§ 1103 TITLE 29—LABOR Page 430

§ 1103. Establishment of trust

(a) Benefit plan assets to be held in trust; authority of trustees

Except as provided in subsection (b) of this

section, all assets of an employee benefit plan

shall be held in trust by one or more trustees.

Such trustee or trustees shall be either named

in the trust instrument or in the plan instrument described in section 1102(a) of this title or

appointed by a person who is a named fiduciary,

and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and discretion to manage and

control the assets of the plan, except to the extent that—

(1) the plan expressly provides that the

trustee or trustees are subject to the direction

of a named fiduciary who is not a trustee, in

which case the trustees shall be subject to

proper directions of such fiduciary which are

made in accordance with the terms of the plan

and which are not contrary to this chapter, or

(2) authority to manage, acquire, or dispose

of assets of the plan is delegated to one or

more investment managers pursuant to section 1102(c)(3) of this title.

(b) Exceptions

The requirements of subsection (a) of this section shall not apply—

(1) to any assets of a plan which consist of

insurance contracts or policies issued by an

insurance company qualified to do business in

a State;

(2) to any assets of such an insurance company or any assets of a plan which are held by

such an insurance company;

(3) to a plan—

(A) some or all of the participants of which

are employees described in section 401(c)(1)

of title 26; or

(B) which consists of one or more individual retirement accounts described in section

408 of title 26;

to the extent that such plan’s assets are held

in one or more custodial accounts which qualify under section 401(f) or 408(h) of title 26,

whichever is applicable.

(4) to a plan which the Secretary exempts

from the requirement of subsection (a) of this

section and which is not subject to any of the

following provisions of this chapter—

(A) part 2 of this subtitle,

(B) part 3 of this subtitle, or

(C) subchapter III of this chapter; or

(5) to a contract established and maintained

under section 403(b) of title 26 to the extent

that the assets of the contract are held in one

or more custodial accounts pursuant to section 403(b)(7) of title 26.

(6) Any plan, fund or program under which

an employer, all of whose stock is directly or

indirectly owned by employees, former employees or their beneficiaries, proposes

through an unfunded arrangement to compensate retired employees for benefits which

were forfeited by such employees under a pension plan maintained by a former employer

prior to the date such pension plan became

subject to this chapter.

(c) Assets of plan not to inure to benefit of employer; allowable purposes of holding plan

assets

(1) Except as provided in paragraph (2), (3), or

(4) or subsection (d) of this section, or under sections 1342 and 1344 of this title (relating to termination of insured plans), or under section 420

of title 26 (as in effect on January 1, 1995), the

assets of a plan shall never inure to the benefit

of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering

the plan.

(2)(A) In the case of a contribution, or a payment of withdrawal liability under part 1 of subtitle E of subchapter III of this chapter—

(i) if such contribution or payment is made

by an employer to a plan (other than a multiemployer plan) by a mistake of fact, paragraph (1) shall not prohibit the return of such

contribution to the employer within one year

after the payment of the contribution, and

(ii) if such contribution or payment is made

by an employer to a multiemployer plan by a

mistake of fact or law (other than a mistake

relating to whether the plan is described in

section 401(a) of title 26 or the trust which is

part of such plan is exempt from taxation

under section 501(a) of title 26), paragraph (1)

shall not prohibit the return of such contribution or payment to the employer within 6

months after the plan administrator determines that the contribution was made by such

a mistake.

(B) If a contribution is conditioned on initial

qualification of the plan under section 401 or

403(a) of title 26, and if the plan receives an adverse determination with respect to its initial

qualification, then paragraph (1) shall not prohibit the return of such contribution to the employer within one year after such determination, but only if the application for the determination is made by the time prescribed by law

for filing the employer’s return for the taxable

year in which such plan was adopted, or such

later date as the Secretary of the Treasury may

prescribe.

(C) If a contribution is conditioned upon the

deductibility of the contribution under section

404 of title 26, then, to the extent the deduction

is disallowed, paragraph (1) shall not prohibit

the return to the employer of such contribution

(to the extent disallowed) within one year after

the disallowance of the deduction.

(3) In the case of a withdrawal liability payment which has been determined to be an overpayment, paragraph (1) shall not prohibit the return of such payment to the employer within 6

months after the date of such determination.

(d) Termination of plan

(1) Upon termination of a pension plan to

which section 1321 of this title does not apply at

the time of termination and to which this part

applies (other than a plan to which no employer

contributions have been made) the assets of the

plan shall be allocated in accordance with the

provisions of section 1344 of this title, except as

otherwise provided in regulations of the Secretary.
Page 431 TITLE 29—LABOR § 1104

(2) The assets of a welfare plan which terminates shall be distributed in accordance with the

terms of the plan, except as otherwise provided

in regulations of the Secretary.

(Pub. L. 93–406, title I, §403, Sept. 2, 1974, 88 Stat.

876; Pub. L. 96–364, title III, §310, title IV,

§§402(b)(2), 410(a), 411(c), Sept. 26, 1980, 94 Stat.

1296, 1299, 1308; Pub. L. 100–203, title IX, §9343(c),

Dec. 22, 1987, 101 Stat. 1330–372; Pub. L. 101–239,

title VII, §§7881(k), 7891(a)(1), 7894(e)(1)(A), (3),

Dec. 19, 1989, 103 Stat. 2443, 2445, 2450; Pub. L.

101–508, title XII, §12012(a), Nov. 5, 1990, 104 Stat.

1388–571; Pub. L. 103–465, title VII, §731(c)(4)(B),

Dec. 8, 1994, 108 Stat. 5004.)

REFERENCES IN TEXT

This chapter, referred to in subsecs. (a)(1) and (b)(4),

(6), was in the original ‘‘this Act’’, meaning Pub. L.

93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are

classified principally to this chapter. For complete

classification of this Act to the Code, see Short Title

note set out under section 1001 of this title and Tables.

AMENDMENTS

1994—Subsec. (c)(1). Pub. L. 103–465 substituted ‘‘1995’’

for ‘‘1991’’.

1990—Subsec. (c)(1). Pub. L. 101–508 inserted ‘‘, or

under section 420 of title 26 (as in effect on January 1,

1991)’’ after ‘‘insured plans’’.

1989—Subsecs. (b)(3), (5), (c)(2)(A)(ii), (C). Pub. L.

101–239, §7891(a)(1), substituted ‘‘Internal Revenue Code

of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for

purposes of codification was translated as ‘‘title 26’’

thus requiring no change in text.

Subsec. (b)(3). Pub. L. 101–239, §7894(e)(3), redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively, struck out ‘‘, to the extent that such plan’s assets are held in one or more custodial accounts which

qualify under section 401(f) or 408(h) of title 26, whichever is applicable’’ before the semicolon in subpar. (B),

and inserted concluding provision ‘‘to the extent that

such plan’s assets are held in one or more custodial accounts which qualify under section 401(f) or 408(h) of

title 26, whichever is applicable.’’

Subsec. (c)(2)(A). Pub. L. 101–239, §7894(e)(1)(A), in introductory provisions, made technical amendment to

reference to part 1 of subtitle E of subchapter III of this

chapter to correct reference to corresponding part of

original Act, requiring no change in text, and in cls. (i)

and (ii), inserted ‘‘if such contribution or payment is’’

before ‘‘made by an employer’’.

Subsec. (c)(3), (4). Pub. L. 101–239, §7881(k), redesignated par. (4) as (3) and struck out former par. (3) which

read as follows: ‘‘In the case of a contribution which

would otherwise be an excess contribution (as defined

in section 4979(c) of title 26) paragraph (1) shall not prohibit a correcting distribution with respect to such

contribution from the plan to the employer to the extent permitted in such section to avoid payment of an

excise tax on excess contributions under such section.’’

1987—Subsec. (c)(2)(B). Pub. L. 100–203, §9343(c)(1),

amended subpar. (B) generally. Prior to amendment,

subpar. (B) read as follows: ‘‘If a contribution is conditioned on qualification of the plan under section 401,

403(a), or 405(a) of title 26, and if the plan does not qualify, then paragraph (1) shall not prohibit the return of

such contributions to the employer within one year

after the date of denial of qualification of the plan.’’

Subsec. (c)(3). Pub. L. 100–203, §9343(c)(2), substituted

‘‘section 4979(c) of title 26’’ for ‘‘section 4972(b) of title

26’’.

1980—Subsec. (a)(1). Pub. L. 96–364, §402(b)(2), substituted ‘‘chapter’’ for ‘‘subchapter’’.

Subsec. (b)(6). Pub. L. 96–364, §411(c), added par. (6).

Subsec. (c)(1). Pub. L. 96–364, §310(1), inserted reference to par. (4).

Subsec. (c)(2)(A). Pub. L. 96–364, §410(a), substituted

provisions relating to contributions or payments of

withdrawal liability under part 1 of subtitle E of subchapter III of this chapter made by an employer to a

plan by a mistake of fact, and by an employer to a

multiemployer plan by a mistake of fact or law, for

provisions relating to contributions made by an employer by a mistake of fact.

Subsec. (c)(4). Pub. L. 96–364, §310(2), added par. (4).

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by Pub. L. 101–508 applicable to qualified

transfers under section 420 of title 26 made after Nov.

5, 1990, see section 12012(e) of Pub. L. 101–508, set out as

a note under section 1021 of this title.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7881(k) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the

provision of the Pension Protection Act, Pub. L.

100–203, §§9302–9346, to which such amendment relates,

see section 7882 of Pub. L. 101–239, set out as a note

under section 401 of Title 26, Internal Revenue Code.

Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in

the provision of the Tax Reform Act of 1986, Pub. L.

99–514, to which such amendment relates, see section

7891(f) of Pub. L. 101–239, set out as a note under section

1002 of this title.

Section 7894(e)(1)(B) of Pub. L. 101–239 provided that:

‘‘The amendments made by subparagraph (A) [amending this section] shall take effect as if included in section 410 of the Multiemployer Pension Plan Amendments Act of 1980 [Pub. L. 96–364].’’

Amendment by section 7894(e)(3) of Pub. L. 101–239 effective, except as otherwise provided, as if originally

included in the provision of the Employee Retirement

Income Security Act of 1974, Pub. L. 93–406, to which

such amendment relates, see section 7894(i) of Pub. L.

101–239, set out as a note under section 1002 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96–364 effective Sept. 26, 1980,

except as specifically provided, see section 1461(e) of

this title.

Amendment by section 410(a) of Pub. L. 96–364 effective Jan. 1, 1975, except with respect to contributions

received by a collectively bargained plan maintained

by more than one employer before Sept. 26, 1980, see

section 410(c) of Pub. L. 96–364, set out as a note under

section 401 of Title 26, Internal Revenue Code.

REGULATIONS

Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this part

call for the promulgation of regulations, see sections

1031 and 1114 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1104, 1105, 1114,

1403 of this title; title 26 section 409.

§ 1104. Fiduciary duties

(a) Prudent man standard of care

(1) Subject to sections 1103(c) and (d), 1342, and

1344 of this title, a fiduciary shall discharge his

duties with respect to a plan solely in the interest of the participants and beneficiaries and—

(A) for the exclusive purpose of:

(i) providing benefits to participants and

their beneficiaries; and

(ii) defraying reasonable expenses of administering the plan;

(B) with the care, skill, prudence, and diligence under the circumstances then prevailing

that a prudent man acting in a like capacity