Annual Reporting and Disclosure
Proposed rule.
CFR Part: "29 CFR Parts 2520 and 2590"
RIN Number: "RIN 1210-AB63"
Citation: "81 FR 47496"
Page Number: "47496"
"Proposed Rules"
SUMMARY: This document contains proposed amendments to
DATES: Written comments must be received by the
ADDRESSES: To facilitate the receipt and processing of written comment letters on the proposed regulation, EBSA encourages interested persons to submit their comments electronically. You may submit comments, identified by RIN 1210-AB63, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments.
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Instructions: All comments received must include the agency name and Regulatory Identifier Number (RIN) for this rulemaking (RIN 1210-AB63). Persons submitting comments electronically are encouraged not to submit paper copies. All comments received will be made available to the public, posted without change to http://www.regulations.gov and http://www.dol.gov/ebsa, and made available for public inspection at the
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Regulatory Action
Under Titles I and IV of ERISA and the Internal Revenue Code (Code), pension and other employee benefit plans are generally required 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 Annual Return/Report), or a Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan (Form 5500-SF) (depending on certain plan characteristics), 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. In addition to being an important disclosure document for plan participants and beneficiaries, the Form 5500 Annual Return/Report is a critical enforcement, compliance, and research tool for the DOL,
Generally, the Agencies have conducted notice and comment rulemaking before making significant changes to the forms and schedules. This proposed revision to the DOL's reporting regulations is needed to implement the forms revisions proposed in the three-agency (DOL,
As noted above and discussed in detail below, because the Form 5500 Annual Return/Report has not kept pace with market developments and changes in the laws covering employee benefit plans, problems with outdated and missing information negatively impact the Agencies' effective and efficient protection of employee retirement and group health benefits. That fact is reflected in the more than 15 reports that have been issued since the publication of the last major forms revisions from the
FOOTNOTE 1 See, e.g.,
In addition, a significant update being made to the Form 5500 Annual Return/Report is the introduction of basic reporting requirements for all plans that provide group health benefits that have fewer than 100 participants and are covered by Title I of ERISA, most of which are currently exempt from reporting requirements, and the addition of a new schedule (Schedule J) proposed to be required for all group health plans. This reflects a new emphasis on transparency under the Affordable Care Act /2/ and a desire to offer plan sponsors the opportunity to satisfy certain Affordable Care Act reporting requirements addressed in this proposal by a more robust Form 5500 Annual Return/Report filing for those group health plans currently required to file and by elimination of the current exemption for plans that provide group health benefits that have fewer than 100 participants that are fully insured, unfunded, or a combination. Once finalized, these proposed changes will result in annual return/report forms that are a more effective policy, enforcement, and research tool, and one that will increase transparency, accountability, and confidence in the employee benefit plan system.
FOOTNOTE 2 The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on
The Agencies' proposed changes to the Form 5500 Annual Return/Report also should be viewed in light of the fact that the last two major revisions of the Form 5500 Annual Return/Report /3/ occurred in 1999 and 2009 in connection with a major shift from a paper-based filing system to the current internet-based wholly electronic filing and electronic data processing system (EFAST and now EFAST2), which is operated by a private sector contractor. For the last two major form revision cycles, the Agencies were focused on moving filers to new technologies for filing Form 5500 Annual Return/Report data. In recognition of the burden and challenges that filers would face in migrating to new filing technologies, the Agencies' generally deferred proposing major form changes that would add substantial new burdens. In fact, by deferring our current proposals until now, the new EFAST2 capabilities are making more feasible and efficient processing of both the existing and the expanded data we are proposing to collect.
FOOTNOTE 3 The Agencies' last tri-agency major revision to the Form 5500 Annual Return/Report series was effective for the 2009 plan year forms. Before that, the last major revision was effective for the 1999 plan year forms and was implemented together with the initial implementation of EFAST. In interim years, the Agencies have made other focused changes, which are set forth annually in the "Changes to Note" section in the instructions. END FOOTNOTE
B. Summary of the Major Revisions of the Regulatory Action
The proposed forms revisions and the DOL implementing regulations are intended to address changes in applicable laws and the employee benefit plan and financial markets, and corresponding shifts in agency priorities and needs since the last major revision. The proposed revisions are also expected ultimately to make filing and processing more efficient and accurate and to restore a greater level of transparency in the employee benefit plan market. /4/ The proposed forms revisions fall under the following general categories:
FOOTNOTE 4 In addition, this rulemaking and forms revisions are being coordinated generally with a re-bid and updating of the ERISA Filing Acceptance System (EFAST2)--the wholly electronic Form 5500 Annual Return/Report filing and processing system. Unlike the 1999 and 2009 forms revisions, the re-bid of EFAST2 does not involve major changes in the EFAST2 key system requirements, capabilities, and functions. Rather, although there are some changes to the system, the re-bid process is largely being undertaken in response to Federal Acquisition Regulation (FAR) requirements on periodic re-bidding of longer term contracts. Under these circumstances, there may be opportunities to implement various form changes either before or after the re-bid EFAST2 contract is awarded. The timing of the re-bid of EFAST2 and implementation of form changes may also be affected by whether funds necessary for the re-bid or form implementation are appropriated as part of the Agencies' respective budgets. Accordingly, although the overall objective is to implement these proposed form changes as part of a re-bid EFAST2 contract, rulemaking and budget issues may require the Agencies to consider a more staged approach. END FOOTNOTE
1. Modernize Financial and Investment Reporting by Pension Plans
A key component of the proposal would expand and modernize financial and investment information reported by pension plans. Reporting on the financial operations and integrity of
An overriding objective of these proposed revisions to the financial information collected as part of the annual return/report is to present plan financial and balance sheet information, including the currently required schedules of assets, in a way that better reflects the investment portfolios and asset management practices of employee benefit plans. The basic objective of ERISA's mandatory financial reporting is to provide information about the reporting entity for the Agencies' enforcement, research, and policy formulation programs; for other federal agencies,
The financial statements contained in the current Schedule H (Large Plan Financial Information) and Schedule I (Small Plan Financial Information) are based on data elements that have remained largely unchanged since the Form 5500 Annual Return/Report was established in 1975. Over the past four decades, the
The shift from DB pension plans to DC pension plans--and the corresponding increase of participants' own contributions to those plans as opposed to employer contributions--has led to increased responsibility for participants to manage their own retirement savings, which includes having to select among investment options in their retirement plans. See Private Pension Plan Bulletin Abstract Of 2012 Form 5500 Annual Reports, at 2 (Of the 516,000 section 401(k)-type plans in 2012, 87.8 percent allowed participants to direct investment of all of their assets, and 3.1 percent allowed participants to direct investment of a portion of their assets.) The need for more relevant and comparable financial information is not limited to 401(k) and other DC pension plans; it also extends to DB pension plans. Reports cited above from GAO, the DOL-OIG, the TIGTA, and the
Further, the Agencies need better information to effectively oversee and enforce existing rules and regulations. For example, as part of the 1999 and 2009 forms revisions, the Agencies stopped collecting a variety of information regarding ESOPs. ESOPs, however, continue to be a significant enforcement focus and concern for both DOL and the
For defined contribution pension plans, especially participant-directed plans, the proposal also would provide better information on employee participation rates in 401(k)-type plans and more relevant information on the types of investment alternatives available in such plans (including information on each designated investment alternative in the plan, information on qualified default investment alternatives, and information on whether the investment alternatives are actively managed or passively managed index funds). As Form 5500 Annual Return/Report information is required by Title I of ERISA to be publicly available, not only would expanded data collection assist in the Agencies' research and policymaking objectives, public access to this information would enable interested private sector and other governmental stakeholders to perform data-based research or help plan sponsors, fiduciaries, and participants and beneficiaries better understand their plan and plan investments. For example, it would be more feasible to compare performance of plans based on types of investments, and get information on how certain plan investment options and structures might correlate to participation, overall performance, or best preparation of workers for retirement.
2. Support Oversight of Group Health Plans and Ongoing Implementation of the Affordable Care Act
The proposed forms revisions and DOL implementing regulations would expand Form 5500 reporting by group health plans /5/ by eliminating obsolete exemptions for certain plans from Form 5500 reporting. Specifically, most private employer-sponsored group health plans with fewer than 100 participants that are fully insured, unfunded, or a combination of the two, currently do not file the Form 5500 Annual Return/Report under the terms of the current DOL exemptions. As a result, for policy formulation, research, and regulatory impact analyses, the DOL must rely on surveys, instead of Form 5500 Annual Return/Report data, to generate even basic estimates of the size of the ERISA group health plan universe that is a major part of the nation's health care delivery system. The current lack of information collected on the Form 5500 Annual Return/Report from group health plans impairs the effectiveness of EBSA's ability to develop health care regulations and complicates the DOL's ability to enforce such regulations and educate plan administrators regarding compliance.
FOOTNOTE 5 Under the proposed changes, all "group health plans" that meet the definition in 733(a) of the Act, including plans that claim "grandfathered" status under 29 CFR 2950.715-1251, are required to file some or all of the Form 5500 Annual Return/Report and applicable schedules, including the Schedule J, regardless of whether such plans are exempt from certain market reform requirements under ERISA SEC 732(a) (exemption for certain small group health plans that have less than two participants who are current employees) or ERISA SEC 733(c) (group health plans consisting solely of excepted benefits). Employee welfare benefit plans as defined in ERISA SEC 3(1) that do not meet the definition of "group health plan" under 733 of the Act (i.e., they do not provide benefits for medical care) are not subject to the proposed enhanced reporting requirements applicable to group health plans. END FOOTNOTE
In addition, section 1253 of the Affordable Care Act requires the Secretary of Labor to prepare an annual report that includes certain general information on self-insured group health plans using data collected from the Form 5500 Annual Return/Report (the "Self-Insured Health Plan Report"). Current Form 5500 Annual Return/Report data provides the basis only for an incomplete assessment of self-insured plans. For example, information about the amount of outstanding claims for a self-insured plan, a proposed new data element on the Schedule J, would be a critical flag that would identify the need for further inquiry or investigation of a group health plan that may be unable to pay outstanding claims. Early intervention by EBSA could prevent a participant from facing bankruptcy over unpaid medical expenses that otherwise would have been covered had the group health plan been properly funded.
We expect more group health plan filings will help the DOL allocate enforcement resources and streamline enforcement actions. For example, these additional filings will enable the DOL to correlate information reported by different group health plans to help identify widespread noncompliance perpetuated by a common service provider rather than relying on multiple investigations of client plans to detect a pattern of non-compliance by a single service provider. Obtaining a correction by going directly to the service provider makes the correction process more efficient for the service provider and the Department and results in uniform and efficient corrective action for participating plans. EBSA anticipates that Form 5500 Annual Return/Report data may similarly be used in future versions of the biennial
3. Reporting To Satisfy Public Health Service Act Sections 2715A and 2717
Sections 2715A and 2717 of the Public Health Service Act (PHS Act), as added by the Affordable Care Act and incorporated into ERISA section 715, /6/ include important new reporting requirements for group health plans and health insurance issuers in the group and individual markets. Specifically, section 2715A of the PHS Act incorporates the transparency provisions of section 1311(e)(3) of the Affordable Care Act to require non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to make available to the DOL, the
FOOTNOTE 6 Sections 2715A and 2717 of the PHS Act are also incorporated into section 9815(a)(1) of the Code. END FOOTNOTE
FOOTNOTE 7 Information required under sections 2715A and 2717 of the PHS Act that is provided as part of a Form 5500 Annual Return/Report would be made available to the public and to the plan's participants and beneficiaries. Section 104(b)(4) of ERISA requires the plan administrator, on written request of a participant or beneficiary, to furnish among other documents, a copy of the latest annual report. See also 29 CFR 2520.104b-1(b)(2). The DOL's regulation at 29 CFR 2520.104b-30 provides that the plan administrator of an employee benefit plan may impose a reasonable charge that is not to exceed
These regulations propose conforming amendments in 29 CFR 2590.715-2715A and 29 CFR 2590.715-2717 to clarify that compliance with the reporting requirements in 29 CFR 2520.103-1 (including filing any required schedules to the annual report) by plans subject to ERISA would satisfy the reporting requirements of PHS Act sections 2715A and 2717, incorporated in ERISA through ERISA section 715(a)(1). /8/ As explained in FAQs issued
FOOTNOTE 8
FOOTNOTE 9 See FAQs about Affordable Care Act Implementation (Part XXVIII), available at http://www.dol.gov/ebsa/faqs/faq-aca28.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA-FAQ-Part-XXVIII-transparency-reporting-final-8-11-15.pdf. END FOOTNOTE
FOOTNOTE 10 Nonfederal governmental plans (as defined in PHS Act section 2791(d)(8)(C)) and health insurance issuers (as defined in PHS Act section 2791(b)(2) and ERISA section 733(b)(2)) are not required to file annual reports pursuant to ERISA sections 103 or 104. Accordingly, any reporting required of such plans and issuers to satisfy PHS Act sections 2715A and 2717 will be addressed separately by HHS in future rulemakings and/or guidance. END FOOTNOTE
This rulemaking proposes transparency and quality reporting for non-grandfathered group health plans under PHS Act sections 2715A and 2717, as incorporated in ERISA. It takes into account differences in markets and other relevant factors to streamline reporting under multiple reporting provisions and reduce unnecessary duplication. The DOL is proposing to collect and provide high-value data to participants, beneficiaries, and regulators, such as information about benefits and plan design characteristics, funding, grandfathered plan status, rebates received by the plan (such as medical loss ratio rebates), service provider information (including information regarding any third party administrators, pharmacy benefit managers, mental health benefit managers, and independent review organizations), information on any stop loss insurance, claims processing and payment information (including number of claims filed, paid, appealed and denied), wellness program information, and other compliance information. In addition to improving DOL's oversight and enforcement activities, the collection of high-value data will lead to greater transparency for consumers, which may assist them in making a decision whether to elect the coverage or opt for another plan such as through their spouse's employer, with the caveat that these data will be collected a number of months after the end of the plan year they describe and thus will not be timely for use in concurrent oversight, enforcement, or consumer choice activities. The DOL may propose collecting additional data in the future. The DOL requests comments regarding other plan characteristics that may be helpful for participants to have information on in evaluating their plan. Further, as noted above, this document includes proposed conforming amendments in 29 CFR 2590.715-2715A and 29 CFR 2590.715-2717 to clarify that compliance with the proposed annual reporting requirements by plans subject to ERISA that provide group health benefits would satisfy the ACA reporting requirements under PHS Act sections 2715A and 2717 incorporated in ERISA through ERISA section 715(a)(1). The Department is specifically seeking public comments on those conforming amendments and the proposed annual reporting requirements for plans that provide group health benefits, including the new Schedule J, in light of the
4. Modernize Data Collection and Usability
This project would standardize and structure the Form 5500 Annual Return/Report to make key retirement and health and welfare benefit data, including information on assets held for investment, more available and usable in the electronic filing and data environment. Modernization is consistent with the Administration's "Smart Disclosure" effort. Executive Office of the President of the United States, Nat'l
5. Updating and Improving Reporting of Service Provider Fee and Expense Information
The DOL has been engaged in a long term initiative focused on transparency and oversight of service provider and investment fees and expenses. The fee initiative has focused on reporting indirect compensation received by service providers (2009 Form 5500 Annual Return/Report revisions), disclosures about service provider compensation to plan fiduciaries (DOL's regulation, effective in 2012, at 29 CFR 2550.408b-2), and plan disclosures to participants and beneficiaries particularly in 401(k)-type plans (DOL's regulation, effective in 2012, at 29 CFR 2550.404a-5).
The fee disclosure regulations were finalized after the publication of the 2009 forms changes. The 2009 indirect compensation reporting requirements permitted filers to disclose rather than report most indirect compensation. This was in response to commenters concerns about potentially inconsistent requirements in Form 5500 reporting and disclosure under the then proposed disclosure regulations. Accordingly, the 21st Century initiative includes proposed revisions that are designed to harmonize Form 5500 reporting requirements with the now final disclosure regulations, especially the ERISA section 408b-2 regulation. The GAO, in particular, recommended that the DOL require plans to report all indirect compensation received by certain of their service providers and to harmonize the ERISA section 408b-2 regulation disclosure and annual reporting requirements.
A key purpose of the required fee disclosures in the ERISA section 408b-2 regulation is to help make sure that pension plan fiduciaries can more effectively negotiate service provider fees based on a better understanding of compensation that the service provider expects to receive, including from third-party sources that might represent a conflict of interest. We believe that annually reporting compensation received by a service provider and its sources on the Form 5500 Annual Return/Report will provide a powerful tool and economic basis for improved evaluation of investment, recordkeeping, and administrative service arrangements. We have already seen innovative uses of Form 5500 Annual Return/Report data by private sector companies that have created tools for evaluating and benchmarking employee benefit plans. Further, service provider failures to disclose indirect compensation as required under the ERISA section 408b-2 regulation have resulted in EBSA obtaining corrective monetary recoveries to plans. Comparing disclosures of anticipated compensation under the ERISA section 408b-2 regulation to compensation received as reported on the Form 5500 Annual Return/Report may uncover disparities between anticipated and actual compensation, which may provide the basis for improved targeting of our enforcement actions.
6. Improving Employee Benefit Plan General Compliance With ERISA and the Code
The Form 5500 Annual Return/Report and related financial audit requirements historically have served to establish discipline for plan fiduciaries by requiring an annual examination of the employee benefit plan's financial and administrative operations. The proposed forms revisions and DOL implementing regulations would add selected new questions regarding plan operations, service provider relationships, and financial management of plans. These questions are intended to compel fiduciaries to evaluate plan compliance with important requirements under ERISA and the Code and to provide the Agencies with improved tools to focus oversight and enforcement resources. The proposed regulations would also update the requirements for certifications for limited scope audits under 29 CFR 2520.103-8.
C. Costs and Benefits
The regulatory impact analysis includes a qualitative discussion of the benefits associated with the proposed rules' five primary objectives. Under the current regulations and forms, the Form 5500 Annual Return/Report annually collects data from approximately 816,000 large and small plan filers--pension and all types of welfare plans, including group health--and DFEs with an aggregate annual cost of
As with the current reporting scheme, the proposed revisions are crafted to limit burden increases for small plans, both pension and welfare, including group health plans. The burden increase for small pension plans that are eligible to file the Form 5500-SF is much less than it is for those pension plans filing the Form 5500 Annual Return/Report that have complex portfolios that include alternative and hard-to-value assets or are employee stock ownership plans, which plans are of greater concern with respect to retirement security of their participants. Similarly, the burden increase for fully insured welfare plans that provide group health benefits with fewer than 100 participants, is much less than it is for welfare plans that provide group health benefits and are fully or partially self-insured, which are at greater risk for non-payment of benefit claims. As is discussed in more detail below, the burden increase for small pension plans that are invested in simple, Form 5500-SF eligible portfolios is very modest, and the changes that apply to those plans (which will mostly apply to all filers) will provide much needed information about the operations, compliance, and asset allocations of such plans. Similarly, welfare plans that provide group health benefits with fewer than 100 participants and that are fully insured, which are currently exempt from filing any Form 5500 Annual Return/Report, would file limited identifying and coverage information. The changes were intentionally limited in order that the burden would be as minimal as possible, while still getting the crucial information about that significant component of the nation's healthcare delivery system and reinforcing for the fiduciaries responsible for many of those plans the need to satisfy important consumer protections required by Title I of ERISA and the Affordable Care Act-related health care benefits. The proposed changes involve only a nominal burden increase for welfare plans other than group health.
Under the proposed regulations and revised forms, the Form 5500 Annual Return/Report would collect data from approximately 2.97 million filers with an aggregate annual cost of
This expansion in the number of first-time filers that are plans that provide group health benefits that have fewer than 100 participants represents new data on group health care issues that is otherwise unavailable or not gathered in a way that is readily usable for ERISA compliance, policy, and enforcement purposes. From a compliance perspective, requiring reporting will be useful to educate plan sponsors and fiduciaries of their obligations with respect to group health plans. Getting first time information on the full breadth of plans providing health benefits that are subject to ERISA will be key data for policy-making regarding such plans and their participants. From an enforcement perspective, data analysis could lead to detection and intervention in a distressed health plan, which could help minimize financial harm suffered by participants when medical claims are unpaid by such plans. Medical bills contribute to a large and increasing share of personal bankruptcies in
FOOTNOTE 11 David U. Himmelstein, M.D.,
FOOTNOTE 12 Section 2715A of the PHS Act extends the transparency reporting provisions set forth in section 1311(e)(3) of the Affordable Care Act (applicable to issuers of "qualified health plans" offered on Exchanges) to non-grandfathered group health plans and non-grandfathered group or individual health insurance coverage offered through or outside of Exchanges. As more fully described on pages 13-14 herein, section 2717 of the PHS Act generally requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to submit annual reports to the DOL, HHS and the
Revisions to the financial schedules (Schedule H and related investment asset reporting changes) and service provider reporting (Schedule C changes) impact predominantly large plans with complex investment portfolios (often involving alternate investments, hard-to-value assets and employer securities). These changes comprise the second and third largest shares of the burden increase, respectively, adding
Revisions to Schedule D and DFE reporting represent the largest burden reduction within the proposed changes. These changes affect all DFEs and those plans that invest in DFEs and reduce aggregate burden by
In addition, it is important to note that the total burden associated with the Form 5500 Annual Return/Report has risen from
Estimated Burden Change
Estimated Total Burden Change
Annual costs Annual burden hours(13M) (millions) Total for current$488.1 4.4 million. reporting requirements Change due to proposed 241.6 2.2 million. GHP requirements Change due to all other 87.2 798,000. Proposed Requirements Total for Proposed 817.0 7.2 million. Reporting Requirements Increase in baseline 127.0 0. since 2007 due to update in wage rates Increase in baseline 16.9 149,000. since 2007 due to update in number of plans (not including plans subject to new GHP reporting)
Estimated Burden Change by Type of Filer
FOOTNOTE 13 The
Type of filer Number of Number of Aggregate Aggregate Aggregate filers filers annual cost annual cost annual cost under under under under change current proposed current proposed (millions) (thousands) (thousands) require- require- ments ments (millions) (millions) Form 5500 Large 148.5 148.5$252.4 $309.3 $56.9 Plans Pension/Large 75.1 75.1 141.2 174.6 33.5 Welfare/Large 47.9 47.9 91.7 114.2 22.5 Health Welfare/Large 25.6 25.6 19.6 20.5 1.0 Non-Health Form 5500 Small 29.7 29.7 14.4 38.3 23.9 Pension and Non- Health Plans Pension ESOP 3.8 3.8 1.8 5.8 4.1 Pension Non-ESOP 22.6 22.6 11.1 29.9 18.8 Welfare/Non- 3.3 3.3 1.5 2.5 1.0 Health Form 5500-SF 622.4 622.4 205.8 227.3 21.5 Small Pension and Non-Health Plans Pension 621.8 621.8 205.6 227.0 21.4 Non-Health 0.7 0.7 0.2 0.2 0.0 Welfare Form 5500 Small 6.2 2,158.0 4.1 227.9 223.86 Health Fully Insured 0.0 1,869.0 0.0 69.6 69.6 Health Other Health 6.2 289.0 4.1 158.2 154.2 DFEs 9.4 8.9 11.4 14.2 2.8 Overall Total 816.3 2,967.5 488.1 817.0 328.8 Note: Some displayed numbers do not sum up to the totals due to rounding. Large plans--100 participants or more. Small plans--generally fewer than 100 participants.
Estimated Burden Change by Form Revision
Revisions Change in Change in Filers Filers Annual cost annual annual under under per costs burden current proposed affected (millions) hours require- require- filer (thousands) ments ments (thousands) (thousands) *14 Changes in$57.6 535.4 115.1 114.6$502 Schedule H (Including changes to Schedules of Assets and Reportable Transactions) and Eliminate Schedule I Schedule C 12.9 116.6 82.4 100.2 128 DFE Reporting -10.1 -94.2 61.1 8.9 -1,137 Changes (Including changes to Schedule D) Schedule E 2.5 22.0 0.0 6.7 374 Completion of 69.6 623.0 0.0 1,869 37 lines 1-5 on Form 5500 and lines 1- 8 on Schedule J by fully insured GHPs with fewer than 100 participants Completion of 39.0 349.1 54.1 336.9 116 Form 5500 by GHPs with fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust and GHPs with 100 or more participants Completion of 133.0 1,179.2 0.0 336.9 395 Schedule J by GHPs with fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust and GHPs with 100 or more participants All Other 24.4 217.9 1,076.7 1,024.2 24 Revisions
FOOTNOTE 14 The elimination of the concept of Master Trust Investment Account reporting and requiring reporting by a master trust instead, whose burden change is accounted for in the DFE Reporting Changes row, results in a reduction in the number of schedules attached. These reductions are reflected in the rows specific to the schedule affected. END FOOTNOTE
II. Discussion of the Proposed Revisions to 29 CFR Part 2520
ERISA section 103 broadly sets out annual financial reporting requirements for employee benefit plans. The Form 5500 Annual Return/Report and the DOL's related regulations generally are promulgated under the ERISA provisions authorizing limited exemptions to these requirements 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 forms, instructions, and related regulations are also promulgated under the DOL's general regulatory authority in ERISA sections 109 and 505.
The forms, schedules, and instructions, in addition to providing an alternative method of compliance under ERISA section 110 for the mandatory reporting requirements under section 103, also serve to help the DOL carry out its statutory directives under sections 506 and 513 of ERISA. Specifically, section 506(a) of ERISA authorizes the Secretary of Labor to coordinate with other Agencies to avoid unnecessary expense and duplication of functions among Government agencies; the Form 5500 Annual Return/Report is designed to simultaneously satisfy annual reporting requirements for each of the three Agencies and help the Agencies more effectively and efficiently (from both an Agency and a public perspective) enforce the provisions of ERISA and the Code. Section 506(b) gives the DOL responsibility for detecting and investigating civil and criminal violations of Title I of ERISA. The Form 5500 Annual Return/Report is one of the important tools the DOL uses to effectuate its responsibility to detect and investigate such violations. Section 513(b)(2) of ERISA specifically directs DOL to undertake research studies relating to pension plans, including but not limited to (A) the effects of this subchapter upon the provisions and costs of pension plans, (B) the role of private pensions in meeting the economic security needs of the Nation, and (C) the operation of private pension plans including types and levels of benefits, degree of reciprocity or portability, and financial and actuarial characteristics and practices, and methods of encouraging the growth of the private pension system. The Form 5500 Annual Return/Report is the most important overall tool DOL has to fulfill this statutory imperative, and the changes in the proposal are essential for required research, as well as enforcement.
The proposed changes to the Form 5500 Annual Return/Report and regulations are designed to: (1) Modernize financial information filed regarding plans; (2) harmonize information on fees and expenses that plans pay to service providers with the information that service providers disclose to plans under 29 CFR 2550.408b-2; (3) enhance mineability of data filed on the Form 5500 Annual Return/Report; (4) require reporting by all plans covered by Title I of ERISA that provide health benefits, including adding a new Schedule J (Group Health Plan Information); and (5) focus filers on compliance with certain ERISA and Code provisions through new questions on plan operations, service provider relationships, and financial management. If adopted, the changes generally would apply for plan years beginning on or after
1. Section 2520.103-1
Section 2520.103-1 generally describes the content of the Form 5500 Annual Return/Report as a limited exemption and alternative method of compliance for ERISA-covered employee benefit plans to satisfy annual reporting requirements under Title I. To accommodate the form, schedule, and instruction changes in the Notice of Proposed Forms Revisions, the proposed regulatory amendments in this document would update form and schedule references in
FOOTNOTE 15 The details of the limited reporting that would be required for small fully insured group health plans would be set forth in the instructions. END FOOTNOTE
2. Section 2520.103-2
Section 2520.103-2 describes the content of the Form 5500 Annual Return/Report for a group insurance arrangement (GIA) that files an annual report under
3. Section 2520.103-3, 2520.103-4, and 2520.103-1(e)
Section 2520.103-3 provides an exemption for employee benefit plans from certain annual reporting requirements for plan assets held in a common collective trust (CCT) maintained by a bank, trust company, or similar institution. Section 2520.103-4 provides a similar exemption for plan assets held in a pooled separate account (PSA) maintained by an insurance carrier. Section 2520.103-1(e) provides for special reporting rules for plans that participate in a master trust. The Notice of Proposed Forms Revisions would alter the annual reporting requirements for plans investing in CCTs, PSAs and master trusts in significant ways to increase the transparency of plan investments in such pooled investment vehicles. The DOL proposes revising language to 29 CFR 2520.103-3, 29 CFR 2520.103-4, and 29 CFR 103-1(e) to reflect those changes.
4. Section 2520.103-6
Section 2520.103-6 sets forth the contents of the Schedule of Reportable Transactions that is part of the Form 5500 Annual Return/Report. The Schedule of Reportable Transactions is required to be filed by plans and DFEs that file their own Form 5500 Annual Return/Report. This schedule is used to report, subject to conditions and exceptions, individual transactions or series of transactions that involve more than five percent of the current value of the assets of the plan or DFE. The existing rules require the schedule to include the name of each party to a "reportable transaction." The form and instructions changes being published concurrently with this document include certain additions and clarifications of the content of the Schedule of Reportable Transactions designed to improve the information regarding parties involved in these significant plan transactions or series of transactions. 29 CFR 2520.103-6(d)(1) sets forth the content requirements for the Schedule of Reportable Transactions. Rather than list all the schedules' content requirements, the proposed amendment to paragraph (d)(1) would simply reference the schedules' contents in the relevant Form 5500 Annual Return/Report instructions.
5. Section 2520.103-8
Section 2520.103-8 implements the limited-scope audit exemption described in ERISA section 103(a)(3)(c). Specifically, this exemption allows a plan to exclude from the examination and report of an independent qualified public accountant (IQPA) any statement or information regarding plan assets held by banks, similar institutions, or insurance carriers if the statement or information is prepared and certified by the bank, similar institution, or insurance carrier. The GAO and the DOL's Inspector General (DOL-OIG) have recommended that the Department revise section 2520.103-8 to improve the information being reported by plan administrators electing a limited scope audit. The DOL agrees that better information is needed by plan administrators in connection with limited scope audits. To address concerns it has observed, as well as to respond to the GAO and the DOL-OIG recommendations, /16/ the DOL proposes amending section 2520.103-8. Currently, section 2520.103-8 requires the bank or insurance company to certify the accuracy and completeness of the information being provided by a written declaration which is signed by a person authorized to represent the bank or insurance carrier. The DOL proposes to amend the requirements under section 2520.103-8 to require that the certification:
FOOTNOTE 16 The Agencies discuss various GAO and DOL-OIG recommendations with respect to the Form 5500 Annual Return/Report and the steps the Agencies are taking that are consistent with the recommendations in the Notice of Proposed Forms Revisions published today in the
(1) Appear on a separate document from the list of plan assets covered by the certification;
(2) Identify the bank or insurance company holding those plan assets that are the subject of the certification;
(3) Describe the manner in which the bank or insurance company is holding the assets covered by the certification;
(4) State whether the bank or insurance company is providing current value information regarding the assets covered by the certification, and if so, state that the assets for which current value is being certified are separately identified in the list of assets covered by the certification;
(5) If current value is not being certified for all of the assets covered by the certification, include a caution that the certification is not certifying current value information and the asset values provided by the bank or insurance company may not be suitable for use in satisfying the plan's obligation to report current value information on the Form 5500 Annual Return/Report; and
(6) If the certification is being provided by an agent on behalf of the bank or insurance company, a statement certifying that the person providing the certification is an authorized agent acting on behalf of the bank or insurance company and affirming that the bank or insurance company is taking responsibility for the accuracy and completeness of the certification and the underlying records used as a basis for the information being certified.
6. Section 2520.103-10
Section 2520.103-10 identifies the financial schedules that are required to be included as part of the Form 5500 Annual Return/Report, which include the "Schedule of Assets Held for Investment" and "Schedule of Assets Acquired and Disposed within the Plan Year." Paragraph (b)(1)(i) of
Paragraph (b)(2)(i) of
7. Section 2520.104-20 and 2520.104-26
Section 2520.104-20 provides an exemption from certain annual reporting and disclosure provisions of ERISA for certain welfare plans that cover fewer than 100 participants at the beginning of the plan year and for which benefits are paid exclusively from the general assets of the employer or employee organization sponsoring the plan, exclusively through insurance, or a combination of both. An expansion of the annual reporting of information regarding plans that provide group health benefits is described in detail in the Notice of Proposed Forms Revisions. To implement those changes, the DOL proposes eliminating the existing regulatory exemption for welfare plans that provide group health benefits (the exemption will continue to apply to other small welfare plans). Thus, small plans that provide group health benefits that are unfunded, or a combination of unfunded and fully insured, will be required to file an annual return/report, including the new Schedule J, in accordance with the requirements in the proposed instructions. Under the proposal, small fully insured plans will only be required to answer basic identifying and plan characteristic information on the Form 5500 and limited health plan benefit, insurance, and participant information on the Schedule J. Similarly, the limited exception in
8. Section 2520.104b-10
Section 104(b)(3) of ERISA provides in part that, each year, administrators must furnish to participants and beneficiaries receiving benefits under a plan materials that fairly summarize the plan's annual report. Section 2520.104b-10 sets forth the requirements for the Summary Annual Report (SAR) and prescribes formats for such reports. The amendments being proposed do not include any change to the SAR requirements. However, in order to facilitate compliance with the SAR requirement, the DOL is updating its cross-reference guide to correspond to the line items of the Form 5500 Annual Return/Report and Form 5500-SF. The cross-reference guide has also been updated to reflect that defined benefit pension plans that furnish an annual funding notice to participants and beneficiaries, pursuant to 29 CFR 2520.101-4, are not required to furnish a SAR. This update reflects statutory changes enacted as part of the Pension Protection Act of 2006 extending the annual funding notice requirements of section 101(f) of ERISA. The cross-reference guide, as before, would continue to be an appendix to 29 CFR 2520.104b-10.
9. Technical and Conforming Changes for Forms and Instructions
Various other technical and conforming changes are being proposed as part of the restructuring of the Form 5500 Annual Return/Report.
III. Regulatory Impact Analysis
Executive Order 12866 and 13563 Statement
Executive Orders 12866 and 13563 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, and public health and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.
Under Executive Order 12866, it must be determined whether a regulatory action is "significant" and therefore subject to the requirements of the Executive Order and review by the
Pursuant to the terms of the Executive Order, it has been determined that this regulatory action is likely to have an annual effect on the economy of
Table 1--Accounting Statement: Estimated Costs From Current Reporting Requirements to 2019 Reporting Requirements [In millions] Category Estimates Units Primary Low High Year Discount Period estimate estimate estimate dollar rate covered (percent) Benefits: Annualized Monetized ( $millions/year) Annualized Quantified Qualitative The proposal pursues five main objectives: (1) Improve reli- Costs: ability of reporting and transparency of financial products and investments acquired by plans, especially alternative investments, hard-to-value assets, and investments through collective investment vehicles; foster ongoing monitoring of retirement plans by employers, plans, participants and beneficiaries, and policymakers; and better leverage the ability of the Agencies to fulfill their statutory oversight role. (2) Establish better compliance awareness and educa- tion, provide critical data for Agency oversight, collect information needed for Congressionally mandated reports on group health plans, and satisfy certain reporting require- ments under sections 2715A and 2717 of the PHS Act as added by the Affordable Care Act and incorporated into ERISA sec- tion 715. (3) Standardize and structure the Form 5500 Annual Return/Report to make key retirement and health and welfare benefit data, including information on assets held for investment, more available and usable in the electronic fil- ing and data environment, which, consistent with the Admin- istration's "Smart Disclosure" effort, to enable private sector data users to develop more individualized tools for employers to evaluate their retirement plans and for employ- ees to manage their retirement savings. (4) By harmonizing reporting on Schedule C of the Form 5500 Annual Return/ Report with the now final disclosure requirements in DOL's regulation at 29 CFR 2550.408b-2, provide a powerful tool and economic basis for improved evaluation of investment, recordkeeping, and administrative service arrangements, in- cluding potential innovative uses of Form 5500 Annual Return/Report data by private sector companies that have created tools for evaluating and benchmarking employee bene- fit plans, provide tools to benefit participants where failures to disclose indirect compensation received by a service provider have resulted in corrective monetary re- coveries to plans, as well as minimize filer confusion with the harmonization of reporting and disclosure requirements. (5) Enhance reporting on plan compliance to improve plan operations, protect participants and beneficiaries and their retirement benefits, and educate and provide annual discipline for plan fiduciaries. Annualized 372.6 2016 7 2019 and Monetized later. ( $millions/year) 366.2 2016 3 2019 and later. Annualized Quantified Qualitative
Background and Need for Regulatory Action
The Form 5500 Annual Return/Report is the principal 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,
As discussed in the Notice of Proposed Forms Revisions published concurrently with this document and below, the DOL has received several reports from the GAO, the DOL-OIG, and the
As described earlier in this document, the proposed revisions to the Form 5500 Annual Return/Report reflect priorities of and efforts by the Agencies to improve the quality of the information collected, while limiting wherever possible, especially for small pension plans invested in easy to value assets and plans that provide group health benefits that have fewer than 100 participants that are fully insured, the overall burden of the statutory reporting requirements and the forms. To accomplish this goal, the Agencies have pursued five objectives. The need for regulatory action to achieve these objectives is discussed below.
(1) Modernizing financial information.
Modernizing the Schedule H Balance Sheet and Income Statement: The financial statements contained in the current Schedule H (Large Plan Financial Information) and Schedule I (Small Plan Financial Information) are based on data elements that have remained largely unchanged since the Form 5500 Annual Return/Report was established in 1975. Many investments in alternative and hard-to-value assets and those held through collective investment funds that are frequently held by plans and the investment industry today were not as prevalent in 1975. Thus, they do not fit squarely into any of the existing Schedule H reporting categories. Further, some of these investments in alternative and hard-to-value assets, including those held through collective investment funds, are sufficiently complex that plan administrators and plan accountants may not completely understand how they fit into the balance sheet reporting on the Form 5500 Annual Return/Report. This results in inconsistent financial reporting by filers because certain types of investments may arguably fall into one or more categories. For example, a "hedge" fund could potentially be reported as a limited partnership or some other type of collective investment entity, or could be reported in a different reporting category based on the primary assets held through a particular type of collective investment vehicle.
Additionally, many filers simply report investments that do not readily fit into one of the existing categories in "Other." For example, large retirement plans reported having
A recent GAO report stated, for example, that, "while hedge funds and private equity have very different risk, return, and disclosure considerations from state and municipal securities, all of these investments could be included in the "other plan asset" category." /17/ GAO also noted that the plan asset categories on the Schedule H are not representative of current plan investments, and provide little insight into the investments themselves, the level of associated risk, or structures of the investments. /18/ The DOL-OIG also recommended that the Agencies revise the Form 5500 Annual Return/Report to improve reporting of hard-to-value assets and alternative investments. /19/ Based on their own assessment and experience in research and enforcement and the use of the Form 5500 Annual Return/Report to support these critical agency functions and responsibilities, as well as in response to these recommendations, as discussed in detail earlier in this document, the Agencies are proposing to make changes to the Schedule H balance sheet and income statement.
FOOTNOTE 17 GAO, Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 12. END FOOTNOTE
FOOTNOTE 18 Id. at 11-12. END FOOTNOTE
FOOTNOTE 19 EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-To-Value Alternative Investments, at 4, 18, and 19. END FOOTNOTE
Modernizing the Schedule H, Line 4i Schedules of Assets: As discussed in detail in the Notice of Proposed Forms Revisions published simultaneously with this document, the Agencies are proposing structural, data element and instruction changes to the current Schedule H, Line 4i(1) Schedule of Assets Held for Investment and Line 4i(2) Schedule of Assets Acquired and Disposed of Within Year. These schedules are filed by plans required to file the Schedule H and by certain DFEs. The Schedules of Assets are a central element of the financial disclosure structure of ERISA. They are the only place on the Form 5500 Annual Return/Report where plans are required to list individual plan investments identified by major characteristics, such as issue, maturity date, interest rate, cost and current value. As such, they are the only part of the Form 5500 Annual Return/Report that can be used to evaluate the year-to-year performance, liquidity, and risk characteristics of a plan's individual investments.
The current reported information, however, suffers from several shortcomings. First, this information is not reported in a data-capturable format. Only an image or picture of the attachments that are currently filed as non-standard attachments to filers' electronic Form 5500 Annual Return/Report filings is available through the EFAST2 public disclosure function. Second, the Line 4i Schedules of Assets are not always found in the same place in each annual return/report. For example, the Line 4i Schedules of Assets are often incorporated in the larger audit report of the plan's IQPA that itself is filed as a nonstandard attachment to the Form 5500 Annual Return/Report. Third, the schedules do not require a standardized method for identifying and describing assets on the Line 4i Schedules. Therefore, under the current reporting rules, the same stock or mutual fund may be identified with various different names or abbreviations.
The creation of more detailed and structured Schedules of Assets is a specific recommendation of the DOL-OIG and the GAO. /20/ The proposed changes to the Schedules of Assets are designed to remedy the shortcomings described above. In addition, data capturability of the Line 4i Schedules of Assets will make it much easier and more efficient to monitor plan holdings as computer programs can read and analyze the data much more efficiently. It will allow the Agencies and the interested public to monitor a larger number of pension plans and their asset allocations. The existence of a group of private companies that are transforming the Line 4i Schedule of Assets Held for Investment of the larger pension plans into data-capturable information and using it to compare plan investment menus and investment allocations is a clear indication that plans sponsors and their service providers also are interested in having access to these data. For example, one of these companies sent a letter to DOL stating that they believe that the information on the Form 5500 Annual Return/Report is very useful in "helping the agency understand the performance and design of retirement plans in the market place" and that the data availability fosters "third party data collection and evaluation efforts that in turn help protect retirement plan participants." /21/ Plan sponsors can use this information to see how their investment menus compare to similarly situated plans and service providers often use this information to identify plans with underperforming investments in order to attract new business. This can lead to more competition and improved plan performance, which will ultimately benefit participants.
FOOTNOTE 20 See EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-to-Value Alternative Investments, at 17; Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 37. END FOOTNOTE
FOOTNOTE 21 See
Changes to DFE Reporting: Under the current reporting rules, DFEs are permitted, or in some cases required, to file their own Form 5500 Annual Return/Report. Generally, pension plans that invest in DFEs only are required to report their interest in the DFE but do not have to report detailed information regarding the underlying investments in the DFE. Such plans are required to file a Schedule D on which the plans identify each DFE in which they invest and the year-end values of the plans' interests. Although DFEs file their own Form 5500 Annual Return/Report, only Master Trust Investment Accounts (MTIAs) and entities meeting the conditions of DOL regulation 29 CFR 103-12 (103-12 IEs) are required to include as part of their own Form 5500 Annual Return/Report, detailed asset holdings on the Schedule H, Line 4i Schedules of Assets. Insurance company pooled separate accounts (PSAs) and bank common/collective trusts (CCTs), which together account for 32 percent of large plans' reported DFE holdings, do not report such information, nor are the investing plans required to report it, although the information is required by regulation to be provided by PSAs and CCTs to investing plans on an annual basis.
The Agencies have encountered, and researchers have reported to the DOL, /22/ difficulties matching plans' investments in DFEs reported by investing plans and DFEs in which the plans and other DFEs are participating. Some of this stems from incomplete, unreliable, or inconsistent data on Schedule D filings. For example, for 2013, about 57 percent of plans and 17 percent of DFEs that filed a Schedule D and reported non-zero amounts of interest in DFEs on Schedule H have at least one discrepancy in reporting of more than
FOOTNOTE 22 See "Invisible Pension Investments,"
GAO has recommended that the Agencies take steps to address the problem of incomplete or inaccurate matching between plan and DFE filings. /23/ Therefore, as discussed in detail earlier in this document, the Agencies are proposing to revise the reporting structure of both Schedule H and the Line 4i Schedules of Assets, with corresponding changes to Schedule D, that are intended to ensure that the Agencies, plan fiduciaries, plan service providers, and other users of data have the tools to create a more complete picture of plans' investment in pooled investment vehicles.
FOOTNOTE 23 See, GAO Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500, at 14-15. END FOOTNOTE
Changes to Financial Information Reporting for Small Plans: Small pension plans that are invested in "eligible" plan assets and otherwise meet certain requirements are eligible to file Form 5500-SF, which was established in part to comply with provisions of the PPA requiring a simplified form of reporting for plans with fewer than 25 participants. /24/ Currently, the Form 5500-SF does not require filers to breakout assets on the balance sheet into specific categories. Small plans that are not eligible to file the Form 5500-SF because they are invested in hard-to-value and alternative investments currently file Schedule I, but the Schedule I does not require small plan filers to provide detailed plan asset information and does not provide significantly more useful financial information than the Form 5500-SF with respect to alternative and hard-to-value assets.
FOOTNOTE 24 See section 1103(b) of the Pension Protection Act of 1996, Public Law 109-280, 120 Stat. 780 (2006). END FOOTNOTE
The lack of specific questions on the investment activity of small pension plans, which comprise over 80 percent of filers, impairs the usefulness of the Form 5500 Annual Return/Report as a tool to obtain a meaningful picture of small plan investments, especially investments in hard-to-value and alternative investments. As the GAO has noted, the limited financial information provided on the Schedule I creates a challenge for participants, beneficiaries, oversight agencies, researchers, and other users of the Form 5500 Annual Return/Report or Form 5500 Annual Return/Report data. /25/ Therefore, as discussed in detail in the Notice of Proposed Forms Revisions published today, under the proposal, Form 5500-SF filers would be required to provide a modest additional breakout of plan investments on the balance sheet. The proposal also would eliminate the Schedule I for small plans that are not eligible to file the Form 5500-SF, predominantly because they are invested in hard-to-value and alternative investments, including employer securities. Under the proposal, such plans instead would be required to complete Schedule H and the Line 4i Schedules of Assets. These changes are designed to ensure that the Agencies are able to collect critical information regarding small plan investments in hard-to-value and alternative investments.
FOOTNOTE 25 GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 18. END FOOTNOTE
Although the proposed elimination of Schedule I and the addition of basic investment category information to the Form 5500-SF balance sheet would result in additional reporting for those small plans invested in hard-to-value and alternative investments, those small plans with simple investment portfolios would not see a significant increase in their annual reporting burden. In light of changes in the financial environment and increasing concern about investments in hard-to-value assets and alternative investments, however, the Agencies believe that requiring the more detailed financial information regarding hard-to-value investments on the Schedule H is important for regulatory, enforcement, and disclosure purposes for those small plans with more complex portfolios that include hard-to-value or alternative investments. The inherent increased risk posed by hard-to-value or alternative investments affects participants in small plans as well as large plans, but without these proposed revisions, the participants in small plans are left without the protection afforded participants in large plans that comes from the reporting that large plans are already required to do. Although such small plans would be required to complete the Schedule H instead of the Schedule I, including the Schedule H Line 4i(1) and 4i(2) Schedules of Assets, eligible small plans, as under the current rules, would still be eligible for a waiver of the annual examination and report of an IQPA under 29 CFR 2520.104-46, and the number count required to determine eligibility would be changed from the number of participants at the beginning of the plan year to the number of participants with account balances at the beginning of the plan year.
(2) Updating fee and expense information on plan service providers with a focus on harmonizing annual reporting requirements on Schedule C with DOL's final disclosure requirements at 29 CFR 2550.408b-2.
The current rules for reporting indirect compensation on the Schedule C as part of the Form 5500 Annual Return/Report, including the limited reporting option for "eligible indirect compensation," were implemented starting with the 2009 forms. /26/ Those changes were part of a three-pronged regulatory initiative that included the DOL's regulations under 29 CFR 2550.408b-2 and participant-level disclosure regulations under 29 CFR 2550.404a-5. At the time the 2009 Schedule C rules were finalized, neither the ERISA section 408b-2 regulation nor the ERISA section 404a-5 regulation had been promulgated. Some elements of the 2009 Schedule C, for example, the eligible indirect compensation provisions, were adopted in light of the fact that it was not certain at the time what the ERISA section 408b-2 final rule would require. Those provisions were also meant to respond to concerns from the regulated community, especially large plan service providers, about having to create two different record-keeping systems to meet the various requirements of the Form 5500 Annual Return/Report and disclosures required under 408b-2 should the later promulgated provisions differ from the Form 5500 reporting requirements on indirect compensation.
FOOTNOTE 26 See 72 FR 74731 (
Now that EBSA has promulgated the ERISA sections 408b-2 and 404a-5 final regulations, there is a need to harmonize fee reporting under the Schedule C and ERISA section 408b-2 regulations to: (1) Make it easier to understand the disclosure and reporting rules regarding indirect compensation; (2) improve quality of data by minimizing any filer confusion that might result from differences in the two requirements and having all the compensation required to be disclosed to be reported on the Schedule C; (3) reduce burden by synchronizing the record-keeping that would be required for ERISA section 408b-2 regulations before-the-fact disclosure with Schedule C's after-the-fact reporting; and (4) make the information easier to understand for end users of the forms by bringing consistency between the service provider fees disclosed to the plan fiduciaries and the service provider fees reported to the Agencies and made public. In this regard, a recent GAO report stated that some filers advised that there was confusion over what Schedule C requires to be reported, including in comparison to what is required under the ERISA section 408b-2 regulations disclosure scheme. /27/ Therefore, as discussed in detail earlier in this document, the Agencies are proposing various changes to the Schedule C to better harmonize it with the disclosure requirements under the final ERISA section 408b-2 regulation. Among other changes, the Agencies are proposing to eliminate the concept of "eligible indirect compensation" on Schedule C in part because "eligible indirect compensation" was created prior to the finalization of ERISA section 408b-2 rules to address concerns about possible future inconsistencies that are no longer applicable. Instead of being able to rely on the construct of "eligible indirect compensation" to report only the name of the person providing the disclosures to the plan administrator, the proposal would require filers to report all types of compensation for ERISA section 408b-2 "covered" service providers. This change will also help address concerns raised by other data sources on service provider compensation about the completeness of Schedule C compensation data. A recent survey by
FOOTNOTE 27 See GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 22. END FOOTNOTE
FOOTNOTE 28
The proposed forms revisions, and implementing DOL regulations, would also require small pension plans that are not eligible to file the Form 5500-SF and welfare plans that are funded with a trust with fewer than 100 participants to file the Schedule C. Currently, only large pension plans and large welfare plans that are not unfunded or insured (e.g., funded using a trust) must file the Schedule C, thus excluding almost 90 percent of current pension plan filers and over 80 percent of current welfare plan filers from having to disclose service provider fees. The DOL recognizes the burdens small plans face in complying with reporting obligations, but must weigh them against the market efficiencies that can be gained through improved transparency and fee disclosure. The DOL therefore proposes to require small pension plans to file Schedule C only if they do not meet the eligibility conditions for filing the Form 5500-SF, which predominantly are those pension plans that are invested in alternative or hard-to-value assets. The DOL proposes to require welfare plans that offer group health benefits with fewer than 100 participants to file Schedule C only if they are not unfunded or insured (e.g., funded with a trust), because those plans are most likely to experience financial difficulties. Defined contribution pension plan Form 5500-SF filers, as well as defined contribution pension plan Form 5500 Annual Return/Report filers required to complete the Schedule H, would also have to attach the comparison chart that is required to be furnished to participants under the DOL's regulation at 29 CFR 2550.404a-5. Although the comparison chart would not be attached in a "structured" format, it would provide, with a minimal burden increase, a picture of the investment earnings and fees for defined contribution pension plans, which constitute the majority of small plan filers.
Requiring those small pension plans that are not eligible to file the Form 5500-SF and welfare plans that include group health benefits with fewer than 100 participants that are not unfunded or insured (e.g., funded with a trust) to complete the Schedule C as part of their Form 5500 Annual Return/Report filing, and requiring Form 5500-SF defined contribution pension plan filers to include the 404a-5 comparison chart should address some of the GAO's concerns that service provider fee information is incomplete because plans with fewer than 100 participants are not currently required to file information about indirect compensation received by the plans' service providers. /29/ Both the proposed Schedule C information for small plans not eligible to file the Form 5500-SF and the 404a-5 information would also enable sponsors of small plans to more easily compare fee information between their plans and increase competition for these services. In addition, financial information reporting could be better aligned with recently adopted disclosure rules to ensure that all fees are reported by the plans. /30/
FOOTNOTE 29 See GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 25. END FOOTNOTE
FOOTNOTE 30 Id. at 50. END FOOTNOTE
(3) Enhancing usability of data filed on the annual return/report.
E-filing, as well as advances in information technology, have changed both the regulated community's and government's ability to use the Form 5500 Annual Return/Report data. The government can now provide the data in a much more timely and comprehensive manner. As a result, the Form 5500 Annual Return/Report data sets are posted on the
FOOTNOTE 31 Requests for individual filings and attachments are available at no cost to the requester. Bulk requests are available at a minimal cost to the requester. See Guide to Submitting Requests Under the Freedom of Information Act, Section VIII (http://www.dol.gov/dol/foia/guide6.htm). END FOOTNOTE
The usefulness of the Form 5500 Annual Return/Report data for comprehensive plan monitoring is dependent on comparable data being available for all or most plans and on the data being available in data-capturable formats. The current financial reporting structures and requirements, however, do not allow the data to be utilized to the fullest extent. As stated above, the Schedule H Line 4i, Schedules of Assets, and the Line 4j, Schedule of Reportable Transactions, as well as other attachments to various schedules (including Schedules MB and SB) are not filed in a standardized electronic format and therefore cannot be searched and analyzed electronically. As a result, the Agencies, other governmental users, including policymakers, and the public have difficulty accessing and making most effective use of key information about pension plan investments.
The proposed requirement for filers to complete a standardized Schedule H Line 4i(1), Schedule of Assets Held for Investment and Line 4i(2) Schedule of Assets Disposed of by End of Plan Year, in a data-capturable format would address some of the critical gaps in available data on pension plan investing, which accounts for over
FOOTNOTE 32 See EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-to-Value Alternative Investments, at 17; see also GAO Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 37; GAO, Federal Agencies Should Collect Data and Coordinate Oversight of Multiple Employer Plans, at 30. END FOOTNOTE
In addition, this proposal would enhance the usability of data by replacing some of the attachments to the various schedules (including some attachments to Schedules MB and SB) /33/ with text fields and having filers report required information in text fields on the face of the forms and on schedules instead of requiring this information to be filed as non-standard attachments. The Agencies took into account the size and complexity of the attachments in determining which should be text fields and which should continue to be attachments, despite the overarching goal of improving data usability for the complete form. In a few cases, especially for detailed actuarial charts, the Agencies determined that requiring standardized attachments or requiring the information to be provided on the face of the forms and schedules could potentially be overly difficult, costly, and complex, and therefore the costs would outweigh the benefits.
FOOTNOTE 33 The proposed Schedule E, which is based in large part on the Schedule E from 2008 and earlier, would use text fields rather than attachments for some of the previously asked questions. END FOOTNOTE
Further improvements would be realized from the proposal's requirement that other currently unstructured data or new elements would also be collected as structured data. These include the lists of employers participating in multiple-employer and controlled group plans required to be attached to the Form 5500 Annual Return/Report or Form 5500-SF; the Schedule H, Line 4a Schedule of Delinquent Contributions, and Schedule H, Line 4j Schedule of Reportable Transactions. Having information on delinquent participant contributions and reportable transactions in a "structured" data format would benefit the Agencies by allowing them to identify common types of violations across plans, more quickly respond to any identified issues, and better determine areas where more enforcement and encouragement of compliance and education is needed. Having this data reported in a structured format would also benefit the Agencies and the general public by identifying the universe of employers that participate in multiple-employer and controlled group plans and allowing them to quickly identify plan sponsors that might be affected by adverse market conditions or financial distress.
In summary, advances and developments in technology allow data users to run increasingly sophisticated analyses using the existing Form 5500 Annual Return/Report data, but this is dependent on the availability of these data in a data-capturable format. In addition to researchers interested in studying trends in the employee benefits industry, some companies have reached out to the DOL to request that Form 5500 Annual Return/Report data be collected in a more standardized and consistent format. /34/ If these data were available in such a format, researchers, businesses and plan professionals could use the data more efficiently to inform employers and participants on plan structures, operations, and finances. Particularly important in a constrained federal budgetary environment, such data will allow EBSA's enforcement staff to monitor many more employee benefit plans in a systematic and efficient way, producing more fruitful investigations and reducing the inefficiencies and disruptions resulting from unnecessary investigations.
FOOTNOTE 34 See
(4) Requiring reporting by all group health plans covered by Title I of ERISA, including adding a new Schedule J (Group Health Plan Information).
The enactment of the Affordable Care Act expanded DOL's already growing oversight and regulatory responsibilities with respect to the provision of group health benefits to workers in private sector employer-sponsored group health plans. Generally most welfare plans that include group health benefits that have fewer than 100 participants do not currently file the Form 5500 Annual Return/Report. The current regulation exempts small plans from the requirement to file if they are unfunded, fully insured or combination unfunded/fully insured. /35/ The current lack of information collected on the Form 5500 Annual Return/Report from group health plans diminishes the effectiveness of EBSA's ability to develop health care regulations and complicates the DOL's ability to enforce such regulations and educate plan administrators regarding compliance.
FOOTNOTE 35 29 CFR 2520.104-20. END FOOTNOTE
The Affordable Care Act requires the Secretary of Labor to provide
FOOTNOTE 36 Only a little over 20,000 self-insured and approximately 4,000 mixed self-insured health plans file annually with the DOL under the current reporting scheme. See "Report to
FOOTNOTE 37 Id. at v. END FOOTNOTE
In addition, sections 2715A and 2717 of the PHS Act, as added by the Affordable Care Act and incorporated into ERISA section 715, include important new reporting requirements for group health plans subject to ERISA. Specifically, section 2715A of the PHS Act incorporates the transparency provisions of section 1311(e)(3) of the Affordable Care Act to require non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to make available to the public, and the government a host of information on health plan enrollment and claims, including: (1) Claims payment policies and procedures; (2) periodic financial disclosures; (3) data on enrollment and disenrollment; (4) data on the number of denied claims; (5) data on rating practices; (6) information on cost-sharing and payments with respect to any out-of-network coverage; (7) information on enrollee and participant rights; and (8) other information as determined by the Secretary. Moreover, section 2717 of the PHS Act generally requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to report annually whether the benefits under the plan: (A) Improve health outcomes through the implementation of activities such as quality reporting, effective case management, care coordination, chronic disease management, and medication and care compliance initiatives, including through the use of the medical homes model as defined for purposes of section 3602 of the Affordable Care Act, for treatment or services under the plan or coverage; (B) implement activities to prevent hospital readmissions through a comprehensive program for hospital discharge that includes patient-centered education and counseling, comprehensive discharge planning, and post discharge reinforcement by an appropriate health care professional; (C) implement activities to improve patient safety and reduce medical errors through the appropriate use of best clinical practices, evidence based medicine, and health information technology under the plan or coverage; and (D) implement wellness and health promotion activities.
These regulations propose conforming amendments in 29 CFR 2590.715-2715A and 29 CFR 2590.715-2717 to clarify that compliance with the reporting requirements in 29 CFR 2520.103-1 (including filing any required schedules to the annual report) by plans subject to ERISA would satisfy the reporting requirements of PHS Act section 2715A and 2717, /38/ incorporated in ERISA through ERISA section 715(a)(1). /39/ As explained in FAQs issued
FOOTNOTE 38
FOOTNOTE 39 Nonfederal governmental plans (as defined in PHS Act section 2791(d)(8)(C)) and health insurance issuers (as defined in PHS Act section 2791(b)(2) and ERISA section 733(b)(2)) are not required to file annual reports pursuant to ERISA section 103. Accordingly, any reporting required of such plans and issuers to satisfy PHS Act sections 2715A and 2717 will be addressed separately by HHS in future rulemakings and/or guidance. END FOOTNOTE
FOOTNOTE 40 See FAQs about Affordable Care Act Implementation (Part XXVIII), available at www.dol.gov/ebsa/faqs/faq-aca28.html and www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA-FAQ-Part-XXVIII-transparency-reporting-final-8-11-15.pdf. END FOOTNOTE
This rulemaking proposes transparency and quality reporting for non-grandfathered group health plans under PHS Act sections 2715A and 2717, as incorporated in ERISA. It takes into account differences in markets and other relevant factors and reduces unnecessary duplication. The DOL is proposing to collect and provide high-value data to participants, beneficiaries, and regulators, such as information about benefits and plan design characteristics, funding, grandfathered plan status, rebates received by the plan (such as medical loss ratio rebates), service provider information (including information regarding any third party administrators, pharmacy benefit managers, mental health benefit managers, and independent review organizations), information on any stop loss insurance, claims processing and payment information (including number of claims filed, paid, appealed and denied), wellness program information, and other compliance information. The collection of high-value data will lead to greater transparency for consumers and assist in their decision-making process.
As discussed in detail in the Notice of Proposed Form Revision, the proposal would make significant changes to group health plan reporting. First, the proposal would add a new Schedule J (Group Health Plan Information). Plans that provide group health benefits that have 100 or more participants, all of which are currently required to file a Form 5500 Annual Return/Report, would have to include the new Schedule J in their annual report, with the remaining reporting requirements generally unchanged, except as proposed to be changed for all filers. Plans that provide group health benefits with fewer than 100 participants that are funded using a trust would generally be required to report the same information as plans that provide group health benefits with 100 or more participants that are funded using a trust; they would no longer be permitted to file the Form 5500-SF. Although this would require such plans to complete the Schedule C and the Schedule H, for plans with simple investments, there should only be a modest burden increase over completing the Form 5500-SF. Small welfare plans funded with a trust that are invested in assets that are not "eligible plan assets" for purposes of Form 5500-SF filing, are already required to file the Form 5500 Annual Return/Report, along with the Schedule I, and if applicable, Schedule A.
Group health plans that have fewer than 100 participants currently exempt from filing an annual report under 29 CFR 2520.104-20 because they are completely unfunded or combination unfunded/fully insured now would be required to file a Form 5500, a Schedule J, and, if applicable, a Schedule A. Plans that are unfunded pay some or all of their benefits out of the plan sponsors' general assets, which exempts them from state insurance regulation, making the DOL their sole regulatory agency. Because such small plans are not currently required to file the Form 5500 Annual Return/Report, there is no comprehensive and direct source of data about the number and characteristics of these plans. Further, because these plans are small, they are more susceptible to financial difficulties. Because of these concerns, the DOL believes that it is important to have more detailed benefit, financial, and compliance information for "unfunded" plans that are self-insured or partially self-insured than for those small plans that are fully insured. These plans would be required under the proposal to file the complete Form 5500 and Schedule J and, if applicable, Schedule A.
Plans that provide group health benefits that have fewer than 100 participants that are fully insured would be required to answer only limited questions on both the Form 5500 and Schedule J, and would not be required to file any other schedules or attachments. Collecting this limited data on fully insured plans providing group health benefits that have fewer than 100 participants would give the DOL basic information to identify health insurance plans they regulate and allow them to better monitor plan trends and activities, but minimize the reporting burden from more detailed reporting that is more generally required on the Form 5500, Schedule A, Schedule J, and any other applicable schedules that comprise the Form 5500 Annual Return/Report.
(5) Improving compliance under ERISA and the Code through selected new questions regarding plan operations, service provider relationships, and financial management of the plan.
In an era of limited financial resources, the Agencies must pursue new and creative ways to maximize the efficacy of their enforcement budgets. Improving compliance under ERISA and the Code reduces the need for costly enforcement actions. Focusing filer compliance through selected new questions regarding plan operations, service provider relationships, and financial management of the plan under ERISA and the Code can also have the effect of allowing the Agencies' enforcement staff to work more efficiently, and therefore better protect plan participants and beneficiaries.
Analysis of Benefits and Costs
The DOL believes that the benefits to be derived from this proposal, including the amendments to the reporting regulations and the forms revisions, would justify their costs. The DOL further believes that these revisions to the existing reporting requirements will enhance protection of ERISA rights by improving the effectiveness of enforcement actions and by improving the quality of data used for research and policymaking purposes. The DOL conducted a detailed assessment of the costs and benefits of these changes.
Benefits
As stated previously, the proposal pursues five main objectives. The various changes to the forms, schedules, instructions, and DOL regulatory exemptions and requirements are together intended to integrate these various objectives, and all of the other goals together are proposed with the intention of supporting the move towards fuller transparency and data mineability overall. Fuller transparency could increase participant trust levels, which could encourage pension plan participants to increase their retirement savings and welfare plan participants to use benefits when needed, resulting in strengthened retirement security and improved public health. The benefits of each of the five main objectives are discussed below.
(1) Modernizing financial information.
As stated previously, the financial information, particularly the asset/liability statement, contained in the current Schedule H (Large Plan Financial Information), Schedule I (Small Plan Financial Information), as well as the more recently established Form 5500-SF, is based on data elements that have remained largely unchanged since the Form 5500 Annual Return/Report was established in 1975. Many investments in alternative and hard-to-value assets and held in collective investment funds do not fit squarely into any of the existing reporting categories on Schedule H. As discussed previously, the GAO has expressed concerns that many investments with widely varying risk, return, and disclosure considerations are often reported in the catch-all "other plan asset" category. /41/ GAO also noted that the plan asset categories on the Schedule H are not representative of current plan investments, and provide little insight into the investments themselves, the level of associated risk, or structures of the investments. /42/ The DOL-OIG also recommended that the Agencies revise the Form 5500 Annual Return/Report to improve reporting of hard-to-value assets and alternative investments. /43/
FOOTNOTE 41 GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 12. END FOOTNOTE
FOOTNOTE 42 Id. at 11-12. END FOOTNOTE
FOOTNOTE 43 EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-To-Value Alternative Investments,
As part of their overall evaluation of how best to restructure financial reporting to maximize usable data while limiting burden increases, the Agencies also concluded that research and enforcement efforts could be enhanced by updating the asset reporting categories and by standardizing Schedule H Line 4i attachments. Accordingly, the changes the Agencies are proposing to make to the asset breakouts on the balance sheet and income statement components of Schedule H would make the asset reporting more consistent with the current financial marketplace and enable the Agencies, plan sponsors, and participants and beneficiaries to develop a more accurate and detailed picture of the types of assets held by plans, including hard-to-value assets and alternative investments and investment held through collective investment vehicles. The proposed changes take into account many of the sophisticated and complex investments that do not fit neatly into any of the existing program categories, which would lead to consistent reporting by filers and more transparency by limiting the consolidation of many diverse investments into the catch-all "Other" category on the balance sheet on the Schedule H.
The Agencies also opted to revise the Schedule H Line 4i Schedules of Assets attachment into two, distinct structured data attachments. Doing so will produce more consistent data, reduce confusion over the proper format to provide required data, and enable data mineability. Moreover, as discussed in detail earlier in this document and the Notice of Proposed Forms Revisions published simultaneously, the structural, data element and instruction changes to the Schedule H, Line 4i Schedule of Assets Held for Investment the Agencies are proposing will allow the Form 5500 Annual Return/Report to be better used as a tool to evaluate the year-to-year performance of a plan's individual investments. The creation of more detailed and structured Schedule H, Line 4i Schedules of Assets is a specific recommendation of the DOL-OIG and the GAO. /44/ The proposed changes to the Schedule H Line 4i Schedules of Assets, in addition to better meeting the needs of the Agencies, other government users, and other end users of the data, should also serve to address the shortcomings identified in these reports.
FOOTNOTE 44 See EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-to-Value Alternative Investments, at 17; Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 37. END FOOTNOTE
The proposed changes made to DFE reporting would ensure that the Agencies, plan fiduciaries, plan service providers, and other users of data have the tools to create a more complete picture of plans' investments in pooled investment vehicles. Similarly, the proposed changes to the financial information reported by small plans would improve the utility of the Form 5500 Annual Return/Report as a tool to obtain a meaningful picture of small plan investments in hard-to-value and alternative investments as suggested by GAO and other government oversight and advisory bodies. /45/
FOOTNOTE 45 Id. END FOOTNOTE
Although these changes would result in additional reporting for certain small plans, the Agencies do not expect that small plans with simple investment portfolios would experience a significant increase in their annual reporting burden. Small plans with complex portfolios that include hard-to-value or alternative investments should have more transparent financial statements which may require somewhat more complex financial reporting obligations. In light of changes in the financial environment and increasing concern about investments in hard-to-value assets and alternative investments, the Agencies believe that requiring separate financial information regarding hard-to-value investments is important for regulatory, enforcement, and disclosure purposes. /46/
FOOTNOTE 46 Although such small plans would be required to complete the Schedule H instead of the Schedule I, including the Schedule H Line 4i(1) and 4i(2) Schedules of Assets, eligible small plans, as they can under the current rules, would still be eligible for a waiver of the annual examination and report of an IQPA under 29 CFR 2520.104-46. END FOOTNOTE
A major overriding objective of these proposed forms revisions is to modernize the Form 5500 Annual Return/Report information collection so that the presentation of plan trust financial and balance sheet information is a more transparent and detailed reflection of the investment portfolios and asset management practices of employee benefit plans. The basic objective of general financial reporting is to provide information about the reporting entity for the Agencies' enforcement, research, and policy formulation programs, for other federal agencies,
Additionally, ERISA Section 513(a) authorizes and directs the Secretary of Labor and EBSA to conduct a robust research program on employee benefits. The Form 5500 Annual Return/Report is one of the leading sources of data used in this research program. Modernizing the financial information reported on the Form 5500 Annual Return/Report will improve the quality of the research conducted by internal and external researchers. This improved research will, in turn, improve the quality of policy decisions made by DOL and other governmental policymakers that rely on the Form 5500 Annual Return/Report data.
(2) Updating fee and expense information on plan service providers with a focus on harmonizing annual reporting requirements on Schedule C with DOL's final disclosure requirements at 29 CFR 2550.408b-2.
As previously discussed, the proposal would harmonize the Schedule C rules with the DOL's regulations at 29 CFR 2550.408b-2. The Agencies believe that requiring reporting of all indirect compensation (rather than continuing the exemption from reporting for "eligible indirect compensation"), but limiting indirect compensation reporting to the service providers and types of compensation that are required to be disclosed under the ERISA section 408b-2 regulation will provide a particular benefit to plan record keepers. The information required to be reported would be an after the fact reporting of fees that should have been disclosed in advance under the ERISA section 408b-2 regulation. Because the ERISA section 408b-2 regulation requires covered service providers to provide plan administrators the information they need to satisfy their Form 5500 Annual Return/Report obligations with respect to compensation information, the additional burden should be limited to entering the data on the Form 5500 Annual Return/Report. /47/
FOOTNOTE 47 See 29 CFR 2550.408b-2(c)(iv). END FOOTNOTE
Currently, given that some significant component of indirect compensation is not reported because it is permitted to be treated as "eligible indirect compensation," and the fact that some filers report formulas instead of dollar amounts, the Agencies and public only have limited information regarding the total compensation that service providers receive and that affects plans' finances and potentially involves conflicts of interests among service providers. Almost 90 percent of 2013 Schedule C filers reported at least one service provider receiving some amount of eligible indirect compensation, and nearly 70 percent of 2013 Schedule C filers reported at least one provider receiving only eligible indirect compensation. Filers identifying at least one service provider as receiving some amount of eligible indirect compensation on their Schedules C, according to the overall Form 5500 data, report holding roughly two-thirds of all pension assets. Thus, the limited "eligible indirect compensation" reporting impacts the data relating to service provider fees in connection with the servicing and management of a significant amount of assets. In addition, analysis of these data also indicates that almost 50 percent of Schedule C filers report at least one service provider who provides a formula instead of an explicit or estimated amount of compensation. These filers report holding almost 40 percent of all pension assets. Providing only a formula without an actual or estimated dollar amount of the compensation makes it very hard for plan sponsors or participants to identify the exact amount of compensation.
The proposed rules and the subsequent reported information would make it possible to get a much better understanding on the fees that were transferred between service providers in the form of indirect compensation, therefore allowing plan sponsors and participants to assess the fees that they are incurring. The Agencies anticipate that the increased transparency under the proposal would likely lead to increased competition in the service provider market.
Aligning the Schedule C with ERISA section 408b-2 disclosure should benefit the regulated community by clarifying and streamlining the information reported on the Schedule C, which should reduce filer confusion, and in turn reduce any filer burden caused by the confusion. The updated service provider information will also improve targeting in the Agencies' enforcement efforts, be a resource for independent researchers to identify fee trends, and help policymakers identify opportunities to make regulatory adjustments.
The proposed rule would also require small pension plans that are not eligible to file the Form 5500-SF and welfare plans that provide group health benefits that are not unfunded or insured (e.g., funded using a trust) and have fewer than 100 participants to file Schedule C. Currently, only large plans (for welfare plans, only large plans that are not unfunded or insured) must file a Schedule C, thus a large portion of plans do not disclose service provider compensation, except total administrative expenses, which includes direct compensation to service providers. /48/ The Agencies believe that the ideal solution for enforcement, research, policymaking, and participant monitoring purposes would be for all indirect compensation to be required to be reported, but recognize the burdens small plans face in complying with disclosure obligations. The Agencies therefore propose to require small pension plans to file Schedule C only if they do not meet the eligibility conditions for filing the Form 5500-SF, which generally would be those pension plans that are invested in alternative or hard-to-value assets. The Agencies propose to require welfare plans that offer group health benefits with fewer than 100 participants to file Schedule C only if they are funded using a trust. This makes the reporting requirements consistent with those for other welfare plans that are funded using a trust that are required to file the Form 5500. Self-insured plans are more susceptible to experience financial difficulties than fully insured plans. Requiring these small plans to file a Schedule C would address some of the GAO's concerns that not all critical information on indirect compensation is being reported to the Agencies. /49/
FOOTNOTE 48 "Direct" compensation is included as an administrative expense item on both the Form 5500-SF and on Schedule H, but it is a total and is not linked to payments to specific service provider. Because it is not a "balance sheet" item, indirect compensation is not reported as part of the financial statements. END FOOTNOTE
FOOTNOTE 49 See GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information at 25-26 ("Given these various exceptions to fee reporting requirements, Schedule C may not provide participants, the government, or the public with information about a significant portion of plan expenses and limits the ability to identify fees that may be questionable.") END FOOTNOTE
(3) Enhancing mineability of the data filed on the Form 5500 Annual Return/Report.
As stated previously, a key component of the proposal is to make it easier and more efficient to use the data from the Form 5500 Annual Return/Report for research, policy analysis, and enforcement purposes. The primary way the Agencies propose to enhance the mineability of Form 5500 Annual Return/Report data is by structuring and standardizing the questions on the forms and schedules and structuring certain information currently required to be reported in the form of a nonstandard attachment to the filing. This will improve the integrity of the collected data and allow the Agencies and others to compare, aggregate, and analyze these data.
The Agencies have identified a number of areas where the current method of reporting information impedes data usability and are proposing several changes to facilitate the efficient use of Form 5500 Annual Return/Report data. Data from Schedule H Line 4i (Schedule of Assets), for example, is currently not available in a standardized electronic format and would be very useful for monitoring the performance of plan investments. The proposed rules would require the Schedule H Line 4i, Schedules of Assets, to be filed in a standardized electronic format, which will allow them to be searched and matched to performance data through common software programs. As a result, the Agencies and the public would have much less difficulty accessing key information about the plan's investments. Additional improvements in data mineability and plan monitoring also would be realized from the proposal's requirement that other currently unstructured data or new elements also be collected as structured data under the proposal, including the lists of employers participating in multiple-employer and controlled group plans required to be attached to the Form 5500 Annual Return/Report or Form 5500-SF, the Schedule H, Line 4a Schedule of Delinquent Contributions, and Schedule H Line 4j Schedule of Reportable Transactions.
Data mineability also would be improved by the proposal's requirement that some data would be reported as text fields instead of as attachments. This would increase the accessibility of data. Similar to the proposed specific data elements for the Schedule H Line 4i Schedules, which replace a suggested format for an unstructured attachment, the Agencies believe, based on their own use of the data to support the research, policy, and oversight efforts of the Agencies, and input from other end users, that data mineability will be enhanced by requiring the use of text fields on the face of the schedules instead of having information filed as non-standard attachments.
Another limitation on data mineability and usability of the current Form 5500 Annual Return/Report is that actuarial information is reported in the form of PDF attachments to the Schedules MB and SB, rather than on the face of the actuarial schedules. Therefore, as discussed above, the proposal would expand data elements on actuarial schedules including information previously reported on unstructured attachments. If questions are directly answered on structured forms and schedules, like the Form 5500 Annual Return/Report and the listed schedules (as opposed to non-standard attachments) the data are "machine-readable" in the 5500 data base, and computer programs can be written to read the data sets created by DOL. This would make more readily searchable and usable actuarial information essential to the Agencies' enforcement efforts and in their ability to target plans with likely compliance issues. Furthermore, the availability of the data would enhance the ability of private-sector auditors using the information to validate a plan actuary's calculations. The data would also provide new opportunities for research. There is no source of system-wide data on defined benefit pension plan participants with age, service, and average benefit levels. The availability of such data would allow for more refined projections of future coverage and benefits adequacy for plan participants and beneficiaries. As more of these data are collected over the years, trends in plan coverages and benefits could more easily be analyzed and identified.
The proposed rules make an additional change to reporting requirements that is expected to make filing some of the plan characteristics easier and more reliable. Instead of having to report all applicable plan characteristic codes under one line item, the proposal would ask for this information grouped by topic. Currently, some filers report an incomplete picture of their plan characteristics. For example, some filers have characteristics that should warrant supplying five or more codes, but instead they only supply two or three. It is expected that the new questions will be easier for filers to respond to and that the data reported will be more accurate.
In summary, these improvements in data mineability will make it more efficient to conduct Form 5500 Annual Return/Report data analysis and to use the data to monitor plans, and identify trends.
(4) Requiring reporting by all group health plans covered by Title I of ERISA, including adding a new Schedule J (Group Health Plan Information).
As discussed above, the proposal would eliminate the current exemption from reporting for certain group health plans covered by Title I of ERISA so that all group health plans covered by Title I of ERISA will be required to file a Form 5500 Annual Return/Report. Currently, generally most plans that provide group health benefits with fewer than 100 participants that meet the conditions of existing regulations are exempt from filing the Form 5500 Annual Return/Report, because they are unfunded, fully insured, or a combination of unfunded/fully insured. Requiring such plans to file would fill an information gap, which would allow the DOL to effectively meet its statutory obligation to enforce the ERISA requirements that apply to group health plans. Currently, the DOL must rely on complaints from plan participants as its primary source to uncover ERISA violations in small plans that are exempt from annual reporting. Eliminating this exemption would provide the DOL with the information necessary to be more proactive and systematic in identifying violations and in providing compliance assistance. The DOL would be able to track total health plan counts and coordinate its enforcement efforts relating to plans providing benefits through common issuers. For example, fully-insured plans using the same insurance provider often contain provisions that are similar. By requiring plans providing group health benefits, that are unfunded, fully insured, or combination unfunded/fully insured and have fewer than 100 participants to identify themselves and the insurance carrier through which they are insured, the DOL should be able to better determine which plans might be affected by noncompliant plan provisions. The DOL also could better coordinate its enforcement efforts with affected service providers and other Federal and State agencies.
This information also would enhance the DOL's ability to develop health care regulations, conduct policy analysis and research with respect to participant trends, and comply with the Affordable Care Act requirement to report to
(5) Improving compliance under ERISA and the Code through selected new questions regarding plan operations, service provider relationships, and financial management of the plan.
Improving compliance under ERISA and the Code through selected new questions will bring two main benefits. First, these compliance questions will serve as a form of education for plan administrators and a self-compliance check. The Agencies believe that the new compliance questions under the proposal, as is true of the existing compliance questions, would help plan administrators better understand and monitor required plan behavior and would remind plan administrators to comply with requirements under ERISA and the Code, and thus will improve protections for participants and beneficiaries.
Second, these compliance questions will allow the Agencies, with their limited enforcement budgets, to engage in more sophisticated targeting and compliance assistance. Improvements in data management technology now enable the Agencies to create plan risk profiles to improve the effectiveness of investigations. These compliance questions, including questions on audit and oversight requirements, nondiscrimination, administrative expenses, participant contributions, and automatic enrollment, will improve the risk profiles, which will further enable the Agencies to use their enforcement resources in the most efficient way possible.
Costs
The costs for plans to satisfy their annual reporting obligations would increase under these proposed regulations relative to the current regime. /50/ As shown in Table 2 below, the aggregate annual cost of such reporting under the current regulations and forms is estimated to be
FOOTNOTE 50 The DOL believes that the annual cost burden on filers would be higher still in the absence of the proposed 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. END FOOTNOTE
Table 2--Summary of Annual Costs: Current Requirements vs. Proposed Requirements Total annual costs Total annual (millions) burden hours (thousands) Current reporting$488.1 4,378.5 requirements Change due to Revisions 328.8 2,949.0 Proposed Reporting 817.0 7,327.5 Requirements
Because this proposal makes substantial changes to the requirements currently in effect, filers also will experience some one-time transition costs. The DOL estimates that plans will require twice as long to supply the new data elements during the first year, relative to subsequent years, and will therefore encounter one-time transition costs of
The DOL has analyzed the cost impact of the individual revisions. 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. For example, nearly all pension plans that are required to file the Form 5500 and related schedules, including ESOPs, would be affected by the changes to the Schedule H. ESOPs, however, would be affected not only by the proposed Schedule H changes, but also by the proposed restoration of Schedule E. The DOL quantified the individual revisions as described below and shown in Table 3.
(1) Revised financial reporting on the Schedule H and elimination of the Schedule I.
Revising the Schedule H, including the revisions to the Schedule H Line 4i Schedules of Assets, and eliminating the Schedule I will increase net costs. The DOL estimates that the net effect of these changes will be to increase the total burden by 535,400 hours. These changes, in conjunction with revisions to the reporting requirements for DFEs, discussed below, will decrease the number of filers reporting on Schedule H and/or Schedule I from 115,100 to 114,600. Applying an hourly labor rate of
FOOTNOTE 51 The appropriateness of the labor rates used in the calculations and assumptions are discussed in the Technical Appendix, which can be accessed at the DOL's Web site at www.dol.gov/ebsa. END FOOTNOTE
(2) Required reporting by all group health plans covered by Title I of ERISA, including addition of a new Schedule J (Group Health Plan Information).
Currently, about 54,000 welfare plans that provide group health benefits file the Form 5500 Annual Return/Report and applicable schedules. Of these 54,000 filers, approximately 48,000 are welfare plans that provide group health benefits with 100 or more participants and the rest are welfare plans that provide group health benefits with fewer than 100 participants. We estimate that this proposed change will increase the number of welfare plan with group health benefit filers to approximately 2.2 million. Of these 2.2 million welfare plans with group health benefits, 1.9 million welfare plans with group health benefits are expected to be fully insured plans with fewer than 100 participants, while 289,000 welfare plans with group health benefits are expected to be unfunded, combination unfunded/fully insured, or funded with a trust with fewer than 100 participants, and approximately 48,000 welfare plans with group health benefits are expected to have 100 or more participants.
The 1.9 million plans that provide group health benefits, have fewer than 100 participants, and are fully insured would be required to complete lines 1-5 on Form 5500 and lines 1-8 on Schedule J. The 289,000 plans that provide group health benefits, have fewer than 100 participants, and are unfunded, combination unfunded/fully insured, or funded with a trust would be required to file a Form 5500, Schedule J, and Schedule A, if applicable, and if they were already required to file a Form 5500 Annual Return/Report (i.e., funded with a trust), they would be required to attach any other applicable schedules. The 48,000 plans that provide group health benefits and have 100 or more participants that already are required to file a Form 5500 Annual Return/Report would be required to attach a Schedule J in addition to any other forms and schedules that they are currently required to submit.
The DOL estimates that requiring plans that provide group health benefits, have fewer than 100 participants, and are fully insured to complete only lines 1-5 of the Form 5500 and lines 1-8 of the Schedule J will increase total burden by 623,000 hours and increase the aggregate annual reporting cost by
Based on the foregoing, the DOL estimates that, in total, group health plan annual reporting burden will increase by approximately 2.2 million hours and the aggregate annual reporting cost will increase by
(3) Restored Schedule E.
Approximately 6,700 employee stock ownership plans (ESOPs) will be subject to increased reporting on the restored Schedule E. As discussed above, the Schedule E is intended to provide increased reporting related to areas of concern specific to ESOPs. The DOL estimates that the restored Schedule E will add approximately 22,000 hours of burden and an additional
(4) Revised Schedule C.
As discussed above, Schedule C revisions are intended to harmonize the Schedule C reporting of indirect compensation with the disclosures required under the DOL's final rules on service provider compensation at 29 CFR 2550.408b-2, expand the Schedule C reporting requirement to all pension plans required to file the Form 5500 regardless of size, expand the Schedule C reporting requirement to welfare plans that offer group health benefits with fewer than 100 participants if they are funded with a trust, clarify the indirect compensation reporting requirements, and improve the information plan officials receive regarding amounts received by plan service providers. The expanded reporting requirements are expected to increase the number of Schedule C filers from approximately 82,400 to approximately 100,200. Reporting burden for Schedule C filers is expected to increase by 116,600 hours, i.e. roughly an hour per filer, which will produce an additional
FOOTNOTE 52 As discussed previously, the DOL is eliminating the limited reporting option for "eligible indirect compensation." The DOL believes that many of the costs associated with gathering and organizing data necessary for expanded service provider reporting, to the extent that the information was not already required to be provided to and kept by the plan administrator for "eligible indirect compensation" that did not have to be reported, have already been accounted for as part of the RIA for the ERISA section 408b-2 rule. Therefore, these costs reflect only the incremental increase of reporting service provider compensation to the Agencies. Under the proposal, indirect compensation reporting would be limited to the types of service providers and compensation under ERISA section 408b-2, in contrast to all service providers currently having to report on the Schedule C receipt of indirect compensation. END FOOTNOTE
FOOTNOTE 53 For new filers, this includes the costs of all other changes to the Schedule C. END FOOTNOTE
FOOTNOTE 54 Costs may not add up to the total due to rounding. END FOOTNOTE
As indicated in the regulatory impact analysis in the final publication of the regulation at 29 CFR 2550.408b-2, the DOL believes that more transparency of service provider compensation serves to discourage harmful conflicts, reduce information gaps, improve fiduciary decision-making about plan services, enhance value for plan participants, and increase the DOL's ability to redress abuses committed by service providers. 77 FR 5632, 5650 (
(5) Changes to reporting requirements and methods for direct filing entities (DFEs), added compliance questions, and all other changes.
As discussed earlier in the preamble, the rule proposes to make several changes to the DFE filing requirements. For example, the Agencies propose eliminating the concept of Master Trust Investment Accounts (MTIA) reporting and require reporting by a master trust instead. The proposal also would change the filing requirements for a CCT or PSA in which the plan invests by requiring the plan to report the interests in the CCT or PSA on the Schedule H balance sheet (Part I, Line 1b) regardless of whether the PSA or CCT in which the plan invests files a Form 5500 Annual Return/Report as a DFE, changing how assets held through DFEs are reported on the proposed Schedule H Line 4i(1) Schedule of Assets Held for Investment, and eliminate the requirement for plans to file the Schedule D, since the DFE information that had been on Schedule D would now be on plans' Schedule H Line 4i(1) Schedule of Assets Held for Investment. The net effect of these changes to DFE reporting is to reduce the number of Schedule D filers from 61,100 to 8,900, with smaller reductions in the filing of other schedules discussed elsewhere. Reporting burden associated with DFEs is expected to fall by 94,200 hours, which will produce a
Additionally, the DOL proposes a series of compliance questions primarily on the Form 5500, Form 5500-SF, and Schedule R. Other miscellaneous changes throughout the forms and schedules include requiring new information on employer matching contributions, employee participation rates and plan design for defined contribution plans, and changes to the reporting on Schedule G.
Some of these compliance questions and other miscellaneous changes add burden, while others reduce burden. Together, the DOL estimates that the net effect of these various changes would add approximately 219,300 hours of aggregate reporting burden, which will produce an additional
Table 3 contains a summary of the changes in costs, expressed both in dollars and in hours, allocated to the changes outlined above and the number of affected filings.
Table 3--Summary of Changes to the Reporting Requirements Revisions Change in Change in Number of Number of [delta] costs burden filers filers Cost per (millions) hours under under affected (thousands) current proposed filer require- require- by proposed ments ments require- (thousands) (thousands) ments n55 Elimination of$57.6 535.4 115.1 114.6$502 Schedule I & Change in Schedule H Schedule C 12.9 116.6 82.4 100.2 128 DFE Reporting -10.1 -94.2 61.1 8.9 -1,137 Changes (Including changes to Schedule D) Schedule E 2.5 22.0 0.0 6.7 374 Completion of 69.6 623.0 0.0 1,869 37 lines 1-5 on Form 5500 and lines 1- 8 on Schedule J by fully insured GHPs with fewer than 100 participants Completion of 39.0 349.1 54.1 336.9 116 Form 5500 by GHPs with fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust and GHPs with 100 or more participants Completion of 133.0 1,179.2 0.0 336.9 395 Schedule J by GHPs with fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust and GHPs with 100 or more participants All Other 24.4 217.9 1,076.7 1,024.2 24 Revisions n56 Total (Unique 328.8 2,949.0 816.3 2,967.5 111 Filers)
The proposal does not otherwise alter reporting costs. With the exception of most welfare plans that provide group health benefits, plans currently exempt from annual reporting requirements (such as certain simplified employee pensions (SEPs) and small unfunded, fully insured, or combination unfunded/fully insured welfare plans that do not provide group health benefits) would remain exempt. Also, plans eligible for limited reporting options (such as certain IRA-based pension plans) would continue to be eligible. The revised Form 5500 Annual Return/Report would retain the structure that is familiar to individual and corporate taxpayers--the form would continue to contain basic identifying information, participant counts, and plan characteristics, along with a checklist of the schedules being filed.
FOOTNOTE 55 The proposed change eliminating the concept of MTIA reporting and requiring reporting by a master trust instead, whose burden change is taken into account in the DFE Reporting Changes row, produces a reduction in the number of schedules included in filings. The change in the number of schedules filed is taken into accounted in the row specific to the schedule affected. END FOOTNOTE
FOOTNOTE 56 The number of filers in this row exceeds the total number of filers because an individual filer counts more than once when it is affected by more than one revision included in the "All Other Revisions" category. END FOOTNOTE
Assumptions, Methodology, and Uncertainty
The cost and burden associated with the annual reporting requirement for any given plan will 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
Assumptions Underlying this Analysis: The DOL's analysis assumes that all benefits and costs will 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, assuming that the world absent the proposed regulations will resemble the present. /57/
FOOTNOTE 57 Further detail can be found in the Technical Appendix, which can be accessed at www.dol.gov/ebsa. END FOOTNOTE
Methodology:
FOOTNOTE 58 The MPR report can be accessed at the DOL's Web site at www.dol.gov/ebsa. END FOOTNOTE
For this forms 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.
To obtain filer counts for pension plans, non-health welfare plans, and DFEs, the DOL used historical counts of Form 5500 Annual Return/Report filers tabulated by type and reported characteristics. For counts of group health plan filers, the DOL used data from the
The MEPS-IC is an annual survey of establishments collected by the
In 2003, DOL began using the MEPS-IC as a basis for estimating the number of health plans. The number of plans was based on the share of the total number of establishments that offer health insurance by size. DOL then attempted to correct for establishments that offer multiple health plans by making a reasonable assumption that the share of establishments that reported that they "offer 2 or more plans" offered two distinct plans. Finally, DOL attempted to control for multiple establishments covered by the same plan sponsor by using the Census of Business ratio of establishment-to-firms and dividing the total number of establishment plans by this ratio to produce an estimate of the number of health "plans" which has been consistently around 2.5 million over the years.
The DOL modeled its approach to calculating burden on the approach used during the 2009 forms revision. 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. /59/
FOOTNOTE 59 Further details about the approach are explained in the Technical Appendix, which can be accessed at the DOL's Web site at www.dol.gov/ebsa. END FOOTNOTE
To estimate aggregate burdens, types of plans with similar reporting requirements were grouped together in various groups and subgroups. As shown in Table 4 below, 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. Table 4 also shows the number of plans within each subgroup affected by the revisions. The universe of filers was divided into four basic types: Defined benefit pension plans, defined contribution pension plans, welfare plans, and DFEs. For the plans, each of these major plan types was further subdivided into multiemployer and single-employer plans. /60/ 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, while 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, and GIAs. 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).
FOOTNOTE 60 For purposes of this analysis, multiple employer plans were treated as single employer plans. END FOOTNOTE
We also separately estimated the costs for each of the forms and for each schedule that is part of the Form 5500 Annual Return/Report. 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 in light of 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, under the proposal, a small, fully insured group health plan would be required to file only basic questions on the Form 5500 and the proposed Schedule J. By contrast, 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 the 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 meaningfully to estimate the relative burdens placed on different categories of filers.
Burden estimates were adjusted for the proposed 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 5500 Forms 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 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. /61/ The DOL estimated the burden impact of changes in the numbers of filings and of changes made to the form and the various schedules. The burden estimates use data from the Form 5500 Annual Return/Report for plan year 2013, which is the most recent year for which complete data is available. The Overall Total line in Table 4 shows that the aggregate cost under the current and proposed requirements, respectively, add up to
FOOTNOTE 61 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 particular situation. In an effort to be conservative in estimating burden, counts of these filings are adjusted to reflect what they would have filed if they had chosen to file the Form 5500-SF. END FOOTNOTE
Table 4--Number of Affected Filers and Costs Under Prior and New Requirements Type of filer Number of Number of Aggregate Aggregate filers under filers under annual cost annual cost current proposed under current under requirements requirements requirements proposed (thousands) (thousands) (millions) requirements (millions) Overall Total 816.3 2,967.5$488.1 $817.0 Large Plans 148.5 148.5 252.4 309.3 DB/ME/100-1,000 0.5 0.5 1.6 1.9 LARGE (Non-ESOP) DB/ME/1,000+ 0.8 0.8 2.8 3.1 LARGE (Non-ESOP) DB/SE/100-1,000 4.8 4.8 13.0 15.2 LARGE (Non-ESOP) DB/SE/1,000+ 2.8 2.8 8.5 9.6 LARGE (Non-ESOP) DC/ME/LARGE 1.1 1.1 2.1 2.5 (100+ Participants) (Non-ESOP) DC/SE/LARGE 2.9 2.9 4.0 6.4 (100+ Partic.) (ESOP) DC/SE/LARGE 62.2 62.2 109.2 135.9 (100+ Partic.) (Non-ESOP) Welfare/LARGE 47.9 47.9 91.7 114.2 (Health) Welfare/ME/LARGE 0.8 0.8 1.1 1.4 (Non-Health) Welfare/SE/LARGE 24.8 24.8 18.5 19.1 (Non-Health) Small Plans 622.4 622.4 205.8 227.3 Eligible for 5500-SF DB/Eligible for 41.1 41.1 37.6 39.0 5500-SF/SMALL (Non-ESOP) DC/Eligible for 580.7 580.7 168.0 188.0 5500-SF/SMALL (Non-ESOP) Welfare/Eligible 0.7 0.7 0.2 0.2 for 5500-SF/SMALL (Non-Health) Small Plans Not 35.9 2,187.7 18.4 266.1 Eligible for 5500-SF DB/ME/Not 0.05 0.05 0.06 0.1 Eligible for 5500-SF/SMALL (Non-ESOP) DB/SE/Not 0.9 0.9 1.0 1.8 Eligible for 5500-SF/SMALL (Non-ESOP) DC/ME/Not 0.001 0.001 0.0004 0.002 Eligible for 5500-SF/SMALL (ESOP) DC/ME/Not 0.1 0.1 0.1 0.2 Eligible for 5500-SF/SMALL (Non-ESOP) DC/SE/Not 3.8 3.8 1.8 5.8 Eligible for 5500-SF/SMALL (ESOP) DC/SE/Not 21.5 21.5 10.0 27.9 Eligible for 5500-SF/SMALL (Non-ESOP) Welfare/Not 0.0 1,869.0 0.0 69.6 Eligible for 5500-SF/SMALL (Fully Insured Health) Welfare/Not 6.2 289.0 4.1 158.2 Eligible for 5500-SF/SMALL (Unfunded, Combination Unfunded/Fully Insured, or Funded with a Trust Health) Welfare/ME/Not 0.1 0.1 0.1 0.2 Eligible for 5500-SF/SMALL (Non-Health) Welfare/SE/Not 3.2 3.2 1.5 2.4 Eligible for 5500-SF/SMALL (Non-Health) DFEs 9.4 8.9 11.4 14.2 Master Trust 1.6 1.0 2.7 2.2 Investment Accounts and Master Trusts Common 4.0 4.0 4.3 6.0 Collective Trusts Pooled Separate 3.2 3.2 3.3 4.7 Accounts 103-12 0.5 0.5 0.7 0.9 Investment Entities Group Insurance 0.1 0.1 0.4 0.4 Arrangements Note: Some displayed numbers do not sum up to the totals due to rounding. DB--defined benefit plans. DC--defined contribution plans. SE--single-employer plans. ME--multiemployer plans. Large plans--100 participants or more. Small plans--generally fewer than 100 participants.
Uncertainty Within Estimates: Because the DOL has access to the historical Form 5500 Annual Return/Report filing information, the DOL has good data for the number of pension plans, large welfare plans, including group health plan filers that file the various schedules, and DFEs, and the types of plans those filers represent. However, there is some uncertainty regarding the number of welfare plans that provide group health benefits and have fewer than 100 participants filing. There is also some uncertainty in the unit cost estimates.
There are two main issues with the methodology for counting welfare plans that provide group health benefits. First, MEPS does not differentiate between establishments offering single or multiemployer plans, which implies EBSA over-counts health plans (i.e., a firm offering health insurance is counted as providing benefits to their employees when in fact one multiemployer plan may cover several firms). Second, MEPS-IC respondents that "offer 2 or more plans" are generally referencing plan types (i.e. HMO vs PPO) or types of employees (part-time plan vs executive plan) which would likely be included on a single Form 5500 Annual Return/Report with a single plan number on the form, which again would over-count the EBSA estimate.
With regard to the unit cost estimates, the DOL has no direct measure for the unit costs and uses a proxy adapted from the MPR model, which was developed in the late 1990s. In addition, some uncertainty is inherent in any proposed revision to the existing form, and the level of uncertainty increases where the proposal adds a new requirement, such as the proposed new group health plan filing requirements, rather than revising, deleting, or moving existing items from one schedule to another.
Regulatory Alternatives
Executive Order 12866 directs federal agencies promulgating regulations to evaluate regulatory alternatives. The DOL and the other Agencies have done so in the process of developing this proposal. The following summarizes major alternatives considered, but not proposed.
(1) Alternative approaches for modernizing financial information besides revising the Schedule H and eliminating the Schedule I.
Most of the changes that are being proposed to modernize the financial information that is reported on the form respond to recommendations from GAO, DOL-OIG, TIGTA,
(2) Alternative approaches for group health plan reporting.
In addition to the proposed annual reporting regime described in detail earlier in this preamble, the DOL considered a variety of other reporting options for group health plans. Among the options considered were (a) using existing
In an effort to minimize burden and reporting duplication, the DOL reviewed existing
The DOL considered requiring welfare plans that offer group health benefits with fewer than 100 participants that are fully insured to file the complete Form 5500 and Schedule J, as would now be required of welfare plans that offer group health benefits with fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust. The DOL also considered requiring welfare plans that offer group health benefits with fewer than 100 participants that are fully insured to attach a Schedule A (in addition to the Form 5500 and Schedule J). The DOL decided against both of these options after weighing the benefits of getting additional data and the likely burdens. DOL also took into account that that the data of most benefit is the proposed new reporting to provide identity, number, and basic funding and benefit structures and types for these plans, which is currently unavailable due to the Form 5500 filing exemption from filing for these plans. More information than that would provide the DOL with somewhat more robust data, but it would not merit the burden of requiring the estimated nearly 2 million small, fully insured plans to report such information, particularly since much of the information is directed towards pension plans and welfare plans that are funded with a trust. For comparison, the DOL estimates that a plan that provides group health benefits with fewer than 100 participants filing a complete Form 5500 Annual Return/Report and a complete Schedule J will incur 5 hours and 14 minutes of burden, while one with fewer than 100 participants answering only limited questions on the Form 5500 and Schedule J will incur only 30 minutes of burden. If the DOL were to require these plans to file a complete Form 5500 and a complete Schedule J, then each of the estimated 2 million welfare plans that offer group health benefits with fewer than 100 participants that are fully insured would incur an additional 4 hours and 44 minutes of burden, at an additional aggregate annual reporting cost of
The DOL decided, however, that plans that provide group health benefits and have fewer than 100 participants that are not fully insured, i.e., some or all of the funding comes from the general assets of the employer or funded through a trust, would have to complete the full Form 5500 Annual Return/Report and the full Schedule J, as well as the Schedule A, if applicable. The filings for plans that provide group health benefits and have fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust would generally be similar to those for plans that provide group health benefits and have 100 or more participants that are funded in the same way. Group health plans that are unfunded, combination unfunded/fully insured, or funded with a trust, by definition, are fully or partially self-insured, and the DOL believes that the additional Schedule J information, in particular, is important for the DOL's role with regard to oversight and to development of the self-insured report.
Relatedly, the DOL also considered not requiring plans that provide group health benefits and have fewer than 100 participants that are funded with a trust to file the more detailed financial and service provider information required of large plans that are funded with a trust, in particular the Schedule C and Schedule
With respect to requiring filing of the Schedule C by plans that provide group health benefits and have fewer than 100 participants that are currently not subject to any filing requirement (i.e., unfunded, fully insured, or combination unfunded/fully insured), the Agencies took into account that the existing 408b-2 regulation only applies to pension plans. Large welfare plans that are funded with a trust are already required to file a Schedule C with service provider compensation information, and the difference in information reporting should not be significant. Moreover, small plans that are funded with a trust would already be required to keep as part of their records information on direct compensation, because direct expenses are reported as administrative expenses of the plan. With respect to indirect compensation, given that the class of service providers for whom indirect compensation must be reported is limited to those identified in 408b-2, a small plan should not have many service providers that would be required to be reported, and so the burden should be minimal. Just as the Agencies believe that it is important to have improved information on small pension plans that invest in alternative and hard-to-value assets, so too, they believe that is important to have the information for small welfare plans that are funded with a trust that invest in such assets. To the extent that small plans funded with a trust are the plans most likely to experience financial difficulties, having this information should help the Agencies and participants and beneficiaries better monitor the financial stability. Additionally, the Form 5500 Annual Return/Report together with the proposed Schedule J would give basic contribution, claims, benefit structure, and group health compliance information. For these reasons, the DOL concluded that the burden of requiring plans that provide group health benefits and have fewer than 100 participants, other than those funded with a trust, to also file the Schedule C and Schedule H would outweigh the benefits of requiring that these schedules be filed; therefore, those plans are not required to do so.
Finally, the DOL considered requiring small, fully insured plans to file a Form 5500 Annual Return/Report and Schedule J every second or third year and requiring those same plans to file a registration form in alternate years. This option was ruled out due to public comments made during the 1999 Form 5500 Annual Return/Report revisions. Prior to the 1999 revisions, some filers were eligible to file the Form 5500-C/R, which included robust reporting during one year and more limited reporting during the second and third years of a three year cycle. Commenters responding to the proposed 1999 revisions were supportive of the DOL's plan to eliminate Form 5500-C/R, and accordingly eliminate the multi-year cycle of reporting, because they felt that it was difficult to keep track of the schedule. /62/ In an effort to take those comments into account, the DOL decided not to propose a reporting scheme for small, fully insured group health plans that required filing a registration statement in certain years and more expansive information in other years because DOL thought it would likely be confusing, lead to filer error, and inconsistent reporting. The proposal to have the currently exempt plans that provide group health benefits with fewer than 100 participants complete some or all of the Form 5500 Annual Return/Report and Schedule J was designed to get the minimal amount of information needed for research, policy, and oversight purposes, with the simplest and least amount of reporting.
FOOTNOTE 62 See 65 FR 5026. END FOOTNOTE
(3) Alternative approaches for ESOP-specific reporting.
In addition to the proposed restoration of the Schedule E, the Agencies also considered whether to add only certain additional ESOP questions to existing schedules, such as the Schedule R, which currently has ESOP questions that were moved to the Schedule R from the Schedule E when the Schedule E was eliminated for 2009 and later filings. As discussed above, before 2009, the Schedule E (ESOP Annual Information) was an
The DOL believes that many of the ESOP questions that were eliminated in 2009 because they were "
(4) Alternative approaches for service provider reporting.
Most of the changes that are being proposed to revise the service provider information that is reported on the form respond to recommendations from GAO, DOL-OIG, TIGTA, and other advisory groups. As discussed previously, the Agencies evaluated whether to require welfare plans that offer group health benefits with fewer than 100 participants to complete the Schedule C. The Agencies also evaluated whether or not to require small pension plans that are required to file the Form 5500 Annual Return/Report to complete the Schedule C, but decided that due to the importance of the information for participants and beneficiaries, plan officials responsible for understanding compensation arrangements, and the Agencies, the benefit outweighed the burden. Because the majority of pension plan filers are small plans that are eligible to file the Form 5500-SF, the Agencies considered whether to add questions to the Form 5500-SF requiring filers to provide indirect compensation information. The Agencies determined that to minimize burden, rather than adding new questions that were a subset or total of those on the Schedule C, they would simply require defined contribution pension plan Form 5500-SF filers to file the comparison chart under the DOL's regulation at 29 CFR 404a-5. This would provide some information (though not in the form of structured data) regarding service provider compensation with only minimal burden.
(5) Alternative approaches for DFE reporting.
Most of the changes that are being proposed to revise DFE reporting respond to recommendations from GAO, DOL-OIG, TIGTA, and others. The Agencies considered a variety of alternative ways to improve DFE reporting. Included in those alternatives was expanding Schedule D reporting to require plans to provide the date of the most recent Form 5500 Annual Return/Report filing of the DFEs in which a plan or investing DFE was invested. The Agencies also considered having both plans and CCTs, PSAs, and 103-12 IEs identify on the Schedule H, Line 4i Schedules of Assets the underlying assets of those DFEs. To minimize burden and duplicative reporting, the Agencies instead chose to eliminate the requirement for plans to complete the Schedule D, and have plans and filing DFE's identify on the plan or filing DFEs Line 4i Schedule of Assets underlying assets by category where the DFE has filed a Form 5500 Annual Return/Report. The assets would be broken out by the plan only if a CCT or PSA did not file a Form 5500 Annual Return/Report. The Agencies also considered whether to require plans that file the Form 5500-SF that participate in DFEs to provide more detailed information on those DFEs to help provide a more complete crosswalk between DFE and plan filings. The Agencies determined that the burden would outweigh the benefit in that regard. In addition, the Agencies considered, but decided against, requiring CCTs and PSAs that file the Form 5500 Annual Return/Report and 103-12 IEs to complete both Schedule H, Line 4i Schedules of Assets. The Agencies determined that having such entities complete just the Line 4i(1) Schedule of Assets Held for Investment, and not the Line 4i(2) Schedule of Assets Disposed During Plan Year, would adequately address concerns with quality and usefulness of data, while minimizing burden.
Regulatory Flexibility Act--Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C.
For purposes of this IRFA, the DOL continues to consider a small entity to be an employee benefit plan with fewer than 100 participants, as it has in many previous IRFAs measuring the impact of proposed regulatory actions on small employee benefit plans. 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
The following subsections address specific components of an IRFA, as required by the RFA.
Need for the rule and its objectives: The DOL is publishing this proposal to amend the regulations relating to the annual reporting and disclosure requirements of section 103 of ERISA simultaneously with the publication of the Notice of Proposed Forms Revisions. The DOL continually 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 of reporting requirements in order to satisfy these objectives changes over time. As discussed in the Need for Regulatory Action section above, the Form 5500 and the financial statements contained in the current Schedule H (Large Plan Financial Information) and Schedule I (Small Plan Financial Information) are based on data elements that have remained largely unchanged since the Form 5500 Annual Return/Report was established in 1975. Meanwhile, benefit plan designs and practices have evolved over time in response to market trends in labor, financial, health care, and insurance markets, and markets for various services used by plans. 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 proposed forms revisions, and associated DOL regulatory amendments in the proposal, are intended to calibrate reporting requirements to take into account certain recent changes in markets, the law (including the Affordable Care Act), and technology, many of which are referred to above in this document.
Description and estimate of number of small entities to which rule will apply: This proposal increases the number of small plans required to comply with annual reporting requirements by requiring approximately 1.9 million welfare plans that provide group health benefits with fewer than 100 participants that previously were exempt from annual reporting to file a Form 5500 Annual Return/Report, completing lines 1-5 on Form 5500 and lines 1-8 on Schedule J. This proposal also requires approximately 289,000 plans that provide group health benefits and have fewer than 100 participants that are unfunded, combination unfunded/fully insured, or funded with a trust to file a Form 5500 Annual Return/Report, where previously roughly 6,000 were required to do so. In total, approximately 2.81 million small pension plans and plans that provide group health benefits covering fewer than 100 participants would be required to comply with annual reporting requirements, where previously approximately 658,000 were required to do so. As described previously, estimates of the number of small pension plans and small welfare plans that do not offer group health benefits are based on 2013 Form 5500 filing data. Estimates of the number of plans that provide group health benefits and have fewer than 100 participants are based on MEPS-IC and Census of Business data.
Description of projected reporting, recordkeeping, and other compliance requirements of the rule: The reporting requirements applicable to small plans are detailed above and in the associated Notice of Proposed Forms Revision. Almost 89 percent of the 2.81 million small plans subject to the proposed annual reporting requirements can satisfy the requirements through streamlined options.
The 1.9 million welfare plans that provide group health benefits with fewer than 100 participants can fulfill the proposed reporting requirements answering lines 1-5 of the Form 5500 and line 1-8 of the Schedule J. For these plans, annual reporting will require the use of a mix of clerical and professional administrative skills.
Over 581,000 small defined contribution pension plans and small welfare plans that do not provide group health benefits can fulfill the proposed reporting requirements with the Form 5500-SF with no schedules required to be attached. All of these plans are eligible for the waiver of audit requirements. For such plans, therefore, satisfaction of the applicable proposed annual reporting requirements is not expected to require the services of an IQPA or auditor, but, like the small, fully insured group health plans, will require the use of a mix of clerical and professional administrative skills. Another 41,000 small defined benefit pension plans and money purchase plans will continue to be eligible to use the streamlined 5500-SF; satisfaction of the proposed reporting requirements will require additional services of an actuary and submission of the Schedule SB or Schedule MB, as applicable, and no other schedules.
The remaining 319,000 small pension and welfare plans will not be eligible to use the Form 5500-SF or any other streamlined reporting option. These plans will be required to file the Form 5500 Annual Return/Report, along with any other schedules required for pension plans or welfare plans that are not fully insured group health plans. /63/ Of these plans, approximately 289,000 are welfare plans that provide group health benefits and are unfunded, combination unfunded/fully insured, or funded with a trust, 25,000 are defined contribution pension plans, and over 3,000 are welfare plans that do not provide group health benefits. All will require a mix of clerical and professional administrative skills to satisfy the proposed reporting requirements. Fewer than 1,000 small pension plans that are not eligible to use the Form 5500-SF are defined benefit pension plans that will be required to use an actuary and file Schedule MB or Schedule SB in addition to needing a mix of clerical and professional administrative skills to satisfy the proposed reporting requirements.
FOOTNOTE 63 The exact schedules that these plans are required to attach vary based on the plans' specific facts and circumstances. END FOOTNOTE
Satisfaction of the proposed annual reporting requirements under these regulations is not expected to require any additional recordkeeping that would not otherwise be part of normal business practices.
Table 5 below compares the DOL's estimates of small plans' reporting costs under the requirements in effect prior to this action with those under the new requirements for various classes of affected plans. As shown, costs under the new requirements will be slightly higher for small pension plans and small welfare plans that are eligible to file the Form 5500-SF and significantly higher for small pension and welfare plans that are not eligible to file the Form 5500-SF (including group health plans). As discussed above, the significant increase for group health plans reflects the elimination of prior reporting exemptions for most plans that provide group health benefits and have fewer than 100 participants. The significant increase for small pension plans and small welfare plans that do not offer group health benefits that are not eligible to file the Form 5500-SF results primarily from the changes to financial and service provider reporting. The DOL notes that for the over 90 percent of plans that are eligible for annual reporting under streamlined options, the per-filer cost under the proposed requirements increases by
FOOTNOTE 64 In the case of the 2.0 million small, fully insured group health plans, the increase in per filer cost is from no cost to
Table 5--Small Plan Reporting Costs Under Prior and New Requirements Class of small Number of Number of Aggregate Aggregate Annual Annual plan filers filers annual annual per filer per filer under under cost cost cost cost current proposed under under under under require- require- current proposed current proposed ments ments require- require- require- require- (thous- (thous- ments ments ments ments ands) ands) (mil- (mil- lions) lions) Defined Benefit 41.1 41.1$37.6 $39.0 $916 $951 Pension--Eligible for 5500-SF Defined Benefit 1.0 1.0 1.1 1.9 1,150 1,970 Pension--Not Eligible for 5500-SF Defined 580.7 580.7 168.0 188.0 289 324 Contribution Pension--Eligible for 5500-SF Defined 25.4 25.4 11.8 33.9 484 1,335 Contribution Pension--Not Eligible for 5500-SF Welfare--Non- 0.7 0.7 0.2 0.2 289 324 Health--Eligible for 5500-SF Welfare--Non- 3.3 3.3 1.5 2.5 455 758 Health--Not Eligible for 5500-SF Welfare--Fully 0.0 1,869.0 0.0 69.6 0 37 Insured Health Welfare-- 6.2 289.0 4.1 158.2 654 547 Unfunded, Combination Unfunded/Insured, or Funded with a Trust Health Total for All 658.3 2,810.1 224.3 493.4 341 176 Small Plans
In comparison to the costs per filer described in Table 5, the 75,000 large pension plans will incur an average cost of
FOOTNOTE 65 Average costs for large plans do not include the costs of obtaining the report of an IQPA or an actuarial report, if such a report is required for the plan's specific situation. END FOOTNOTE
Table 6 below compares the DOL's estimates of small plans' reporting costs under the requirements in effect prior to this action with those under the new requirements as a percentage of plan assets for pension plans and welfare plans that do not offer group health benefits and as a percentage of annual health insurance premiums for welfare plans that offer group health benefits to show the impact of the reporting requirement on small plans of differing sizes. /66/ As shown, group health plans with five or fewer participants that are unfunded, combination unfunded/fully insured, or funded with a trust incur the highest costs as a result of the proposed reporting requirements, incurring an annual reporting cost of 0.998 percent of their annual health insurance premiums. Non-health welfare plans that are eligible to file Form 5500-SF and have between 6 and 10 participants incur the second highest costs under the proposed reporting requirements. These plans' annual reporting cost is 0.561 percent of their plan assets.
FOOTNOTE 66 Plan asset data reflects data reported on 2013 Form 5500 filings. Because so few plans that provide group health benefits and have fewer than 100 participants are currently subject to annual reporting requirements and many group health plans do not hold assets in trusts, the DOL concluded that annual health insurance premium data reported by the
Table 6--Small Plan Reporting Costs Under Prior and New Requirements as a Percentage of Plan Assets or Aggregate Annual Health Insurance Premiums Class of small plan Annual per filer Annual per filer Number of plans (participants) cost under cost under subject to current proposed proposed filing requirements as requirements as requirements a percentage of a percentage of plan assets or plan assets or aggregate annual aggregate annual health health insurance insurance premiums premiums Defined Benefit Pension-- Eligible for 5500-SF: 5 or Fewer 0.088 0.091 178,694 6-10 0.084 0.087 105,458 11-25 0.067 0.070 139,971 26-50 0.040 0.041 86,936 51-75 0.022 0.023 38,822 76-90 0.018 0.018 14,491 90-99 0.016 0.016 6,341 Defined Benefit Pension-- Not Eligible for 5500-SF: 5 or Fewer 0.002 0.003 566 6-10 0.050 0.086 82 11-25 0.041 0.069 60 26-50 0.016 0.027 40 51-75 0.017 0.028 46 76-90 0.016 0.027 66 90-99 0.020 0.034 90 Defined Contribution Pension--Eligible for 5500-SF: 5 or Fewer 0.045 0.050 178,694 6-10 0.036 0.040 105,458 11-25 0.024 0.027 139,971 26-50 0.014 0.016 86,936 51-75 0.010 0.011 38,822 76-90 0.008 0.009 14,491 90-99 0.007 0.008 6,341 Defined Contribution Pension--Not Eligible for 5500-SF: 5 or Fewer 0.011 0.033 15,650 6-10 0.040 0.115 1,856 11-25 0.021 0.062 1,989 26-50 0.012 0.033 1,888 51-75 0.009 0.026 1,362 76-90 0.009 0.026 990 90-99 0.008 0.024 1,086 Welfare--Non-Health-- Eligible for 5500-SF: 5 or Fewer 0.135 0.151 263 6-10 0.501 0.561 61 11-25 0.269 0.301 124 26-50 0.124 0.139 91 51-75 0.036 0.041 58 76-90 0.057 0.064 32 90-99 0.134 0.150 23 Welfare--Non-Health--Not Eligible for 5500-SF: 5 or Fewer 0.019 0.032 1,917 6-10 0.197 0.328 51 11-25 0.172 0.287 117 26-50 0.038 0.064 218 51-75 0.073 0.123 310 76-90 0.028 0.047 323 90-99 0.150 0.250 404 Welfare--Fully Insured 1,869,000 Health 5 or Fewer 0.000 0.068 6-10 0.000 0.034 11-25 0.000 0.014 26-50 0.000 0.007 51-75 0.000 0.005 76-90 0.000 0.004 90-99 0.000 0.003 Welfare--Unfunded, 289,000 Combination Unfunded/Fully Insured, or Funded with a Trust Health 5 or Fewer 1.192 0.988 6-10 0.596 0.496 11-25 0.238 0.199 26-50 0.119 0.100 51-75 0.079 0.066 76-90 0.066 0.055 90-99 0.060 0.050 Note: Due to data constraints, the DOL is unable to break out smaller subgroup plan counts for welfare plans that provide group health benefits with fewer than 100 participants. Instead, the DOL has provided the total number of welfare plans that provide group health benefits with fewer than 100 participants.
The DOL is unaware of any relevant federal rules for small plans that duplicate, overlap, or conflict with these regulations.
Description of steps the DOL has taken to minimize impact on small entities: In developing these regulations and the associated forms revisions, the Agencies considered a number of alternative provisions directed at small plans, many of which are discussed elsewhere in this preamble and in the Notice of Proposed Forms Revision. The DOL believes that the proposed changes to the reporting requirements impose the least amount of burden on small plans, while allowing the DOL to collect sufficient information for it to fulfill its statutory responsibilities. Any efforts to further reduce reporting burden would have had a detrimental impact on the DOL's ability to protect plan participants and beneficiaries.
The new reporting requirements for welfare plans that offer group health benefits with fewer than 100 participants comprise over 83 percent of the increased burden on small plans. The subset of these welfare plans that are fully insured comprises almost 87 percent of welfare plans that offer group health benefits with fewer than 100 participants. As discussed previously, the DOL considered requiring welfare plans that offer fully insured group health benefits with fewer than 100 participants to file a Form 5500 Annual Return/Report and Schedule J annually, or alternatively, on a two or three year cycle. The DOL opted instead to have those plans file only limited information on the Form 5500 Annual Return/Report and Schedule J. Requiring those plans to file a complete Form 5500 Annual Return/Report and Schedule J annually would have added
As discussed above, the Schedule I is being eliminated for small plans that are not eligible to file Form 5500-SF because the Schedule I does not require small plans to provide detailed plan asset information. This shortcoming impairs the utility of the Form 5500 Annual Return/Report as a tool to obtain a meaningful picture of small plan investments in hard-to-value and other assets. As the GAO has noted, the limited financial information provided on the Schedule I creates a challenge for participants, beneficiaries, oversight agencies, researchers, and other users of the Form 5500 Annual Return/Report or its data. /67/ Accordingly, under the proposed change, approximately 27,000 small plans that are not eligible to file the Form 5500-SF and currently are required to file the Schedule I would be required to complete the Schedule H and the applicable schedules of assets. Although this would result in additional reporting details for certain small plans, the Agencies do not expect that small plans with simple investment portfolios would see a significant increase in their annual reporting burden. Small plans with complex portfolios that include hard-to-value or alternative investments should have more transparent financial statements which may require somewhat more complex financial reporting obligations. In light of changes in the financial environment and increasing concerns about investments in hard-to-value assets and alternative investments, the Agencies continue to believe that requiring separate financial information regarding hard-to-value investments is important for regulatory, enforcement, and disclosure purposes. The DOL notes that although the proposal would require such small plans to complete the Schedule H instead of the Schedule I, including the Schedule H Line 4i(1) and 4i(2) Schedules of Assets, small plans that are eligible for a waiver of the annual examination and report of an IQPA under current rules would still be eligible for this waiver under the proposal. /68/
FOOTNOTE 67 GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 18. END FOOTNOTE
FOOTNOTE 68 29 CFR 2520.104-46. END FOOTNOTE
The proposed rule would also require approximately 18,200 small plans that are not eligible to file the Form 5500-SF to file Schedule C. Currently, only large plans must file a Schedule C, thus excluding a large portion of plans from having to disclose service provider fees. The Agencies recognize the burdens small plans face in complying with disclosure obligations. The Agencies therefore propose to require small pension plans to file Schedule C only if they do not meet the eligibility conditions for filing the Form 5500-SF, which generally would be those pension plans that are invested in alternative or hard-to-value assets. Small welfare plans that provide group health benefits (which are not eligible to file the Form 5500-SF) would also be required to file the Schedule C if they are not unfunded or insured (e.g., funded using a trust). This would continue to emphasize sensitivity to reporting burden for small plans with simple investment portfolios, while addressing some of the GAO's concerns that not all critical information on indirect compensations is being reported to the Agencies. See GAO Targeted Revisions Could Improve Usefulness of Form 5500 Information at 25-26 ("Given these various exceptions to fee reporting requirements, Schedule C may not provide participants, the government, or the public with information about a significant portion of plan expenses and limits the ability to identify fees that may be questionable.") In addition, the rule would align financial information reporting with recently adopted disclosure rules to ensure that all fees are reported by the plans. /69/
FOOTNOTE 69 Id. at 50. END FOOTNOTE
Paperwork Reduction Act Statement
In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)), the DOL requests comments on the information collections included in the proposed amendments to the DOL's regulations relating to annual reporting and disclosure requirements under Part 1 of Subtitle B of Title I of ERISA and in the proposed revision of the Form 5500 Annual Return/Report pursuant to Part 1 of Subtitle B of Title I and Title IV of ERISA and the Code. The DOL has submitted an information collection request (ICR) to OMB in accordance with 44 U.S.C. 3507(d), for OMB's review of the DOL's information collections previously approved under OMB Control No. 1210-0110.
A copy of the ICR can be obtained by contacting the
OMB asks that comments about information collections in this NPRM be submitted by mail or courier to the
* Evaluate whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
* Evaluate the accuracy of the DOL's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
* Enhance the quality, utility, and clarity of the information to be collected; and
* Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
Congressional Review Act
The proposed rules being issued here are subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C.
Unfunded Mandates Reform Act Statement and Summary
Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538 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
The DOL is issuing the current proposed regulations and forms revisions under Sections 103, 104, 110 and 505 of ERISA (29 U.S.C. 1023, 1024, 1030, and 1135). Under Titles I and IV of ERISA and the Code, pension and other employee benefit plans are generally required 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 or Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan, together with any required schedules and attachments, generally satisfies these annual reporting requirements. The current proposal would amend current reporting regulations and update the existing forms and schedules as explained in the summary information provided above in this document.
The DOL assessed the anticipated benefits and costs of the current proposal pursuant to Executive Order 12866 in the Regulatory Impact Analysis for the current proposal, above, and concluded that its benefits would justify its costs. The current proposal's material benefits and costs generally would be largely confined to the private sector, where plans would incur increased costs from expanded reporting requirements, while participants and beneficiaries and other end-users of the Form 5500 Annual Return/Report data would benefit from improved reporting. The DOL itself, as well as
Some employee benefit plans sponsored by tribal governments that are subject to ERISA because they cover employees who are involved in performing commercial activities (whether or not such activities are essential government functions) may be affected by the Federal mandate contained in this rule, if it is adopted as proposed. The DOL does not have sufficient data to estimate the amount of the increase in future compliance costs that would be imposed on tribal governments that sponsor these plans, but it believes such costs would be similar to those imposed on private sector employers that are discussed in the regulatory impact analysis. Such increased costs would not be paid with Federal financial assistance (or otherwise paid for by the government). The DOL is not aware of any available Federal resources to carry out this mandate on tribal governments. The budgetary impact of the mandate will fall on tribal governments that maintain certain employee benefit plans. Apart from this, the DOL does not believe that the mandate will cause any disproportionate budgetary effects on any particular regions of the nation or particular tribal governments, urban, rural or other types of communities, or particular segments of the private sector.
The DOL has not consulted with elected representatives of tribal governments, but will do so after the proposed regulations and forms revisions are published.
In summary, the DOL believes the benefits of this proposed rule are significant, and will result in a modernized annual return/report that has substantially more utility for the agencies, the regulated community, and the public. The proposed rule would also impose increased costs on employee benefit plan sponsors. Tribal governments that sponsor ERISA-covered plans will incur increased costs as will all other sponsors of ERISA-covered plans. The DOL lacks sufficient information to quantify the number of tribal governments impacted by this proposed rule, but believes that the costs imposed on tribal governments will be consistent with the costs imposed on all other sponsors of ERISA-covered plans. Finally, the DOL does not believe that the costs imposed by this proposed rule will have any disproportionate budgetary effects based on any particular regions of the nation or particular tribal governments, urban, rural or other types of communities, or particular segments of the private sector.
Federalism Statement
Executive Order 13132 (
List of Subjects
29 CFR Part 2520
Accounting, Employee benefit plans, Pensions, Reporting and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Department proposes to amend Subchapter C, parts 2520 and 2590 of Title 29 of the Code of Federal Regulations as follows:
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
1. The authority section for part 2520 continues to read as follows:
Authority: 29 U.S.C. 1021-1025, 1027, 1029-31, 1059, 1134, and 1135; and Secretary of Labor's Order 1-2011, 77 FR 1088 (
2. In
* * * * *
(b) * * *
(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 E (ESOP Annual Information), Schedule G (Financial Transaction Schedules), Schedule H (Financial Information), Schedule J (Group Health Plan Information), Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information), Schedule R (Retirement Plan Information), Schedule SB (Single-Employer Defined Benefit Plan Actuarial 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 SUBSEC 2520.104-43, 2520.104a-6 and 2520.104-44, 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 C (Service Provider Information), Schedule E (ESOP Annual Information), Schedule G (Financial Transactions), Schedule H (Financial Information), Schedule J (Group Health Plan Information), Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information), Schedule R (Retirement Plan 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.
(2)(i) The annual report of an employee pension benefit plan or employee welfare benefit plan that does not provide group health benefits 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, including Schedule SB (Single Employer Defined Benefit Plan Actuarial Information) and Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase 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
(F) Is not a group health plan as defined in section 733(a) of the Act.
(iii) The annual report of an employee benefit plan that meets the definition of a group health plan as defined in section 733(a) of the Act 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 C (Service Provider Information), Schedule H (Financial Information), and Schedule J (Group Health Plan Information). See the instructions for this form.
* * * * *
(e) Plans that participate in a master trust. The plan administrator of a plan which participates in a master trust shall file a Form 5500 Annual Return/Report in accordance with the instructions for the form relating to master trusts. For purposes of annual reporting, a master trust is a trust for which a regulated financial institution serves as trustee or custodian (regardless of whether such institution exercises discretionary authority or control respecting the management of assets held in the trust) and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. A master trust must operate either on a calendar year basis or on the same fiscal year as all of the plans that are participating in the master trust. For purpose of this paragraph, a regulated financial institution is a bank, trust company, or similar financial institution regulated, supervised, and subject to periodic examination by a State or Federal agency. Common control is determined on the basis of all relevant facts and circumstances (whether or not such employers are incorporated).
3. In
* * * * *
(b) Contents. (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), a separate Schedule J (Group Health Plan Information) for each participating plan, and the other financial schedules described in
* * * * *
4. In
* * * * *
(c) Contents. (1) A plan that meets the requirements of paragraph (b) of this section, and that invests in a common or collective trust that files a Form 5500 report in accordance with
(2) A plan that meets the requirements of paragraph (b) of this section and that invests in a common or collective trust that does not file a Form 5500 report in accordance with
5. In
* * * * *
(c) Contents. (1) A plan that meets the requirements of paragraph (b) of this section, and which invests in a pooled separate account that files a Form 5500 report in accordance with
(2) A plan that meets the requirements of paragraph (b) of this section and which invests in a pooled separate account that does not file a Form 5500 report in accordance with
6. In
* * * * *
(d) Contents. (1) The schedule of reportable transactions shall be filed in the format and include information as described in the instructions for the Form 5500 Annual Return/Report of Employee Benefit Plan.
(2) [Removed]
7. In
(a) General. Under the authority of section 103(a)(3)(C) of the Act, the examination and report of an independent qualified public accountant need not extend to any statement or information prepared and certified by a bank or similar institution or insurance carrier provided the certification meets the requirements of paragraph (d) of this section.
* * * * *
(c) Excluded information. Any statements or information certified to by a bank or similar institution or insurance carrier described in paragraph (b) of this section, provided that the statements or information regarding assets so held are prepared and certified to by the bank or insurance carrier in accordance with the requirements of (d) of this section and
(d) Contents and manner. The certification described in paragraph (a) of this section shall:
(1) Appear on a separate document from the list of plan assets covered by the certification;
(2) Identify the bank or insurance company holding the plan's assets;
(3) Describe the manner in which the bank or insurance company is holding the assets covered by the certification;
(4) State whether the bank or insurance company is providing current value information regarding the assets covered by the certification in accordance with 2520.103-5, and if so, state that the assets for which current value is being certified are separately identified in the list of assets covered by the certification;
(5) If current value is not being certified for all of the assets covered by the certification, include a caution that the certification is not certifying current value information and the asset values provided by the bank or insurance company may not be suitable for use in satisfying the plan's obligation to report current value information on the Form 5500 Annual Return/Report; and
(6) If the certification is being provided by an agent on behalf of the bank or insurance company, a statement certifying that the person providing the certification is an authorized agent acting on behalf of the bank or insurance company and affirming that the bank or insurance company is taking responsibility for the accuracy and completeness of the certification and the underlying records used as a basis for the information being certified.
(e) The administrator of a plan which meets the requirements of paragraph (b) of this section, and which is not required to have covered by the accountant's examination or report any of the information described in paragraph (c) of this section shall attach to the Form 5500 Annual Return/Report of Employee Benefit Plan the certification of investment information created by certain banks or insurance companies in accordance with the requirements of paragraph (d) of this section to comply with the limited scope audit requirements.
8. In
* * * * *
(b) * * *
(1) * * *
(i) A schedule of all assets held for investment purposes at the end of the plan year (see
* * * * *
(2) Assets disposed of during the plan year. (i) A schedule of all assets disposed of during the plan year (see
* * * * *
9. In
* * * * *
(b) * * *
(1) Which have fewer than 100 participants at the beginning of the plan year, and do not provide benefits consisting of medical care as defined in section 733(a)(2) of the Act;
* * * * *
10. In
* * * * *
(b) Application. This exemption applies only to welfare benefit plans that do not provide benefits consisting of medical care as defined in section 733(a)(2) of the Act that are maintained by an employee organization, as that term is defined in section 3(4) of the Act, paid out of the employee organization's general assets, which are derived wholly or partly from membership dues, and which cover employee organization members and their families.
* * * * *
11. Revise
Under the authority of section 104(a)(2)(A) of ERISA, the requirement of section 103(d)(6) of ERISA that the annual report include as part of the actuarial statement (Schedule SB) the present value of all of the plan's liabilities for nonforfeitable pension benefits allocated by termination priority categories, as set forth in section 4044 of title IV of ERISA, and the actuarial assumptions used in these computations, is waived.
12. In
* * * * *
Appendix to S. 2520.104B-10--The Summary Annual Report (SAR) Under ERISA: A Cross-Reference to the Annual Report SAR Item Form 5500 line items Form 5500-SF line items A. Pension Plan (defined contribution pension benefit plans and defined benefit pension plans that do not furnish the annual funding notice under 29 CFR 2520.101-4) 1. Funding arrangement Form 5500-10a Line 13a. 2. Total plan expenses Sch. H--2j Line 10h. 3. Administrative Sch. H--2i(12)(C) Line 10f. expenses 4. Benefits paid Sch. H--2e(4) Line 10d. 5. Other Expenses Sch. H--Subtract the sum Line 10g. of 2e(4) & 2i(12)(C) from 2j 6. Total Participants at Form 5500--7f Line 7f. end of plan year 7. Value of plan assets (net): a. end of plan year Sch. H--1l [Col. (b)] Line 9c [Col. (b)]. b. beginning of plan Sch. H--1l [Col. (a)] Line 9c [Col. (a)]. year 8. Changes in Net Assets Sch. H--Subtract 1l Line 9c-Subtract [Col. [Col. a] from 11 [Col. a] from [Col. b]. b] 9. Total Income Sch. H--2d Line 10c. a. Employer Sch. H--2a(1)(A, & 2a(2) Line 10a(1)(A). contributions if applicable b. Employee Sch. H--2a(1)(B), & Line 10a(1)(B). contributions 2a(2) if applicable c. Gains (losses) from Sch. H--2c(4)(C) Not applicable. sale of assets d. Earnings from Sch. H--Subtract the sum Line 10b. investments of 2a(3) and 2c(4)(C) from 2d 10. Name of insurance Schs. A--1a Not applicable. carriers 11. Total insurance Sch. A--5b (total of all Not applicable. premiums contracts) 12. Unpaid minimum required contribution (S-E plans or Defined contribution plans) or Funding deficiency (ME plans): a. S-E Defined benefit Sch. SB--43 Same. plans b. ME Defined benefit Sch. MB--10 Not applicable. plans c. Defined contribution Sch. R--7c, if not zero Line 16b. plans B. Welfare Plan 1. Name of insurance Schs. A--1a Not applicable. carriers 2. Total (experience Schs. A--Sum of 9a(1) Not applicable. rated and and 10a (total of all non-experienced rated) contracts) insurance premiums 3. Experience rated Schs. A--9a(1) (total of Not applicable. premiums all contracts) 4. Experience rated Schs. A--9b(4) (total of Not applicable. claims all contracts) 5. Value of plan assets (net) a. end of plan year Sch. H--1l [Col. (b)] Line 9c [Col. (b)]. b. beginning of plan Sch. H--1l [Col. (a)] Line 9c [Col. (a)]. year 6. Changes in Net Assets Sch. H--Subtract 1l Line 9c--Subtract [Col. [Col. a] from [Col. b] a] from [Col. b]. 7. Total Income Sch. H--2d Line 10c. a. Employer Sch. H--2a(1)(A) & 2a(2) Line 10a(1)(A) if contributions if applicable applicable. b. Employee Sch. H--2a(1)(B) & 2a(2) Line 10a(1)(B) if contributions if applicable applicable. c. Gains (losses) from Sch. H--2c(4)(C) Not applicable. sale of assets d. Earnings from Sch. H--Subtract the sum Line 10b. investments of 2a(3) and 2c(4)(C) from 2d 8. Total plan expenses Sch. H--2j Line 10h. 9. Administrative Sch. H--2i(12)(C) Line 10f. expenses 10. Benefits paid Sch. H--2e(4) Line 10d. 11. Other Expenses Sch. H--Subtract the sum Line 10g. of 2e(4) & 2i(12)(C) from 2j
PART 2590 --RULES AND REGULATIONS FOR GROUP HEALTH PLANS
13. The authority citation for Part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Pub. L.104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
Subpart C--Other Requirements
14. Add SUBSEC 2590.715-2715A and 2590.715-2717 to Subpart C to read as follows:
A group health plan that complies with the requirements of
A group health plan that complies with the requirements of
Signed at
Assistant Secretary,
[FR Doc. 2016-14892 Filed 7-11-16; 4:15 pm]
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