§ 1101 TITLE 29—LABOR Page 428

PART 4—FIDUCIARY RESPONSIBILITY

PART REFERRED TO IN OTHER SECTIONS

This part is referred to in sections 1002, 1055, 1056,

1132, 1169, 1201, 1342, 1349 of this title.

§ 1101. Coverage

(a) Scope of coverage

This part shall apply to any employee benefit

plan described in section 1003(a) of this title (and

not exempted under section 1003(b) of this title),

other than—

(1) a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a

select group of management or highly compensated employees; or

(2) any agreement described in section 736 of

title 26, which provides payments to a retired

partner or deceased partner or a deceased

partner’s successor in interest.

(b) Securities or policies deemed to be included

in plan assets

For purposes of this part:

(1) In the case of a plan which invests in any

security issued by an investment company

registered under the Investment Company Act

of 1940 [15 U.S.C. 80a–1 et seq.], the assets of

such plan shall be deemed to include such security but shall not, solely by reason of such

investment, be deemed to include any assets of

such investment company.

(2) In the case of a plan to which a guaranteed benefit policy is issued by an insurer, the

assets of such plan shall be deemed to include

such policy, but shall not, solely by reason of

the issuance of such policy, be deemed to include any assets of such insurer. For purposes

of this paragraph:

(A) The term ‘‘insurer’’ means an insurance company, insurance service, or insurance organization, qualified to do business

in a State.

(B) The term ‘‘guaranteed benefit policy’’

means an insurance policy or contract to the

extent that such policy or contract provides

for benefits the amount of which is guaranteed by the insurer. Such term includes any

surplus in a separate account, but excludes

any other portion of a separate account.

(c) Clarification of application of ERISA to insurance company general accounts

(1)(A) Not later than June 30, 1997, the Secretary shall issue proposed regulations to provide guidance for the purpose of determining, in

cases where an insurer issues 1 or more policies

to or for the benefit of an employee benefit plan

(and such policies are supported by assets of

such insurer’s general account), which assets

held by the insurer (other than plan assets held

in its separate accounts) constitute assets of the

plan for purposes of this part and section 4975 of

title 26 and to provide guidance with respect to

the application of this subchapter to the general

account assets of insurers.

(B) The proposed regulations under subparagraph (A) shall be subject to public notice and

comment until September 30, 1997.

(C) The Secretary shall issue final regulations

providing the guidance described in subparagraph (A) not later than December 31, 1997.

(D) Such regulations shall only apply with respect to policies which are issued by an insurer

on or before December 31, 1998, to or for the benefit of an employee benefit plan which is supported by assets of such insurer’s general account. With respect to policies issued on or before December 31, 1998, such regulations shall

take effect at the end of the 18-month period following the date on which such regulations become final.

(2) The Secretary shall ensure that the regulations issued under paragraph (1)—

(A) are administratively feasible, and

(B) protect the interests and rights of the

plan and of its participants and beneficiaries

(including meeting the requirements of paragraph (3)).

(3) The regulations prescribed by the Secretary pursuant to paragraph (1) shall require,

in connection with any policy issued by an insurer to or for the benefit of an employee benefit

plan to the extent that the policy is not a guaranteed benefit policy (as defined in subsection

(b)(2)(B) of this section)—

(A) that a plan fiduciary totally independent

of the insurer authorize the purchase of such

policy (unless such purchase is a transaction

exempt under section 1108(b)(5) of this title),

(B) that the insurer describe (in such form

and manner as shall be prescribed in such regulations), in annual reports and in policies issued to the policyholder after the date on

which such regulations are issued in final form

pursuant to paragraph (1)(C)—

(i) a description of the method by which

any income and expenses of the insurer’s

general account are allocated to the policy

during the term of the policy and upon the

termination of the policy, and

(ii) for each report, the actual return to

the plan under the policy and such other financial information as the Secretary may

deem appropriate for the period covered by

each such annual report,

(C) that the insurer disclose to the plan fiduciary the extent to which alternative arrangements supported by assets of separate accounts of the insurer (which generally hold

plan assets) are available, whether there is a

right under the policy to transfer funds to a

separate account and the terms governing any

such right, and the extent to which support by

assets of the insurer’s general account and

support by assets of separate accounts of the

insurer might pose differing risks to the plan,

and

(D) that the insurer manage those assets of

the insurer which are assets of such insurer’s

general account (irrespective of whether any

such assets are plan assets) with the care,

skill, prudence, and diligence under the circumstances then prevailing that a prudent

man acting in a like capacity and familiar

with such matters would use in the conduct of

an enterprise of a like character and with like

aims, taking into account all obligations supported by such enterprise.

(4) Compliance by the insurer with all requirements of the regulations issued by the Secretary

pursuant to paragraph (1) shall be deemed com-
Page 429 TITLE 29—LABOR § 1102

pliance by such insurer with sections 1104, 1106,

and 1107 of this title with respect to those assets

of the insurer’s general account which support a

policy described in paragraph (3).

(5)(A) Subject to subparagraph (B), any regulations issued under paragraph (1) shall not take

effect before the date on which such regulations

become final.

(B) No person shall be subject to liability

under this part or section 4975 of title 26 for conduct which occurred before the date which is 18

months following the date described in subparagraph (A) on the basis of a claim that the assets

of an insurer (other than plan assets held in a

separate account) constitute assets of the plan,

except—

(i) as otherwise provided by the Secretary in

regulations intended to prevent avoidance of

the regulations issued under paragraph (1), or

(ii) as provided in an action brought by the

Secretary pursuant to paragraph (2) or (5) of

section 1132(a) of this title for a breach of fiduciary responsibilities which would also constitute a violation of Federal or State criminal law.

The Secretary shall bring a cause of action described in clause (ii) if a participant, beneficiary, or fiduciary demonstrates to the satisfaction of the Secretary that a breach described

in clause (ii) has occurred.

(6) Nothing in this subsection shall preclude

the application of any Federal criminal law.

(7) For purposes of this subsection, the term

‘‘policy’’ includes a contract.

(Pub. L. 93–406, title I, §401, Sept. 2, 1974, 88 Stat.

874; Pub. L. 101–239, title VII, §7891(a)(1), Dec. 19,

1989, 103 Stat. 2445; Pub. L. 104–188, title I,

§1460(a), Aug. 20, 1996, 110 Stat. 1820.)

REFERENCES IN TEXT

The Investment Company Act of 1940, referred to in

subsec. (b)(1), is title I of act Aug. 22, 1940, ch. 686, 54

Stat. 789, as amended, which is classified generally to

subchapter I (§80a–1 et seq.) of chapter 2D of Title 15,

Commerce and Trade. For complete classification of

this Act to the Code, see section 80a–51 of Title 15 and

Tables.

AMENDMENTS

1996—Subsec. (c). Pub. L. 104–188 added subsec. (c).

1989—Subsec. (a)(2). Pub. L. 101–239 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.

EFFECTIVE DATE OF 1996 AMENDMENT

Section 1460(b) of Pub. L. 104–188 provided that:

‘‘(1) IN GENERAL.—Except as provided in paragraph (2),

the amendment made by this section [amending this

section] shall take effect on January 1, 1975.

‘‘(2) CIVIL ACTIONS.—The amendment made by this

section shall not apply to any civil action commenced

before November 7, 1995.’’

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by 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.

PLAN AMENDMENTS NOT REQUIRED UNTIL

JANUARY 1, 1998

For provisions directing that if any amendments

made by subtitle D [§§1401–1465] of title I of Pub. L.

104–188 require an amendment to any plan or annuity

contract, such amendment shall not be required to be

made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.

104–188, set out as a note under section 401 of Title 26,

Internal Revenue Code.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1003 of this title;

title 26 section 4975.

§ 1102. Establishment of plan

(a) Named fiduciaries

(1) Every employee benefit plan shall be established and maintained pursuant to a written instrument. Such instrument shall provide for one

or more named fiduciaries who jointly or severally shall have authority to control and manage

the operation and administration of the plan.

(2) For purposes of this subchapter, the term

‘‘named fiduciary’’ means a fiduciary who is

named in the plan instrument, or who, pursuant

to a procedure specified in the plan, is identified

as a fiduciary (A) by a person who is an employer or employee organization with respect to

the plan or (B) by such an employer and such an

employee organization acting jointly.

(b) Requisite features of plan

Every employee benefit plan shall—

(1) provide a procedure for establishing and

carrying out a funding policy and method consistent with the objectives of the plan and the

requirements of this subchapter,

(2) describe any procedure under the plan for

the allocation of responsibilities for the operation and administration of the plan (including any procedures described in section

1105(c)(1) of this title),

(3) provide a procedure for amending such

plan, and for identifying the persons who have

authority to amend the plan, and

(4) specify the basis on which payments are

made to and from the plan.

(c) Optional features of plan

Any employee benefit plan may provide—

(1) that any person or group of persons may

serve in more than one fiduciary capacity with

respect to the plan (including service both as

trustee and administrator);

(2) that a named fiduciary, or a fiduciary

designated by a named fiduciary pursuant to a

plan procedure described in section 1105(c)(1)

of this title, may employ one or more persons

to render advice with regard to any responsibility such fiduciary has under the plan; or

(3) that a person who is a named fiduciary

with respect to control or management of the

assets of the plan may appoint an investment

manager or managers to manage (including

the power to acquire and dispose of) any assets

of a plan.

(Pub. L. 93–406, title I, §402, Sept. 2, 1974, 88 Stat.

875.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1002, 1103, 1105,

1114 of this title.