 
148,800 to 130,100 in large plan filers.

          Table 4--Plans Switching Filing Size Class Generates an Estimated $27 Million in Cost Savings
    [Estimated burden change by type of filer. Changes to filing exemptions and requirements for small plans]
----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of
                                   filers under    filers under   Aggregate cost  Aggregate cost  Aggregate cost
          Type of plan                current          final       under current    under final       change
                                    (thousands)     (thousands)     (millions)      (millions)      (millions)
----------------------------------------------------------------------------------------------------------------
Large Plans.....................           148.8           130.1           261.2           228.7          -$32.5
Small Plans.....................           705.6           724.3           232.9           238.1             5.2
DFEs............................             9.7             9.7            11.4            11.4             0.0
                                 -------------------------------------------------------------------------------
    Overall Total...............           864.1           864.1           505.5           478.2           -27.3
----------------------------------------------------------------------------------------------------------------
Notes: Some displayed numbers do not sum up to the totals due to rounding.
DOL calculations are based on the 2020 Private Pension Plan Bulletin data files.
Large plans--100 participants or more.
Small plans--generally fewer than 100 participants.

v. Internal Revenue Code and ERISA Title IV Changes
    The regulation includes changes related to Internal Revenue Code 
requirements and reporting requirements for defined benefit pensions 
subject to filing Schedules MB, SB, and R. The Agencies believe the 
additional questions reflect information plans have close at hand and 
expect that reporting this information would result in a de minimis 
marginal burden.
5. Assumptions, Methodology, and Uncertainty
    The cost and burden associated with the annual reporting 
requirements for any given plan depend upon the specific information 
that must be provided, given the plan's characteristics, practices, 
operations, and other factors. For example, a small, single-employer 
defined contribution pension plan eligible to file the Form 5500-SF 
should incur far lower costs than a large, multiemployer defined 
benefit pension plan that holds multiple insurance contracts, engages 
in reportable transactions, and has many service providers that each 
received over $5,000 in compensation. The DOL separately considered the 
cost to different types of plans in arriving at its aggregate cost 
estimates. The DOL's basis for these estimates follows.

[[Page 11805]]

i. Assumptions Underlying This Analysis
    The DOL's analysis assumes that all benefits and costs would be 
realized in the first year of the reporting cycle to which the changes 
apply and within each year thereafter. This assumption is premised on 
the requirement that each plan will be required to file the Form 5500 
Annual Return/Report. The DOL has used a ``status quo'' baseline for 
this analysis, which assumes the future will resemble the present, 
absent the final regulations and forms revisions. The DOL does not 
include a separate one-time transition cost for learning or updating 
systems during the first year in which the reporting changes apply. 
Cost to read instructions is already included in the estimates of the 
burden. The changes would largely apply requirements currently in 
effect for large MEPs to PEPs and DCGs. The financial services 
providers and recordkeepers that service such plans and DCGs generally 
are already providing Form 5500 filings services for the employee 
benefit plans they service so we do not anticipate material start-up 
costs for them to file Form 5500s on behalf of PEPs or DCGs. We also do 
not anticipate that individual plans that participate in a DCG 
reporting arrangement would expend more time to supply information to 
DCG reporting arrangements during the first year than what they 
currently incur to supply annual reporting data to service providers 
that prepare their annual reports (and may in fact incur less time even 
during the first year). Similarly, the creation of the Schedule MEP 
mostly reorganizes the way annual reporting data is provided by 
affected plans, rather than adding significant additional information 
collection.
    Further, it is not anticipated that the limited number of 
additional questions for (1) defined benefit pension plans, and (2) 
Code related questions for pension plans related to existing compliance 
obligations, will entail material start-up or learning costs. The 
changes largely apply existing requirements in the context of a new 
schedule for some filers and as an attachment to current filings for 
others.
ii. Methodology
    Mathematica Policy Research, Inc. (MPR) developed the underlying 
cost data, which has been used by the Agencies in estimating burden 
related to the Form 5500 Annual Return/Report since 1999. See 65 FR 
21068, 21077-78 (Apr. 19, 2000); Borden, William S., Estimates of the 
Burden for Filing Form 5500: The Change in Burden from the 1997 to the 
1999 Forms, Mathematica Policy Research, submitted to DOL May 25, 
1999.\46\ The cost information was derived from surveys of filers and 
their service providers, as modified due to comments, which were used 
to measure the unit cost burden of providing various types of 
information. The DOL has adjusted these unit costs since 1999 to 
account for changes to the forms and schedules and increases in the 
cost of labor and service providers since MPR developed the initial 
data.
---------------------------------------------------------------------------

    \46\ The MPR report can be accessed at https://mathematica.org/publications/estimates-of-the- burden-for-filing-form-5500-the-
change-in-burden-from-the-1997-to-the-1999-forms. See also Technical 
Appendix: Documentation of Form 5500 Revision Burden Model at 
www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/technical-appendices.
---------------------------------------------------------------------------

    For this form revision, the DOL used the adjusted MPR unit cost 
data for pension and non-health welfare plans. The DOL developed the 
unit cost data for group health plans using the best available data. To 
develop unit costs for DFEs, the DOL created weighted averages of the 
unit costs for plans.
    The DOL used historical counts of Form 5500 Annual Return/Report 
filers tabulated by type and reported characteristics to estimate filer 
counts for pension plans, welfare plans, and DFEs.
    The DOL modeled its approach to calculating burden on the approach 
used during the 2009 forms revision and the 2016 modernization 
proposal.\47\ Aggregate burden estimates were produced in both 
revisions by multiplying the unit cost measures by the filer count 
estimates. The methodology is described in broad terms below.
---------------------------------------------------------------------------

    \47\ See 72 FR 64731 (Nov. 16, 2007) and 81 FR 47496 (July 16, 
2016).
---------------------------------------------------------------------------

    To estimate aggregate burdens, types of plans with similar 
reporting requirements were grouped together in various groups and 
subgroups. Calculations of aggregate cost were prepared for each of the 
various subgroups, both under requirements in effect prior to this 
action and under the forms as revised. The universe of filers was 
divided into four basic types: Defined benefit pension plans, defined 
contribution pension plans, welfare plans, and DFEs. Each of these 
major plan types was further subdivided into multiemployer and single-
employer plans.\48\
---------------------------------------------------------------------------

    \48\ For purposes of this analysis, multiple-employer plans were 
treated as single-employer plans.
---------------------------------------------------------------------------

    Since the filing requirements differ substantially for small and 
large plans, the plan types were also divided by plan size. For large 
plans (100 or more participants), the defined benefit plans were 
further divided between very large (1,000 or more participants) and 
other large plans (at least 100 participants, but fewer than 1,000 
participants). Small plans (less than 100 participants) were divided 
similarly, except that they were divided into Form 5500-SF eligible and 
Form 5500-SF ineligible plans, as applicable.
    Welfare plans were divided into group health plans and plans that 
do not provide any group health benefits; plans that provide group 
health benefits and have fewer than 100 participants were divided into 
fully insured group health plans and unfunded, combination unfunded/
fully insured plans, or funded with a trust group health plans.
    DFEs were divided into Master Trusts/MTIAs, CCTs, PSAs, 103-12 IEs, 
GIAs, and DCGs. For each of these sets of respondents, burden hours per 
respondent were estimated for the Form 5500 Annual Return/Report itself 
and up to seven schedules or the Form 5500-SF (and the Schedule SB, for 
Form 5500-SF eligible defined benefit pension plans).
    The costs for each of the forms and schedules that are part of the 
Form 5500 Annual Return/Report were also estimated separately. When 
items on a schedule are required by more than one Agency, the estimated 
burden associated with that schedule is allocated among the Agencies. 
This allocation is based on how many items are required by each Agency. 
The burden associated with reading the instructions for each item also 
is tallied and allocated accordingly.
    The reporting burden for each type of plan is estimated considering 
the circumstances that are known to apply or that are generally 
expected to apply to such plans, including plan size, funding method, 
usual investment structures, and the specific items and schedules such 
plans ordinarily complete. For example, a large single- employer 
defined benefit pension plan that is intended to be tax-qualified that 
has insurance products among its investments and whose service 
providers received compensation above the Schedule C reporting 
thresholds would be required to submit an annual report completing 
almost all the line items of the Form 5500, plus Schedule A (Insurance 
Information), Schedule SB (Single-Employer Defined Benefit Plan 
Actuarial Information), Schedule C (Service Provider Information), 
possibly Schedule G (Financial Transaction Schedules), Schedule H 
(Financial Information), and Schedule R (Retirement Plan Information), 
and would be required to submit an IQPA report. In this way, the 
Agencies intend

[[Page 11806]]

to estimate the relative burdens placed on different categories of 
filers. Burden estimates were adjusted for the final revisions to each 
schedule, including items added or deleted in each schedule and items 
moved from one schedule to another.
    The DOL has not attributed a recordkeeping burden to the Form 5500 
Annual Return/Report in this analysis or in the Paperwork Reduction Act 
analysis because it believes that plan administrators' practice of 
keeping financial records necessary to complete the 5500 forms and 
schedules arises from usual and customary management practices that 
would be used by any financial entity and does not result from ERISA or 
Code annual reporting and filing requirements.
    The aggregate baseline burden is the sum of the burden per form and 
schedule as filed prior to this action multiplied by the estimated 
aggregate number of forms and schedules filed.\49\ The DOL estimated 
the burden impact of changes in the numbers of filings and of changes 
made to the various form and the schedules. The burden estimates use 
data from the Form 5500 Annual Return/Report for plan year 2020, which 
is the most recent year for which complete data is available.
---------------------------------------------------------------------------

    \49\ Some filers are eligible to file the Form 5500-SF but 
choose to file a Form 5500 and attach Schedule I and/or other 
schedules because they find it less burdensome to do so in their 
situation. Counts of these filings are adjusted to reflect what they 
would have filed if they had chosen to file the Form 5500-SF.
---------------------------------------------------------------------------

iii. Uncertainty
    The SECURE Act created PEPs and directed the DOL and the Department 
of the Treasury to make available a consolidated reporting option for 
defined contribution pension plans that meet certain requirements. Due 
to these final rules designed to implement the SECURE Act, as well as 
the new Schedule DCG and Schedule MEP, which requires MEPs to indicate 
the MEP type by checkbox (association retirement plans, PEO plans, 
PEPs, and other MEPs), the DOL assumes that these entities will 
identify the type of entity when they file a Form 5500 with the 
applicable new schedules. However, until they file, the Departments 
face significant uncertainty about the number of each type of entity 
and whether they are merely providing coverage in a different manner 
than was already provided by employers to their employees through 
single-employer plans or already existing MEPs (including association 
retirement plans and PEO plans) or whether with the availability of 
additional commercial arrangements and plans, more employers will 
establish plans for their employees.
    While pooled plan providers have filed a Form PR which lists plans 
they are forming, they do not report the number of participating 
employers. Some of the first PEPs to be created would be filing the 
2021 Form 5500 series. The submission of the 2021 Forms is underway but 
not complete. As previously stated, due to the filing deadlines the 
2021 Form 5500 dataset is not complete, therefore the DOL is relying on 
alternative sources and professional judgement to estimate PEPs. The 
DOL has identified 646,111 defined contribution plans that reported 
code 3D, of which 531,872 are considered small defined contribution 
plans filing the Form 5500-SF as possible plans that could join a DCG 
or a PEP. However, the decision depends not only on cost savings and 
administrative ease, but also on employers' preferences and perceptions 
about the advantages and disadvantages of joining either group.
    The SECURE Act 2.0, which passed at the end of 2022, allows for the 
formation of 403(b) PEPs. There is a great deal of uncertainty in how 
to estimate the impact of this change in the statute due to the lack of 
data on any such arrangement within the 403(b) universe of plans, and 
the fact that it is likely that few plans or providers are positioned 
to act in the short term. Using the estimates from PEP creation 
discussed earlier in the analysis (which may not be representative of 
403(b) plan/provider), an estimate of roughly 140 employers joining a 
403(b) PEPs in future years can be derived by scaling the estimate of 
the number of employers joining a PEP presented earlier by the ratio of 
403(b) plans (20,732) to 401(l)-type plans (621,509).
    The Agencies requested information during the proposed rule stage 
that would help improve its estimates of the numbers of affected 
entities, employers, and the burdens they would experience, but did not 
receive comments that would help improve its estimates.
iv. Alternatives
    As described above, the DOL changes to Title I annual reporting 
requirements are primarily designed to implement statutory changes 
enacted as part of the SECURE Act. The DOL considered several 
alternative approaches to address these statutory changes, including:
     Retaining the proposed requirement of auditing both a DCG 
trust and plan level audit.
     Not requiring a plan-level audit and instead requiring 
just an audit of the DCG's trust. Retaining the proposed ``eligible 
plan asset'' restriction on investments for plans that are part of a 
DCG. Retaining the proposed requirement that small plans that are part 
of a DCG must satisfy the small plan audit waiver but not by virtue of 
enhanced bonding. Not permitting any brokerage windows in DCGs. Not 
allowing direct or indirect holding of employer securities.\50\ The 
cost (or savings) for each of these items, individually or in 
combination, is difficult to disentangle from the whole given that each 
of the items interacts with the others. However, as a point of 
reference, the combination of changes from the proposed rule to the 
final, which many of the alternatives represent, results in an 
additional cost savings of $0.7 million annually, $2.3 million as 
adopted vs. $2.6 million as proposed.
---------------------------------------------------------------------------

    \50\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 1, SECURE Act 
Section 202 DCG Reporting Arrangements, paragraph (b) Eliminating 
the Single DCG Trust, DCG Trust Audit, and ``Eligible Plan Assets'' 
Requirements for All Investments in DCG reporting.
---------------------------------------------------------------------------

     Including more or fewer questions on the Schedule DCG and 
the Schedule MEP.\51\
---------------------------------------------------------------------------

    \51\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 1, SECURE Act 
Section 202 DCG Reporting Arrangements, paragraph (c) Content 
Requirement for DCG Form 5500 and Subsection 2 Schedule MEP 
(Multiple-Employer Pension Plan Information) and MEP Reporting.
---------------------------------------------------------------------------

     Including more or fewer questions for defined benefit 
plans on issues under Title IV of ERISA or questions for retirement 
plans on Code compliance issues.\52\
---------------------------------------------------------------------------

    \52\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 3 Internal 
Revenue Code Compliance Questions and Subsection 5 Additional 
Defined Benefit Plan Reporting Improvements.
---------------------------------------------------------------------------

     Not adding new content elements to the Schedules of Assets 
and requiring the Schedules of Assets to be filed in a data-capturable 
format.\53\ At the

[[Page 11807]]

proposal stage at 86 FR 51284 this change was estimated as $41 million.
---------------------------------------------------------------------------

    \53\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 6, Schedule H 
Schedules of Assets Changes and Breakout Categories for 
Administrative Expenses, paragraph (a) Deferring Schedules of Asset 
Changes for re-proposal as part of DOL's general Form 5500 
improvement project.
---------------------------------------------------------------------------

     Not changing the methodology for participant count for 
determining whether a defined contribution retirement plan is subject 
to the annual reporting requirements applicable to large plans versus 
small plans.\54\ Not making this change, as noted in Table 4, would 
lead to $27.3 million per year higher costs.
---------------------------------------------------------------------------

    \54\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 4, 
Participant-Count Methodology for Determining Eligibility for Small 
Plan Simplified Reporting Options for Individual Account Plans.
---------------------------------------------------------------------------

     Allowing a DCG with under 100 total participants to file 
as a small plan rather than requiring all DCGs to generally follow the 
annual reporting requirements applicable to large plans--i.e., Form 
5500-SF or Form 5500, Schedule A (if applicable), Schedule I, Schedule 
R (if applicable)--no IQPA audit, and no detailed supplemental 
schedules.\55\ According to the 2021 Form 5500 instructions, the 
estimated time a defined contribution plan may expect to save by filing 
as a small plan versus a large plan, depending on the combinations of 
forms required, is up to 24 hours of labor, which is a 75% reduction in 
resources.\56\
---------------------------------------------------------------------------

    \55\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 1, SECURE Act 
Section 202 DCG Reporting Arrangements, paragraph (c) Content 
Requirement for DCG Form 5500.
    \56\ Instructions for Form 5500 Annual Return/Report of Employee 
Benefit Plan, Pg. 79 at https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2021-instructions.pdf.
---------------------------------------------------------------------------

     Requiring non-plan MEWAs and/or non-group health MEWA 
plans to report the participating plan information on the Form M-1 and 
Form 5500, respectively.\57\
---------------------------------------------------------------------------

    \57\ See accompanying final forms revisions document being 
published concurrently in the Federal Register from the Agencies 
titled, Annual Information Return/Report, at Part I. SUPPLEMENTARY 
INFORMATION, Section D, Overview of Final Form and Instruction 
Changes and Discussion of Public Comments, Subsection 1, Subsection 
2 Schedule MEP (Multiple-Employer Pension Plan Information) and MEP 
Reporting.
---------------------------------------------------------------------------

6. Paperwork Reduction Act Statement

    In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 
U.S.C. 3506(c)(2)(A)), the Agencies solicited comments concerning the 
information collection request (ICR) included in the revision of the 
Form 5500 Annual Return/Report.\58\ At the same time, the Agencies also 
submitted an information collection request (ICR) to the Office of 
Management and Budget (OMB), in accordance with 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    \58\ 86 FR 51488.
---------------------------------------------------------------------------

    The Agencies did not receive comments that specifically addressed 
the paperwork burden analysis of the information collection requirement 
contained in the proposed rule.
    In connection with publication of the final regulations and final 
forms revision, the Agencies are submitting an ICRs to OMB requesting a 
revision of the collections of information under OMB Control Numbers 
1210-0110 (DOL), 1545-1610 (IRS), 1212-0057 (PBGC) and 1210-0040 (DOL 
for SAR) reflecting the final regulations and instruction changes being 
finalized in this document. The accompanying Notice of Final Forms 
Revisions includes a separate PRA discussion that includes tables 
breaking out the average time for filing the Form 5500, Form 5500-SF, 
and each schedule, broken down by pension plans (sub-grouped by large 
plans filing the Form 5500, small plan filing the Form 5500, small plan 
filing the Form 5500-SF), welfare plans that include health benefits 
(sub-grouped by large plans and small, unfunded, combination unfunded/
fully insured, or funded with a trust 5500-SF), welfare plans that do 
not include health benefits (sub-grouped by large plans filing the Form 
5500, small plan filing the Form 5500, small plan filing the Form 5500-
SF), and DFEs (sub-grouped by master trusts, CCTs, PSAs, 103-1IEs, 
GIAs, and DCGs). The discussion also includes a table with the 
estimated PRA burdens attributable the Form 5500 Annual Return/Report 
broken down by the portions allocated to the DOL and the IRS. The DOL 
is also submitting revisions to the Summary Annual Report ICR. A copy 
of the ICRs may be obtained by contacting the person listed in the PRA 
Addressee section below. The Agencies will notify the public when OMB 
approves the ICRs.
    A copy of the ICRs may be obtained by contacting the PRA addressee 
shown. PRA ADDRESSEE: Address requests for copies of the ICRs to James 
Butikofer, Office of Research and Analysis, U.S. Department of Labor, 
Employee Benefits Security Administration, 200 Constitution Avenue NW, 
Room N-5655, Washington, DC 20210 or email: [email protected]. ICRs 
submitted to OMB also are available at http://www.RegInfo.gov.

7. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \59\ imposes certain 
requirements with respect to Federal rules that are subject to the 
notice and comment requirements of section 553(b) of the Administrative 
Procedure Act \60\ and are likely to have a significant economic impact 
on a substantial number of small entities. Unless the head of an agency 
determines that a final rule will not have a significant economic 
impact on a substantial number of small entities, section 604 of the 
RFA requires the agency to present a final regulatory flexibility 
analysis (FRFA) of the final rule. The DOL has determined that this 
final rule and final forms revisions are likely to have a significant 
economic impact on a substantial number of small entities. Therefore, 
the DOL has prepared a FRFA.
---------------------------------------------------------------------------

    \59\ 5 U.S.C. 601 et seq. (1980).
    \60\ 5 U.S.C. 551 et seq. (1946).
---------------------------------------------------------------------------

    For purposes of this FRFA, an entity is considered a small entity 
if it is an employee benefit plan with fewer than 100 participants.\61\ 
The definition of small entity considered appropriate for this purpose 
differs, however, from a definition of small business that is based on 
size standards promulgated by the Small Business Administration (SBA) 
(13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 631 et 
seq.). The basis of EBSA's definition of a small entity for this FRFA 
is found in

[[Page 11808]]

section 104(a)(2) of ERISA, which permits the Secretary to prescribe 
simplified annual reports for pension plans that cover fewer than 100 
participants. The DOL has consulted with the SBA Office of Advocacy 
concerning use of this participant count standard for RFA purposes and 
has a memorandum of understanding with the Office of Advocacy to use 
the standard.\62\ The DOL sought comment on the appropriateness of 
continuing to use this size standard and did not receive any comments 
on the appropriateness of the size standard.
---------------------------------------------------------------------------

    \61\ While some large employers may have small plans, in 
general, small employers maintain most small plans. The Form 5500 
Annual Return/Report impacts any employer in any private sector 
industry who chooses to sponsor a plan. The DOL is unable to locate 
any data linking employer revenue to plans to determine the 
relationship between small plans and small employers in industries 
whose SBA size standard is revenue-based. For a separate project, 
the DOL purchased data on ESOPs that file the Form 5500 and on 
defined contribution pension plans that file the Form 5500-SF from 
Experian Information Solutions, Inc. The Experian dataset provides 
the number of employees for the plan sponsor. By merging these data 
with internal DOL data sources, the DOL determined the relationship 
between small plans and small employers in industries whose SBA size 
standard is based on a threshold number of employees that varies 
from 100 to 1,500 employees. Based on these data, the DOL estimates 
that over 97 percent of small retirement plans and over 80 percent 
of small health plans are sponsored by employers with fewer than 100 
employees. The DOL estimates that over 99 percent of small 
retirement plans and over 97 percent of small health plans are 
sponsored by employers with fewer than 1,500 employees. Thus, the 
DOL believes that assessing the impact of these final rules on small 
plans is an appropriate substitute for evaluating the effect on 
small entities.
    \62\ Memorandum received from the U.S. Small Business 
Administration, Office of Advocacy on July 10, 2020.
---------------------------------------------------------------------------

    The following subsections address specific components of an FRFA, 
as required by the RFA.
i. Need for, and Objectives of the Rule
    The DOL is publishing separately today in the Federal Register a 
notice of final rulemaking, which conform the regulations to the forms 
and instruction changes being adopted in this notice of final forms 
revisions. The DOL strives to tailor reporting requirements to minimize 
reporting costs, while ensuring that the information necessary to 
secure ERISA rights is adequately available.
    The optimal design for reporting requirements changes over time. In 
addition, the technologies available to manage and transmit information 
continually advance. Therefore, it is incumbent on the Agencies to 
revise their reporting requirements from time to time to keep pace with 
such changes. The final forms revisions, and associated DOL regulatory 
amendments are intended to implement the reporting requirements 
required by the SECURE Act, taking into account certain recent changes 
in markets, other laws, and technology, many of which are referred to 
above in this document.
ii. Public Comments Received
    The Agencies received 114 comments on the proposals. The Form 5500 
Annual Return/Report and regulations provide for simplified reporting 
for small plans. These final forms revisions and final regulations 
provide additional filing options and benefits to small plans. 
Provisions particularly benefiting small plans include DCGs 
consolidated reporting option, the change in the participant count 
methodology for definition of a small defined contribution plan, and 
reporting for PEPs using the Schedule MEP. Comments for these topics 
are extensively discuss in sections I.D.1, I.D.2, and I.D.4 of the 
notice of final forms revisions.
    Comments received did not directly address the initial regulatory 
flexibility analysis (IRFA) nor did the Chief Counsel of Advocacy file 
a comment on the IRFA.
iii. Affected Small Entities
    The rule changes the current method of counting covered 
participants for purposes of determining when a defined contribution 
plan may file as a small plan and whether the plan may be exempt from 
the audit requirement. Specifically, the change allows defined 
contribution plans to count just the number of participants/
beneficiaries with account balances as of the beginning of the plan 
year, as compared to the current rule that counts all the employees 
eligible to participant in the plan. This change allows an estimated 
18,699 large defined contribution plans to be re-defined and file as 
small defined contribution plans. The estimated distribution of these 
plans by amount of assets is shown in Table 6.

   Table 6--The Majority of Plans Being Reclassified as Small Plans Hold Less Than $10 Million in Plan Assets
 [Distribution of large DC pension plans to be redefined as small filers, by type of plan and amount of assets,
                                                      2020]
----------------------------------------------------------------------------------------------------------------
                                                                      Single-      Multiemployer     Multiple-
                Amount of assets                       Total      employer plans       plans      employer plans
----------------------------------------------------------------------------------------------------------------
Total...........................................          18,699          18,350              28             321
None or not reported............................             100             100  ..............  ..............
$1-24K..........................................             278             275  ..............               3
25-49K..........................................             163             163  ..............  ..............
50-99K..........................................             285             285  ..............  ..............
100-249K........................................             717             708  ..............               9
250-499k........................................             992             980  ..............              12
500-999K........................................           1,908           1,885               2              21
1-2.49M.........................................           5,083           4,996               3              85
2.5-4.9M........................................           4,981           4,890               2              89
5-9.9M..........................................           3,124           3,047               1              76
10-24.9M........................................             939             914               1              23
25-49.9M........................................              75              70               1               3
50-74.9M........................................              25              19               6  ..............
75-99.9M........................................               7               6               1  ..............
100-149.9M......................................               6               3               2               1
150-199.9M......................................               4               1               3  ..............
200-249.9M......................................               5               3               2  ..............
250-499.9M......................................               5               2               3  ..............
500-999.9M......................................               1               1  ..............  ..............
1-2.49B.........................................               2               1               1  ..............
----------------------------------------------------------------------------------------------------------------

    As described in the regulatory impact analysis above, the DOL 
estimates that 142 DCGs will form in the first year, filing for 20,827 
small plans. These plans would no longer need to file a Form 5500 or 
Form 5500-SF; their DCG filing a complete Form 5500 Annual Return/
Report in accordance with its instructions, including the requirement 
to include the new Schedule DCG for each individual participating plan,

[[Page 11809]]

would satisfy the reporting requirements for these plans.
    There also may be some cases in which sponsors of small defined 
contribution plans decide to participate in a PEP, which would result 
in small plans being terminated and merged into the PEP and no longer 
filing a Form 5500 or Form 5500-SF. Small employers without a plan 
could also decide to join a PEP. As discussed above, the DOL is 
estimating that 3,369 small employers/plans will join a PEP.\63\
---------------------------------------------------------------------------

    \63\ For the calculation of the total number of participating 
employers in PEPs, it is first assumed that 80 percent of all the 
employers who would participate in a PEP are currently providing 
benefits through small plans, and that the remaining 20 percent 
through large plans. This distribution would apply to the registrant 
that has already exceptionally listed 2,000 employers (which would 
then be divided in 1,600 small participating plans and 400 large 
participating plans) and to the other 201 pooled plan providers 
assumed to be created. It is also assumed that each of these other 
201 pooled plan providers would be servicing 11 employers each. 
Therefore, the total number of small plans participating in a PEP is 
estimated as: 1,600 + (201 x 11 x 0.8) = 3,369 (rounded).
---------------------------------------------------------------------------

    Due to the change in the participant count methodology for defined 
contribution plans, approximately 631,976 defined contribution pension 
plans covering fewer than 100 participants with account balances are 
eligible to comply with annual reporting requirements applicable to 
small plans, whereas before the change in the participant count 
methodology approximately 613,290 defined contribution plans were 
filing as small plans. In total, the DOL estimates there would be now 
678,553 small plans where previously were 652,934. Estimates of the 
number of small pension plans are based on 2020 Form 5500 filing data.
v. Impact of the Rule
    While many small plans could experience a reduced burden as a 
result of the final changes, the 18,699 large plans filing under the 
current participant count methodology, but who will file as small plans 
under the new participant count methodology, are the ones who would 
experience a significant impact.
    Specifically, due to the change in the participant count 
methodology, 18,699 defined contribution plans are re-defined as small 
plans and eligible for an audit waiver. An estimated 10,714 of those 
affected plans currently provide the IQPA report and audited financial 
statements that would save in audit costs under these final rule and 
final forms revisions.\64\ There is variation in filing requirements 
based on the characteristics of a plan and types of assets held. 
However, these plans would no longer need to attach the IQPA report 
(audit), and other schedules required of large plans with its Form 5500 
Annual Return/Report. As described earlier in this document,\65\ the 
DOL estimates that there could be an audit cost reduction of $7,500 for 
each one of these 10,714 plans. Nevertheless, plans may still conduct 
an audit even if there is no requirement. It is estimated that 25 
percent of plans could still conduct an audit. These plans would no 
longer be required to file the Schedule H, but may need to file the 
Schedule I. It is possible that affected plans may qualify to file Form 
5500-SF, which would further reduce the filing burden; however, the 
DOL's estimate assumes only a change from Schedule H to Schedule I for 
the affected plans. The difference in burden between filing Schedule H 
and Schedule I is estimated to be $587 per year.\66\
---------------------------------------------------------------------------

    \64\ To estimate the number of large plans currently providing 
the IQPA report and audited financial statements the DOL identified 
the large plans which (1) are most likely to be redefined as small 
plans, and (2) have filed Schedule H in 2020, as estimated on the 
2020 Form 5500 Pension Research Files. Note that an 80 to 120 
participant transition provision allows a plan that covers fewer 
than 100 participants to continue taking advantage of the simplified 
option or exemption, as applicable, until they reach 121 
participants, therefore not all plans with 100 or more participants 
will file as a large plan in a given year.
    \65\ See fns. 47-49 supra.
    \66\ The methodology DOL uses results in estimates that it will 
take a pension plan approximately 8 hours to file a Schedule H, 
compared to approximately two hours to file a Schedule I for 
comparable plans. The Department multiplies the difference by a 
labor rate of accountants and auditors of $108.4. For a description 
of the Department's methodology for calculating wage rates, see: 
https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf. For a 
discussion of the burden estimating methodology see the 
``Methodology'' section starting, supra.
---------------------------------------------------------------------------

    Table 6 above shows that number of plans by the amount of assets in 
the plans. This shows an estimate of 4,443 plans (those with less than 
$1 million in assets) that would see a costs savings of about one 
percent of plan assets.\67\
---------------------------------------------------------------------------

    \67\ Plan asset data reflects data reported on 2020 Form 5500 
filings.
---------------------------------------------------------------------------

    The establishment of DCGs, the use of Schedules DCG ($168 per 
plan), Schedule MEP ($18 for most MEPs and $25 per PEP), and the other 
changes could impact a substantial number of small plans, as discussed 
above, but the impacts per plan are small in magnitude and do not meet 
the qualifications for a significant impact for this analysis.\68\
---------------------------------------------------------------------------

    \68\ The Department uses a labor rate of accountants and 
auditors of $108.4. For a description of the Department's 
methodology for calculating wage rates, see: https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
---------------------------------------------------------------------------

vi. Duplicate, Overlapping, or Relevant Federal Rules
    The DOL us unaware of any relevant Federal rules for small plans 
that duplicate, overlap, or conflict with these regulations.
vii. Description of Steps Taken To Minimize the Impact on Small 
Entities
    These final regulations and related changes to the Form 5500 Annual 
Return/Report generally implement or otherwise relate to SECURE Act 
changes to ERISA and the Code, and do not include significant 
modifications to existing small plan simplified reporting options other 
than expanding the number of plans that will be eligible for simplified 
reporting options by reason of the change in the method of counting 
participants for determining small plans versus large plan status. 
Small pension plans that are invested in ``eligible'' plan assets and 
otherwise meet certain requirements can elect to use a simplified 
reporting option of filing Form 5500-SF, which was established by 
regulation in part to comply with provisions of the Pension Protection 
Act requiring a simplified form of reporting for plans with fewer than 
25 participants. Since the majority of small plans required to file an 
ERISA annual report cover fewer than 25 participants, the simplified 
reporting option also constitutes the DOL's efforts to further reduce 
the information collection burden for small business concerns with 
fewer than 25 employees, pursuant to the Small Business Paperwork 
Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
    The DOL, in developing the final changes for Form 5500 filings by 
DCGs, carried forward an audit waiver for small plans participating in 
a DCG consolidated Form 5500 filing. We also, in developing the 
Schedule MEP filing requirements for PEPs and other MEPs, did not 
expand small plan reporting requirements. We generally limited the 
information collection to consolidating information collected on the 
Schedule MEP that is already reported elsewhere by MEPs on the current 
Form 5500, as discussed elsewhere in this preamble and in the separate 
notice of final rulemaking being published with this notice. Overall, 
the DOL believes that the final changes to the reporting requirements 
reduce the burden on small plans, while allowing the DOL to collect 
sufficient information for it to fulfill its statutory 
responsibilities.

[[Page 11810]]

8. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 requires each 
Federal agency to prepare a written statement assessing the effects of 
any Federal mandate in a proposed or final agency rule that may result 
in an expenditure of $100 million or more (adjusted annually for 
inflation with the base year 1995) in any one year by State, local, and 
tribal governments, in the aggregate, or by the private sector.\69\ For 
purposes of the Unfunded Mandates Reform Act, as well as Executive 
Order 12875,\70\ this final rule and final forms revisions do not 
include any Federal mandate that the DOL expects would result in such 
expenditures by State, local, or tribal governments, or the private 
sector.
---------------------------------------------------------------------------

    \69\ 2 U.S.C. 1501 et seq. (1995).
    \70\ Enhancing the Intergovernmental Partnership, 58 FR 58093 
(Oct. 28, 1993).
---------------------------------------------------------------------------

9. Federalism Statement

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by Federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on the States, the 
relationship between the National Government and States, or on the 
distribution of power and responsibilities among the various levels of 
government.\71\ Federal agencies promulgating regulations that have 
federalism implications must consult with State and local officials and 
describe the extent of their consultation and the nature of the 
concerns of State and local officials in the preamble to the rule.
---------------------------------------------------------------------------

    \71\ Federalism, supra note 6.
---------------------------------------------------------------------------

    In the DOL's view, these final regulations and final forms 
revisions would not have federalism implications because they would not 
have direct effects on the States, on the relationship between the 
National Government and the States, or on the distribution of power and 
responsibilities among various levels of government.
    Section 514 of ERISA provides, with certain exceptions specifically 
enumerated, that the provisions of Titles I and IV of ERISA supersede 
any and all laws of the States as they relate to any employee benefit 
plan covered under ERISA. The requirements being implemented in these 
rules do not alter the fundamental provisions of the statute with 
respect to employee benefit plans, and as such would have no 
implications for the States or the relationship or distribution of 
power between the National Government and the States.

List of Subjects in 29 CFR Part 2520

    Accounting, Employee benefit plans, Freedom of information, 
Pensions, Public assistance programs, Reporting and recordkeeping 
requirements.

    For the reasons discussed in the preamble, 29 CFR part 2520 is 
amended as follows:

PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE

0
1. The authority citation for part 2520 is revised to read as follows:

    Authority:  29 U.S.C. 1002(44), 1021-1025, 1027, 1029-31, 1059, 
1134, and 1135; and Secretary of Labor's Order 1-2011, 77 FR 1088. 
Sec. 2520.101-2 also issued under 29 U.S.C. 1132, 1181-1183, 1181 
note, 1185, 1185a-b, 1191, and 1191a-c. Sec. 2520.101-5 also issued 
under 29 U.S.C. 1021 note; sec. 501, Pub. L. 109-280, 120 Stat. 780; 
sec. 105(a), Pub. L. 110-458, 122 Stat. 5092. Secs. 2520.102-3, 
2520.104b-1, and 2520.104b-3 also issued under 29 U.S.C. 1003, 1181-
1183, 1181 note, 1185, 1185a-b, 1191, and 1191a-c. Secs. 2520.104b-1 
and 2520.107 also issued under 26 U.S.C. 401 note; sec. 1510, Pub. 
L. 105-34, 111 Stat. 1068.


0
2. In Sec.  2520.103-1, revise paragraphs (a) introductory text, 
(a)(2), (b) introductory text, (b)(1), (c)(1), (c)(2)(i), and 
(c)(2)(ii)(D) and (E) and add paragraphs (c)(2)(ii)(F) and (G) to read 
as follows:


Sec.  2520.103-1  Contents of the annual report.

    (a) Except as provided in Sec. Sec.  2520.104-43, 2520.104-51, 
2520.104a-6, and 2520.104a-9, the administrator of a plan required to 
file an annual report in accordance with section 104(a)(1) of the Act 
shall include with the annual report the information prescribed in 
paragraph (a)(1) of this section or in the simplified report, limited 
exemption or alternative method of compliance described in paragraph 
(a)(2) of this section.
* * * * *
    (2) Under the authority of subsections 104(a)(2), 104(a)(3), and 
110 of the Act, section 1103(b) of the Pension Protection Act of 2006, 
and section 202 of the SECURE Act, a simplified report, limited 
exemption, or alternative method of compliance is prescribed for 
employee welfare and pension benefit plans, as applicable. A plan 
filing a simplified report or electing the limited exemption, or an 
alternative method of compliance shall file an annual report containing 
the information prescribed in paragraph (b) or (c) of this section, as 
applicable, and shall furnish a summary annual report as prescribed in 
Sec.  2520.104b-10.
    (b) Contents of the annual report for plans with 100 or more 
participants electing the limited exemption or alternative method of 
compliance. Except as provided in paragraphs (d) and (f) of this 
section and in Sec. Sec.  2520.103-2, 2520.103-14, and 2520.104-44, the 
annual report of an employee benefit plan covering 100 or more 
participants at the beginning of the plan year which elects the limited 
exemption or alternative method of compliance described in paragraph 
(a)(2) of this section shall include:
    (1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' 
and any statements or schedules required to be attached to the form, 
completed in accordance with the instructions for the form, including 
Schedule A (Insurance Information), Schedule C (Service Provider 
Information), Schedule D (DFE/Participating Plan Information), Schedule 
G (Financial Transaction Schedules), Schedule H (Financial 
Information), Schedule MEP (Multiple-Employer Plan), Schedule MB 
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan 
Actuarial Information), Schedule SB (Single-Employer Defined Benefit 
Plan Actuarial Information), Schedule R (Retirement Plan Information), 
and other financial schedules described in Sec.  2520.103-10. See the 
instructions for this form.
* * * * *
    (c) * * *
    (1) Except as provided in paragraphs (c)(2), (d), (e), and (f) of 
this section, and in Sec. Sec.  2520.104-43, 2520.104-44, 2520.104-51, 
2520.104a-6, and 2520.104a-9, the annual report of an employee benefit 
plan that covers fewer than 100 participants at the beginning of the 
plan year shall include a Form 5500 ``Annual Return/Report of Employee 
Benefit Plan'' and any statements or schedules required to be attached 
to the form, completed in accordance with the instructions for the 
form, including Schedule A (Insurance Information), Schedule D (DFE/
Participating Plan Information), Schedule I (Financial Information--
Small Plan), Schedule MEP (Multiple-Employer Plan), Schedule MB 
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan 
Actuarial Information), Schedule SB (Single-Employer Defined Benefit 
Plan Actuarial Information) and Schedule R (Retirement Plan 
Information). See the instructions for this form.
    (2)(i) The annual report of an employee pension benefit plan or

[[Page 11811]]

employee welfare benefit plan and that covers fewer than 100 
participants at the beginning of the plan year and that meets the 
conditions in paragraph (c)(2)(ii) of this section with respect to a 
plan year may, as an alternative to the requirements of paragraph 
(c)(1) of this section, meet its annual reporting requirements by 
filing the Form 5500-SF ``Short Form Annual Return/Report of Small 
Employee Benefit Plan'' and any statements or schedules required to be 
attached to the form, Schedule MEP (Multiple-Employer Pension Plan), 
Schedule MB (Multiemployer Defined Benefit Plan and Certain Money 
Purchase Plan Actuarial Information) and Schedule SB (Single-Employer 
Defined Benefit Plan Actuarial Information), completed in accordance 
with the instructions for the form. See the instructions for this form.
    (ii) * * *
    (D) Is not a multiemployer plan;
    (E) Is not a plan subject to the Form M-1 requirements under Sec.  
2520.101-2;
    (F) Is not a multiple-employer pension plan that is a pooled 
employer plan described in section 3(43) of the Act; and
    (G) Is not a DCG reporting arrangement described in Sec.  2520.104-
51.
* * * * *

0
3. In Sec.  2520.103-5, revise paragraph (a) introductory text to read 
as follows:


Sec.  2520.103-5  Transmittal and certification of information to plan 
administrator for annual reporting purposes.

    (a) General. In accordance with section 103(a)(2) of the Act, an 
insurance carrier or other organization which provides benefits under 
the plan or holds plan assets, a bank or similar institution which 
holds plan assets, or a plan sponsor shall transmit and certify such 
information as needed by the administrator to file the annual report 
under section 104(a)(1) of the Act and Sec.  2520.104a-5, Sec.  
2520.104a-6, or Sec.  2520.104a-9:
* * * * *

0
4. In Sec.  2520.103-10:
0
a. Revise paragraph (a);
0
b. Redesignate paragraph (c) as paragraph (d); and
0
c. Add a new paragraph (c).
    The revisions and addition read as follows:


Sec.  2520.103-10  Annual report financial schedules.

    (a) General. The administrator of a plan filing an annual report 
pursuant to Sec.  2520.103-1(a)(2), the report for a group insurance 
arrangement pursuant to Sec.  2520.103-2, or the report for a defined 
contribution group (DCG) reporting arrangement pursuant to Sec.  
2520.103-14, shall, as provided in the instructions to the Form 5500 
``Annual Return/Report of Employee Benefit Plan,'' include as part of 
the report the separate financial schedules described in paragraph (b) 
of this section.
* * * * *
    (c) Presentation of investment assets in commingled trusts and 
direct filing entities (DFEs). (1) Except as provided in the Form 5500 
and the instructions thereto or for filings by direct filing entities 
(including DCG reporting arrangements), in the case of assets or 
investment interests of two or more plans maintained in one trust, 
entries on the schedule of assets held for investment purposes at the 
end of the plan year and the schedule of assets acquired and disposed 
of during the plan year shall be completed by including the plan's 
allocable portion of the trust.
    (2) In the case of direct filing entities (including DCG reporting 
arrangements) required to file a schedule of assets held for investment 
purposes at the end of the plan year and the schedule of assets 
acquired and disposed of during the plan year, the entries on the 
schedules shall be completed by including the assets held by the DFE or 
held in the DCG reporting arrangement's trust or trusts for the 
individual plans that report in the DCG, and shall include the number 
of plans with an allocable interest in each listed investment.
* * * * *

0
5. Add Sec.  2520.103-14 to read as follows:


Sec.  2520.103-14  Contents of the annual report for defined 
contribution group (DCG) reporting arrangements.

    (a) General. A defined contribution group reporting arrangement as 
described in Sec.  2520.104-51(c) (``DCG reporting arrangement'' or 
``DCG'') that files a consolidated annual report pursuant to Sec.  
2520.104-51 shall include in such report the items set forth in 
paragraph (b) of this section.
    (b) Contents of the annual report for DCG reporting arrangement. 
(1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' and 
any statements or schedules required to be attached to the form, 
completed in accordance with the instructions for the form, including 
Schedule A (Insurance Information), Schedule C (Service Provider 
Information), Schedule D (DFE/Participating Plan Information), Schedule 
DCG (Individual Plan Information), Schedule G (Financial Transaction 
Schedules), Schedule H (Financial Information), and other applicable 
financial schedules referred to in Sec.  2520.103-10, completed in 
accordance with the instructions for the form.
    (2) Where some or all of the assets of plans participating in the 
DCG are held in a pooled separate account maintained by an insurance 
carrier, or in a common or collective trust maintained by a bank, trust 
company or similar institution, a copy of the annual statement of 
assets and liabilities of such account or trust for the fiscal year of 
the account or trust which ends with or within the plan year for which 
the DCG's annual report is made is required to be furnished by such 
account or trust under Sec.  2520.103-5(c). Although the statement of 
assets and liabilities referred to in Sec.  2520.103-5(c) shall be 
considered part of the DCG's consolidated annual report, such statement 
of assets and liabilities need not be filed with the DCG's annual 
report. See Sec. Sec.  2520.103-3 and 2520.103-4 for reporting 
requirements for plans some or all of the assets of which are held in a 
pooled separate account maintained by an insurance company, or a common 
or collective trust maintained by a bank or similar institution; and 
see Sec.  2520.104-51(b)(2) for when the term ``DCG reporting 
arrangement'' or ``DCG'' shall be used in place of the term ``plan.''
    (3)(i) Except for employee pension benefit plans that cover fewer 
than 100 participants at the beginning of the plan year that meet the 
conditions for being eligible for a waiver of the audit and accountant 
opinion requirements in section 103(a)(3)(A) of the Act pursuant to 
Sec.  2520.104-46, the Schedule DCG for each participating plan shall 
include:
    (A) A report of an independent qualified public accountant for the 
participating plan that meets the requirements in Sec.  2520.103-
1(a)(5).
    (B) Separate financial statements meeting the requirements of Sec.  
2520.103-1(b)(2) if such financial statements and schedules are 
prepared in order for the independent qualified public accountant to 
form the opinion required by section 103(a)(3)(A) of the Act and this 
paragraph.
    (C) Notes to the financial statements described in paragraph (b)(1) 
or (b)(3)(i)(B) of this section, which contain the information set 
forth in Sec.  2520.103-1(b)(3).
    (ii) For purposes of this section, an employee pension benefit plan 
described in Sec.  2520.103-1(d) will be treated as a plan that covers 
fewer than 100 participants as of the beginning of the plan year.
    (d) Electronic filing requirement. See Sec.  2520.104a-2 and the 
instructions for the Form 5500 ``Annual Return/Report

[[Page 11812]]

of Employee Benefit Plan'' for electronic filing requirements. The 
common plan administrator for each plan whose reporting obligations are 
satisfied by a DCG filing under this section must maintain an original 
copy of the DCG filing, with all required signatures, as part of each 
plan's records. A single copy of the DCG consolidated Form 5500 filing, 
that includes all schedules and attachments maintained by the common 
plan administrator on behalf of all the plans will satisfy this 
requirement.


0
6. Add Sec.  2520.104-51 to read as follows:


Sec.  2520.104-51  Alternative method of compliance for defined 
contribution group (DCG) reporting arrangements.

    (a) General. Under the authority of section 110 of the Act and 
section 202 of the SECURE Act, the administrator of an employee pension 
benefit plan which meets the requirements of paragraph (b) of this 
section is not required to file a separate annual report with the 
Secretary of Labor as required by section 104(a)(1) of the Act.
    (b) Application. (1) This alternative method of compliance applies 
only to an individual account or defined contribution pension plan for 
a plan year in which:
    (i) Such plan participates in a defined contribution group (DCG) 
reporting arrangement described in paragraph (c) of this section; and
    (ii) A consolidated annual report containing the items set forth in 
Sec.  2520.103-14 has been filed with the Secretary of Labor in 
accordance with Sec.  2520.104a-9 by the common plan administrator (as 
described in paragraph (c)(2)(iii) of this section) for all of the 
plans participating in the DCG reporting arrangement (as described in 
paragraph (c) of this section).
    (2) For purposes of this section, the terms ``DCG reporting 
arrangement,'' ``DCG'' or ``common plan administrator'' shall be used 
in place of the terms ``plan'' and ``plan administrator,'' in 
Sec. Sec.  2520.103-3, 2520.103-4, 2520.103-6, 2520.103-9, 2520.103-10 
and elsewhere in subpart C of this part and this subpart, as 
applicable.
    (c) Defined contribution group (DCG) reporting arrangement. An 
arrangement is a ``DCG reporting arrangement'' or ``DCG'' for purposes 
of this section only if all plans relying on the DCG consolidated 
annual report described in paragraph (b)(1)(ii) of this section--
    (1) Are individual account plans or defined contribution plans as 
defined in section 3(34) of the Act;
    (2) Have--
    (i) The same trustee meeting the requirements set forth in section 
403(a) of the Act (``common trustee'');
    (ii) The same one or more named fiduciaries designated in 
accordance with the requirements set forth in section 402(a) of the Act 
(``common named fiduciaries''), except that nothing in this paragraph 
(c)(2)(ii) precludes an individual employer from acting as an 
additional named fiduciary with respect to the individual plan it 
sponsors, provided that the other named fiduciaries are the same and 
common to all plans;
    (iii) A designated plan administrator as defined in section 
3(16)(A) of the Act that is the same plan administrator and common to 
all plans (``common plan administrator''); and
    (iv) Plan years beginning on the same date (``common plan year'');
    (3)(i) Provide the same investments or investment options to 
participants and beneficiaries in all the plans (``common investments 
or common investment options'');
    (ii) A single dedicated brokerage window provided by the same 
designated registered broker-dealer common to all plans that restricts 
participant and beneficiary investments solely to assets with a readily 
determinable fair market value as described in Sec.  2520.103-
1(c)(2)(ii)(C) will be treated as a common investment option for 
purposes of this paragraph (c)(3);
    (4) Do not hold any employer securities at any time during the plan 
year, except that nothing in this paragraph (c)(4) prohibits 
investments in any employer's publicly traded securities within the 
otherwise ``same investment option'' described in paragraph (c)(3);
    (5) Are either audited by an independent qualified public 
accountant (IQPA) or satisfy the audit waiver conditions in Sec.  
2520.104-46;
    (6) Are not a multiemployer plan; and
    (7) Are not a multiple-employer pension plan (including a pooled 
employer plan described in section 3(43) of the Act and a multiple-
employer defined contribution pension plan described in Sec.  2510.3-55 
of this chapter).
    (d) Limitations. The alternative method of compliance set out in 
this section does not relieve the administrator of a pension plan 
participating in a DCG reporting arrangement described in paragraph (c) 
of this section from any other requirements of Title I of the Act, 
including the provisions which require that plan administrators furnish 
copies of the summary plan description to participants and 
beneficiaries (section 104(b)(1)), furnish certain documents to the 
Secretary of Labor upon request (section 104(a)(6)), authorize the 
Secretary of Labor to collect information and data from employee 
benefit plans for research and analysis (section 513), and furnish a 
copy of a summary annual report to participants and beneficiaries of 
the plan, as required by section 104(b)(3) of the Act.

0
7. In Sec.  2520.104a-5, revise paragraph (a) introductory text to read 
as follows:


Sec.  2520.104a-5  Annual reporting filing requirements.

    (a) Filing obligation. Except as provided in Sec. Sec.  2520.104a-6 
and 2520.104a-9, the administrator of an employee benefit plan required 
to file an annual report pursuant to section 104(a)(1) of the Act shall 
file an annual report containing the items prescribed in Sec.  
2520.103-1 within:
* * * * *


0
8. Add Sec.  2520.104a-9 to read as follows:


Sec.  2520.104a-9  Annual reporting for defined contribution group 
(DCG) reporting arrangements.

    (a) General. A defined contribution group (DCG) reporting 
arrangement described in Sec.  2520.104-51(c) that files a consolidated 
annual report for all the plans participating in the DCG reporting 
arrangement in accordance with the terms of paragraphs (b) and (c) of 
this section shall be deemed to have filed such a report in accordance 
with Sec.  2520.104a-9 for purposes of Sec.  2520.104-51.
    (b) Date of filing. The consolidated annual report shall be filed 
within seven months after the close of the common plan year of all the 
plans participating in the DCG reporting arrangement, unless extended. 
See ``When to file'' instructions of the Form 5500 Annual Return/
Report.
    (c) Where to file. The consolidated annual report prescribed in 
Sec.  2520.103-14 shall be filed electronically in accordance with the 
instructions to the Annual Return/Report Form.

0
9. Amend Sec.  2520.104b-10 by:
0
a. In paragraph (d)(3):
0
i. Revising the section ``Summary Annual Report for (name of plan)'';
0
ii. In the section ``Your Rights to Additional Information'':
0
A. Add paragraphs 11 and 12;
0
B. Revise the last undesignated paragraph; and
0
c. Removing the appendix to the section; and
0
d. Adding table 1 at the end of the section.

[[Page 11813]]

    The revisions and additions read as follows:


Sec.  2520.104b-10  Summary Annual Report.

* * * * *
    (d) * * *
    (3) * * *

Summary Annual Report for (Name of Plan)

    This is a summary of the annual report [insert as applicable either 
Form 5500 Annual Return/Report of Employee Benefit Plan or Form 5500-SF 
Annual Return/Report of Small Employee Benefit Plan] of [insert name of 
plan and EIN/PN] for [insert period covered by this report]. The 
[insert as applicable either Form 5500 or Form 5500-SF] annual report 
has been filed with the Employee Benefits Security Administration, as 
required under the Employee Retirement Income Security Act of 1974 
(ERISA). Your plan is a [insert a brief description of the plan based 
on the plan characteristic codes listed for the plan on the Form 5500, 
including whether it is a defined contribution or defined benefit plan, 
and whether the plan is a pooled employer plan, another type of 
multiple-employer plan or a single-employer plan].
    [If the plan is participating in a DCG reporting arrangement]:
    Your plan participates in an annual reporting arrangement that 
files a consolidated Form 5500 Annual Report for all the separate plans 
in the arrangement. This summary includes aggregate information on all 
the participating plans from the consolidated Form 5500. The 
consolidated Form 5500 also includes a separate schedule (Schedule DCG) 
that provides specific plan level information for each individual plan, 
as well as an accountant's report regarding your individual plan, 
unless the plan is eligible for a small plan audit waiver under 
Department of Labor regulations. As noted below regarding your rights 
to additional information, you have a right to receive a copy of the 
Schedule DCG relating to your plan on request from the plan 
administrator.
* * * * *

Your Rights to Additional Information

* * * * *
    11. a Schedule DCG for plans participating in a consolidated group 
Form 5500 filing that includes your plan sponsor's name, EIN, plan 
administrator's name, EIN and telephone number, total number of 
participants in your plan, and basic financial information about the 
plan.)
    12. a Schedule MEP, including name and EIN of the employers 
participating in the MEP, each participating employer's percentage of 
the total contributions (employer and employee) made by all employers 
participating in the MEP and, for defined contribution pension plans 
only, the aggregate account balance for each of the employers 
participating in the MEP.)
* * * * *
    You also have the legally protected right to examine the annual 
report at the main office of the plan ( address ), (at any other 
location where the report is available for examination), and at the 
U.S. Department of Labor in Washington, DC, or to obtain a copy from 
the U.S. Department of Labor upon payment of copying costs. Requests to 
the Department should be addressed to: Public Disclosure Room, Room N-
1513, Employee Benefits Security Administration, U.S. Department of 
Labor, 200 Constitution Avenue NW, Washington, DC 20210. The annual 
report is also available online at the Department of Labor website 
www.efast.dol.gov.
* * * * *

  Table 1 to Sec.   2520.104b-10--The Summary Annual Report (SAR) Under ERISA: A Cross-Reference to the Annual
                                                     Report
----------------------------------------------------------------------------------------------------------------
                                         Form 5500 large plan     Form 5500 small plan   Form 5500-SF filer line
               SAR item                    filer line items         filer line items              items
----------------------------------------------------------------------------------------------------------------
A. Pension Plan:
    1. Funding arrangement...........  Form 5500-9a...........  Same...................  Not applicable.
    2. Total plan expenses...........  Sch. H-2j..............  Sch. I-2j..............  Line 8h.
    3. Administrative expenses.......  Sch. H-2i(5)...........  Sch. I-2h..............  Line 8f.
    4. Benefits paid.................  Sch. H-2e(4)...........  Sch. I-2e..............  Line 8d.
    5. Other expenses................  Sch. H--Subtract the     Sch. I-2i..............  Line 8g.
                                        sum of 2e(4) & 2i(5)
                                        from 2j.
    6. Total participants............  Form 5500-6f...........  Same...................  Line 5b.
    7. Value of plan assets (net):
        a. End of plan year..........  Sch. H-1l [Col. (b)]...  Sch. I-1c [Col. (b)]...  Line 7c [Col. (b)].
        b. Beginning of plan year....  Sch. H-1l [Col. (a)]...  Sch. I-1c [Col. (a)]...  Line 7c [Col. (a)].
    8. Change in net assets..........  Sch. H--Subtract 1l      Sch. I--Subtract 1c      Line 7c--Subtract Col.
                                        [Col. (a)] from 1l       [Col. (a) from Col.      (a) from Col. (b).
                                        [Col. (b)].              (b)].
    9. Total income..................  Sch. H-2d..............  Sch. I-2d..............  Line 8c.
        a. Employer contributions....  Sch. H-2a(1)(A) & 2a(2)  Sch. I-2a(1) & 2b if     Line 8a(1) if
                                        if applicable.           applicable.              applicable.
        b. Employee contributions....  Sch. H-2a(1)(B) & 2a(2)  Sch. I-2a(2) & 2b if     Line 8a(2) & 8a(3) if
                                        if applicable.           applicable.              applicable.
        c. Participating employer's    Sch. MEP Line 2c.......  Sch. MEP Line 2c.......  Not applicable.
         percentage of the total
         contributions (employer and
         employee) made by all
         employers participating in a
         MEP.
        d. Aggregate account balance   Sch. MEP Line 2d.......  Sch. MEP Line 2d.......  Not applicable.
         of the employer
         participating in a defined
         contribution MEP (determined
         as the sum of the account
         balances of the employees of
         such employer (including the
         beneficiaries of such
         employees).
        e. Gains (losses) from sale    Sch. H-2b(4)(C)........  Not applicable.........  Not applicable.
         of assets.
        f. Earnings from investments.  Sch. H--Subtract the     Sch. I-2c..............  Line 8b.
                                        sum of 2a(3), 2b(4)(C)
                                        and 2c from 2d.
    11. Total insurance premiums.....  Total of all Schs. A-6b  Total of all Schs. A-6b  Not applicable.
    12. Unpaid minimum required
     contribution (S-E plans) or
     Funding deficiency (ME plans):
        a. S-E Defined benefit plans.  Sch. SB-39.............  Same...................  Same.
        b. ME Defined benefit plans..  Sch. MB-10.............  Same...................  Not applicable.
        c. Defined contribution plans  Sch. R-6c, if more than  Same...................  Line 12d.
                                        zero.

[[Page 11814]]

 
    13. Individual plan information    Schedule DCG...........  Not applicable.........  Not applicable.
     for plans participating in a DCG
     reporting arrangement.
B. Welfare Plan:
    1. Name of insurance carrier.....  All Schs. A-1(a).......  Same...................  Not applicable.
    2. Total (experience rated and     All Schs. A--Sum of      Same...................  Not applicable.
     non-experienced rated) insurance   9a(1) and 10a.
     premiums.
    3. Experience rated premiums.....  All Schs. A-9a(1)......  Same...................  Not applicable.
    4. Experience rated claims.......  All Schs. A-9b(4)......  Same...................  Not applicable.
    5. Value of plan assets (net):
        a. End of plan year..........  Sch. H-1l [Col. (b)]...  Sch. I-1c [Col. (b)]...  Line 7c [Col. (b)].
        b. Beginning of plan year....  Sch. H-1l [Col. (a)]...  Sch. I-1c [Col. (a)]...  Line 7c [Col. (a)].
    6. Change in net assets..........  Sch. H--Subtract 1l      Sch. I--Subtract 1c      Line 7c--Subtract [Col.
                                        [Col. (a)] from 1l       [Col. (a)] from 1c       (a)] from 7c [Col.
                                        [Col. (b)].              [Col. (b)].              (b)].
    7. Total income..................  Sch. H-2d..............  Sch. I-2d..............  Line 8c.
        a. Employer contributions....  Sch. H-2a(1)(A) & 2a(2)  Sch. I-2a(1) & 2b if     Line 8a(1) if
                                        if applicable.           applicable.              applicable.
        b. Employee contributions....  Sch. H-2a(1)(B) & 2a(2)  Sch. I-2a(2) & 2b if     Line 8a(2) if
                                        if applicable.           applicable.              applicable.
        c. Gains (losses) from sale    Sch. H-2b(4)(C)........  Not applicable.........  Not applicable.
         of assets.
        d. Earnings from investments.  Sch. H--Subtract the     Sch. I-2c..............  Line 8b.
                                        sum of 2a(3), 2b(4)(C)
                                        and 2c from 2d.
    8. Total plan expenses...........  Sch. H-2j..............  Sch. I-2j..............  Line 8h.
    9. Administrative expenses.......  Sch. H-2i(5)...........  Sch. I-2h..............  Line 8f.
    10. Benefits paid................  Sch. H-2e(4)...........  Sch. I-2e..............  Line 8d.
    11. Other expenses...............  Sch. H--Subtract the     Sch. I-2i..............  Line 8g.
                                        sum of 2e(4) & 2i(5)
                                        from 2j.
----------------------------------------------------------------------------------------------------------------


    Signed at Washington, DC, this 2nd day of February, 2023.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration, U.S. 
Department of Labor.
[FR Doc. 2023-02652 Filed 2-23-23; 8:45 am]
BILLING CODE 4510-29-P