DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Parts 2520 and 2530

Disclosure of Plan Information to Participants and Beneficiaries

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Request for information.

SUMMARY: This document requests information from the public concerning the
summary plan description, summary annual report and individual benefit
reporting and recordkeeping requirements of the Employee Retirement Income
Security Act of 1974, as amended, (ERISA), and regulations issued thereunder.
The information furnished in response to this document is intended to assist
the Department of Labor (the Department) in evaluating the extent to which the
current disclosure requirements serve to assure that participants and
beneficiaries are provided with useful and timely information about their
employee benefit plans and the extent to which the requirements should be
updated to reflect statutory, technological and other changes affecting the
disclosure of information to participants and beneficiaries. The furnished
information also will assist the Department in developing regulatory and
legislative proposals as may be necessary to address identified deficiencies
relating to the various disclosure provisions.

DATES: Written comments should be received by the Department of Labor on or
before February 25, 1994.

ADDRESSES: Comments (preferably, at least six copies) should be addressed to
the Office of Regulations and Interpretations, Pension and Welfare Benefits
Administration, room NÄ5669, U.S. Department of Labor, Washington, DC 20210.
Attenion: DISCLOSURE RFI. All comments received will be available for public
inspection at the Public Disclosure Room, Pension and Welfare Benefits
Administration, U.S. Department of Labor, room NÄ5507, 200 Constitution Ave.,
NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Katherine D. Lewis, Office of Regulations and
Interpretations, Pension and Welfare Benefits Administration, U.S. Department
of Labor, Washington, DC 20210, telephone (202) 219Ä7901; or Cynthia Weglicki,
Plan Benefits Security Division, Office of the Solicitor, U.S. Department of
Labor, Washington, DC 20210, telephone (202) 219Ä4592. These are not toll-free
numbers.

SUPPLEMENTARY INFORMATION:

A. General

With the enactment of the Employee Retirement Income Security Act of 1974
(ERISA) came a legislatively ordered array of disclosure requirements under
Title I. These disclosures are intended to inform participants and
beneficiaries of their rights and obligations under their plan, the financial
condition of the plan, and whether the plan is being administered in
accordance with the law.

The disclosure requirements under Title I of ERISA, in addition to providing
for the availability to participants and beneficiaries of plan documents and
other instruments pursuant to which their plan is established or operated,®1¯ 
require that specific information relative to an employee benefit plan be
furnished to each participant and each beneficiary receiving benefits under
the plan. These disclosures include: Summary plan descriptions (SPDs), as well
as summaries of material plan changes and periodic updates of the SPD
(sections 102(a)(1) and 104(b)(1)); summary annual reports (section
104(b)(3)); and, in the case of pension plans, individual benefit statements
describing the participant's accrued and vested benefits (sections 105 and
209).®2¯ 

®1¯ See sections 104(b)(2) and 104(b)(4).

®2¯ In addition, participants and beneficiaries are required to be furnished
noticed of an employer's failure to make a payment required to meet the
minimum funding standards under section 302 if the employer fails to make the
required payment within 60 days of the due date for such payment (section
101(d)). Participants and beneficiaries also are required to be furnished
notices of an employer's filing of an application for a funding waiver
(section 303(e)), of a qualified transfer of excess pension assets to a health
benefit account (section 101(e)), and of amendments to certain pension plans
to significantly reduce the rate of future benefit accrual (section 204(h)).

Since ERISA's enactment and the adoption of many of the Department's
regulations governing ERISA's disclosure requirements, there have been a
number of changes to the statute (e.g., the addition of provisions governing
continuation of health care coverage and qualified domestic relations orders,
among others) and changes in the way plan information is prepared, maintained
and communicated because of increased reliance on and utilization of
computerized information systems. In addition, a number of questions have been
raised with respect to whether participants and beneficiaries are being
provided useful and timely information concerning the plans in which they
participate. For these reasons, the Department believes that it is appropriate
to undertake a comprehensive review of the current disclosure framework in an
effort to identify areas in which modifications to regulatory or statutory
requirements would serve to assure the disclosure of useful and timely
information to participants and beneficiaries, as well as to eliminate any
unnecessary administrative burdens and costs attendant to the providing of
such information.

As an initial step in the review process, the Department is inviting plan
sponsors, administrators, fiduciaries, participants, beneficiaries, service
providers and other interested persons to submit comments and views concerning
the adequacy of the current statutory and regulatory disclosure scheme,
recommendations for changes, and information and data relating to compliance
costs (or cost savings) applicable to either the current scheme or recommended
changes thereto. It is intended that the information provided will assist the
Department in identifying areas for change and in developing proposals as may
be necessary to address identified deficiencies relating to the various
disclosure provisions.

Set forth below is a brief discussion of the summary plan description, summary
annual report, and individual benefit reporting requirements of ERISA and
related regulations.®3¯  Following the discussion of each requirement are a
number of questions with respect to which the Department would like to receive
comments, views, information and data. The questions are provided for guidance
purposes only and are not intended to restrict or otherwise limit the scope of
public comment on the subject disclosure provisions. To facilitate the
processing and review of comments, however, commentators are requested to
identify the requirement to which each of their comments relates (e.g., SPD
requirements or summary annual report requirements or benefit statement
requirements) and, as appropriate, the number of the question being addressed.
Commentators also are requested to provide as much quantitative and
qualitative information as possible concerning costs, administrative burdens,
savings, and benefits attributable to compliance with the current disclosure
framework and any recommended changes thereto.

®3¯ It should be noted that a number of exemptions and alternative methods of
compliance relating to the disclosure requirements have been prescribed by
regulations issued by the Department (See 29 CFR  2520.104Ä20; 2520.104Ä21;
2520.104Ä22; 2520.104Ä23; 2520.104Ä24; 2520.104Ä26; 2520.104Ä27; 2540.104Ä48;
and 2520.104Ä49). Although specific exemptions and alternative methods of
compliance are not discussed herein, public comments on these regulations will
be considered by the Department.

B. Summary Plan Descriptions

Background

In general, sections 102(a) and 104(b)(1) of ERISA provide that the
administrator of an employee benefit plan shall furnish to each participant,
and beneficiary receiving benefits under the plan, a summary plan description
(SPD). The SPD is required to be written in a manner calculated to be
understood by the average plan participant and is required to be sufficiently
accurate and comprehensive to reasonably apprise participants and
beneficiaries of their rights and obligations under the plan. (See section
102(a)(1) and 29 CFR 2520.102Ä2.)

The specific information required to be contained in the SPD is described in
section 102(b) and 29 CFR 2520.102Ä3. Among other things, SPDs are required to
contain: The name and type of administration of the plan; the name and address
of the person designated as agent for service of legal process; a description
of the relevant provisions of any applicable collective bargaining agreement;
the plan's requirements respecting eligibility for participation and benefits;
a description of the provisions concerning for nonforfeitable pension
benefits; circumstances which may result in disqualification, ineligibility or
denial or loss of benefits; the sources of financing for the plan; the
procedures to be followed in presenting claims for benefits and the remedies
available under the plan for the redress of claims which are denied in whole
in part; information concerning whether the plan, if a pension plan, is
insured under Title IV and, if so, information concerning coverage provided by
the Pension Benefit Guaranty Corporation (See model language at 
2520.102Ä3(m)(3).); and a statement of ERISA rights, which is intended to
provide participants and beneficiaries with a brief description of their
rights and remedies under ERISA. (See model statement at  2520.102Ä3(t)(2).)

Purusant to section 104(b)(1) and 29 CFR  2520.104bÄ2, the SPD is required to
be furnished to a participant within 90 days after becoming a participant or,
in the case of beneficiaries, within 90 days after first receiving benefits;
or, if later, within 120 days after the plan becomes subject to Part I of
title I of ERISA. If there is a material modification in the terms of the plan
or a change in the information required to be contained in the SPD,
administrators are required to furnish participants and beneficiaries with a
summary of such modifications or changes (often referred to as a summary of
material modifications or "SMM'') within 210 days following the end of the
plan year in which the modification or change is adopted. (See 29 CFR
2520.104bÄ3 and 2520.104bÄ4 relating to the furnishing of SMMs.)

Section 104(b)(1) also requires that participants and beneficiaries be
periodically furnished updated SPDs which integrate all plan amendments during
the applicable period. Under section 104(b)(1) and  2520.104BÄ2(b),
participants and beneficiaries are required to be provided updated SPDs every
fifth year if there have been changes in the information required to be
disclosed in the SPD during the applicable five year period. If there have
been no changes during the five year period, a new SPD must be furnished
within ten years.

Request for Information

1. What, if any, additional information should be required to be disclosed in
the SPD? For example, to what extent should the SPD be required to contain
information relating to procedures and notice requirements applicable to
domestic relations and child medical support orders? (See section 206(d)(3)
and section 609.)

2. Is guidance necessary with respect to the extent to which information
relating to the continuation of coverage provisions of Part 6 of Title I
should be included in the SPD? The Department notes that section 606(a)(1)
requires administrators of group health plans to provide written notice of the
rights provided under Part 6 to each covered employee and spouse of the
employee, at the time of commencement of coverage under the plan.

3. What currently required information, if any, should be eliminated from the
SPD and why?

4. Within what period of time following plan changes should summaries of those
changes be required to be furnished to participants and beneficiaries? Should
welfare plan changes be required to be furnished within a shorter period of
time than pension plan changes? Within what period do plans generally furnish
participants and beneficiaries with copies of (a) changes to pension plans,
and (b) changes to welfare plans?

5. How frequently should SPDs be required to be updated? Should the frequency
with which updated SPDs are furnished be determined by the number of plan
changes since the last SPD? (For example, should an updated SPD be required to
be furnished after four plan amendments?) Are SPDs currently updated more
frequently than every five years? If so, what factors are considered and how
frequently are updated SPDs generally provided?

6. What, if any, alternative means for furnishing SPDs, updated SPDS or SPD
information to participants and beneficiaries should be considered? Describe
the benefits and costs attendant to such alternative(s), as compared with
compliance with current requirements. (See also general requirements
applicable to the furnishing of documents under Part 1 of Title I set forth in
29 CFR 2520.104bÄ1.)

C. Summary Annual Reports

Background

Section 104(b)(3) provides that within 210 days following the close of a
plan's fiscal year, the administrator shall furnish to each participant and to
each beneficiary receiving benefits under the plan, a copy of the statements
and schedules concerning plan assets and liabilities and receipts and
disbursements (described in sections 103(b)(3)(A) and (B)) for such fiscal
year, and such other material (including the percentage determined under
section 103(d)(11))®4¯  as is necessary to fairly summarize the latest annual
report. This annual disclosure is commonly referred to as the summary annual
report or SAR.®5¯ 

®4¯ Section 103(d)(11) requires that the actuarial statement, which is
required to accompany the annual report of certain pension plans, include the
percentage of assets to liabilities if the current value of the assets is less
than 70 percent of the current liability under the plan.

®5¯ Related statutory requirements include section 104(b)(2), which requires
that the latest annual report be made available for examination by any
participant or beneficiary, and section 104(b)(4), which requires that a copy
of the latest annual report be furnished to any participant or beneficiary,
upon receipt of a written request. Section 104(b)(4) also permits the
administrator to make a reasonable charge to cover the cost of furnishing such
complete copies. See also 29 CFR 2520.104bÄ30 governing charges for documents.

Pursuant to 29 CFR 2520.104bÄ10, governing the furnishing of the SAR, SARs
must be distributed within nine months after the close of a plan year, or
within two months after the close of a period for which an extension for
filing the plan's annual report has been granted by the Internal Revenue
Service, rather than 210 days after the close of a plan year as provided in
the statute. The regulation also describes the information required to be
contained in the SAR and prescribes formats for the disclosure of that
information. The formats prescribed by the regulation are intended to permit
the entry of SAR information directly from specific line items of the plan's
annual report. The regulation also sets forth special rules for small plans
filing the Form 5500ÄR.

Because the Form 5500ÄR is essentially a notice-type statement, containing no
financial information, the regulations permit small plans, for those years for
which a Form 5500ÄR is filed, to satisfy their SAR obligation either by
furnishing participants and beneficiaries with a copy of the Form 5500ÄR,
along with a required notice (See  2520.104bÄ10(b)(3).), or by notifying
participants and beneficiaries that they will be furnished a copy of the Form
5500ÄR, free-of-charge, upon request.®6¯ 

®6¯ Pursuant to  2520.104bÄ10(b)(2), administrators may notify participants
of the availability of the Form 5500ÄR by posting the required notice at
worksite locations for a period of not less than 30 days. However, certain
participants, such as retirees, beneficiaries, participants who have separated
with vested benefits, and others not reasonably expected to visit worksite
locations where the notice is posted, are required to be furnished notice on
an individual basis.

All other plans must use the prescribed formats for the furnishing of SAR
information. The regulations contain different informational requirements for
pension plans and welfare plans. (See  2520.104bÄ10(d) (3) and (4),
respectively.)

In brief, the SAR for a pension plan is require to contain the following
information: the type of funding arrangement (trust, insurance, etc.); the
amount of plan expenses; the amount of administrative expenses; the amount of
benefits paid; the total number of participants and beneficiaries as of the
end of the plan year; the value of plan assets, after subtracting liabilities,
at the beginning of the year and at the end of the year; an indication of
whether there was an increase or decrease in net assets and the amount of such
increase or decrease; the total amount of income, with a showing of the amount
of income constituting employer contributions, the amount of participant
contributions, the amount of gain or loss from the sale of assets, the amount
of earnings from investments; and certain insurance information for plans
utilizing allocated insurance contracts. Defined benefit pension plans are
also required to include the plan actuary's statement that enough (or not
enough) money was contributed to keep the plan funded in accordance with the
minimum funding standard, as well as the amount of the deficit, if any.
Defined contribution plans are required to include similar information in
their SARs.

The information required to disclosed in a welfare plan SAR varies, generally
depending on whether the plan pays benefits through a fund or insurance
contracts. In the case of a welfare plan which pays benefits through a fund,
the SAR is required to contain much of the same financial information required
to be included in the SAR of a pension plan. If any benefits are provided on
an uninsured basis, the SAR must so indicate. If a welfare plan purchases
insurance, the SAR must include: The name of the insurer(s); the types of
claims covered by the insurance; the total amount of premiums paid; a
statement relating to experience-rated contracts (if applicable), the premiums
paid for such contracts and the amount of benefits paid under such contracts
during the plan year.

All SARs are required to contain a statement describing the rights of
participants and beneficiaries to receive a copy of the full annual report, or
any part thereof.

Request for Information

7. What, if any, additional information should be required to be disclosed in
the SAR? For example

a. Should the SAR be required to disclose: whether the plan was audited by an
independent qualified public accountant; whether the accountant issued a
"qualified'' or "adverse'' opinion or a disclaimer in connection with the
opinion, and, if so, the reason(s) for the qualified or adverse opinion, or
disclaimer; any errors and irregularities, illegal acts or material internal
control deficiencies identified by the accountant; any events subsequent to
year end, identified by the account, which would affect the plan's financial
condition?

b. Should the SAR of a defined benefit pension plan be required to disclose:
The benefit obligations of the plan; detailed information concerning the
funding status of the plan and, if underfunded, by how much (currently, only
plans with assets which are less than 70 percent of the plan's liabilities are
required to disclose such information); information about PBGC coverage and
the maximum benefits payable by the PBGC; whether the sponsor has applied for
or been granted a funding waiver during the plan year; whether the employer
has failed to make a required installment or other payment required to meet
the minimum funding standards during the plan year?

8. Is there any information which should be deleted from the SAR?

9. Within what period following the end of the plan year should SARs be
required to be furnished to participants and beneficiaries?

10. Are there any events affecting the financial condition of a plan which
should be communicated to participants and beneficiaries prior to the end of
the plan year (e.g., a failure of the sponsor to make required contributions,
insufficient assets to make benefit or premium payments)? What events should
necessitate disclosure? Within what period should disclosure of such events be
required?

11. What, if any, alternatives means for furnishing SARs should be considered?
Describe the benefits and costs attendant to such alternative(s), as compared
with compliance with the current requirements. (Also see general requirements
applicable to furnishing documents under Part 1 of Title I set forth in 29 CFR
2520.104bÄ1.)

D. Individual Benefit Reporting and Recordkeeping

Background

Section 105(a) of ERISA generally requires each administrator of an employee
pension benefit plan to furnish to any participant or beneficiary, who so
requests in writing, a statement indicating, on the basis of the latest
available information, the total benefits accrued and the nonforfeitable
pension benefits, if any, which have accrued, or the earliest date on which
such benefits will become nonforfeitable. Similarly, section 209(a)(1) of
ERISA generally requires the plan administrator of a pension plan subject to
Part 2 of title I of the Act to make a report, in accordance with regulations
of the Secretary of Labor, to each employee who is a participant under the
plan and who requests such report. The report required under section 209(a)(1)
must be sufficient to inform the employee of his or her accrued benefits which
are nonforfeitable. Under both sections 105(a) and 209(a)(1), no participant
is entitled to more than one report on request during any single 12-month
period. Section 209(a) also requires similar reports to be provided to a
participant who terminates service with the employer or has a one-year break
in service. Sections 105(d) and 209(a)(2) authorize the Secretary of Labor to
prescribe regulations specifying the extent to which these reporting
requirements apply to plans adopted by more than one employer.

In addition, section 105(c) requires plan administrators to provide to
participants with respect to whom registration statements are filed with the
Internal Revenue Service under section 6057 of the Internal Revenue Code of
1986 (the Code) individual benefit statements setting forth the information
contained in the registration statements. This statement also is required to
include a notice to participants of any benefits which are forfeitable if the
participant dies before a certain date.

Section 209 also establishes certain recordkeeping requirements relating to
benefit reporting. In general, section 209(a)(1) requires records to be
maintained by employers and authorizes the Secretary of Labor to prescribe
regulations governing such records. The information necessary for individual
benefit reporting is to be furnished by the employer to the plan
administrator. In the case of a plan adopted by more than one employer,
however, section 209(a)(2) requires records to be maintained by the plan
administrator, based on information to be provided by each such employer.

Section 209(b) provides that if any person required under section 209(a) to
furnish information or maintain records for any plan year fails to comply with
such requirements, such person shall pay to the Secretary a civil penalty of
$10 for each employee with respect to whom such failure occurs, unless it is
shown that the failure was due to reasonable cause.

The Department last proposed regulations governing the individual benefit
reporting and recordkeeping requirements under sections 105 and 209 in 1980.
At that time, separate regulations were proposed for single employer plans and
multiple employer plans. (See 45 FR 51231, August 1, 1980, and 45 FR 52824,
August 8, 1980, respectively.) The Department anticipates withdrawing the 1980
proposed regulations and publishing revised proposed benefit reporting
regulations or developing statutory amendments which take into account the
information furnished in response to this document.

Request for Information

Furnishing Benefit Statements

12. Should participants and beneficiaries be limited to one benefit statement
request per 12 month period? If not, how frequently should participants and
beneficiaries be permitted to request such information?

13. Are there classes of participants or beneficiaries with respect to whom
benefit statements should not be required to be furnished every 12 months
(e.g., participants and beneficiaries who are currently receiving benefits,
participants and beneficiaries to whom annuities have been distributed,
non-vested participants who have terminated service with sponsoring
employers)?

14. Should plans be permitted to condition the furnishing of benefit
statements on a participant's compliance with reasonable plan procedures? If
so, what are reasonable procedures?

15. What information, if any, should plans be permitted to require from
participants and beneficiaries as a condition to furnishing a benefit
statement?

16. Within what period of time following receipt of a benefit statement
request should plans be required to furnish the requested statement?

17. Under what circumstances, if any, should plans furnishing annual benefit
statements to all participants be relieved from the obligation to respond to
individual benefit statement requests?

18. Should there be a requirement that a benefit statement be furnished
automatically upon a termination of service or a one-year break in service to
all participants, including participants with no vested benefits?

19. Within what period of time following a termination in service or break in
service should plans be required to furnish benefit statements?

20. What methods of delivering benefit statements or benefit statement
information should be permitted? Possible methods of delivery might include
first class mail, personal delivery, interoffice mail, or access to benefit
information via computer terminals. What methods are currently being utilized
for communicating individual benefit information to participants and
beneficiaries?

Content of the Benefit Statement

21. Section 105(a) requires the furnishing of benefit statements based on the
"latest available information.'' How should "latest available information'' be
defined or determined for purposes of furnishing benefit statements in
response to a request, upon termination of service, upon incurring a break in
service, and in situations where benefit statements are furnished annually?

22. What information should be required to be contained in an individual
benefit statement? For example, should benefit statements be required to set
forth: Both the percentage and amount of vested accrued benefits; the earliest
date on which benefits will become partially or fully vested; the amount of
participant contributions; the portion of the accrued benefit derived from
employer contributions and from participant contributions; the amount of any
Social Security offset; projected early and normal retirement benefits;
projected early and normal retirement benefits stated in the form of a joint
and survivor annuity; descriptions of the projections and assumptions on which
the benefit statement is based, or the date of the information on which the
benefit statement is based.

23. What variations, if any, in the information required to be contained in
benefit statements should be considered for insurance contract plans (as
described in section 301(b) of ERISA and section 412(i) of the Code);
individual account plans; employer stock plans; and class-year plans?

24. What information should be required to be furnished participants with no
vested benefits?

25. Should benefit statements for underfunded plans be required to include
information concerning the funding status of the plan and the benefit coverage
limits of the Pension Benefit Guaranty Corporation?

Recordkeeping

26. What methods of record retention should be permitted for individual
benefit information?

27. How long should individual benefit information be required to be retained?

28. In the case of multiple employer plans, what reporting requirements should
be imposed on employers with respect to the furnishing of individual benefit
information to the plan administrator?

29. Identify and explain any individual benefit recordkeeping problems which
are unique to multiple employer plans. How should these problems be addressed?

All submitted comments will be made a part of the record of proceeding
referred to herein and will be available for public inspection.

Signed at Washington, DC this 17th day of December, 1993.

Olena Berg,

Assistant Secretary for Pension and Welfare Benefits, U.S. Department of
Labor.

[FR Doc. 93Ä31368 Filed 12Ä23Ä93; 8:45 am]

BILLING CODE 4510Ä29ÄM