[Federal Register Volume 71, Number 237 (Monday, December 11, 2006)]
[Notices]
[Pages 71562-71579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9633]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

DEPARTMENT OF THE TREASURY

Internal Revenue Service

PENSION BENEFIT GUARANTY CORPORATION

RIN 1210-AB14


Proposed Revision of Annual Information Return/Reports

AGENCIES: Employee Benefits Security Administration, Labor, Internal 
Revenue Service, Treasury, Pension Benefit Guaranty Corporation.

ACTION: Notice of Supplemental Proposed Forms Revisions.

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SUMMARY: This document contains a proposal to make changes required by 
the Pension Protection Act of 2006 (PPA) to the Form 5500 Annual 
Return/Report filed for employee benefit plans under the Employee 
Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue 
Code (Code). The proposed changes supplement proposed revisions to the 
Form 5500 Annual Return/Report published, prior to the enactment of the 
PPA, by the Department of Labor, the Internal Revenue Service, and the 
Pension Benefit Guaranty Corporation (Agencies) in the Federal Register 
on July 21, 2006, at 71 FR 41616 (July 2006 Proposal). This 
supplemental proposal replaces the Schedule B, ``Actuarial 
Information,'' with separate actuarial schedules for single-employer 
plans (Schedule SB) and multiemployer plans (Schedule MB) to reflect 
PPA changes in funding and annual reporting requirements; adds new 
questions to the Schedule R, ``Retirement Plan Information,'' to 
collect additional information regarding single and multiemployer 
defined benefit pension plans required by the PPA; and proposes having 
the Form 5500-SF Annual Return/Report (Short Form 5500) included in the 
July 2006 Proposal serve as the simplified report required by the PPA 
for plans with fewer than 25 participants. The revisions are being 
proposed for 2008 plan year filings and would affect employee pension 
and welfare benefit plans, plan sponsors, administrators, and service 
providers to plans subject to annual reporting requirements under ERISA 
and the Code.

DATES: Written comments must be received by the Department of Labor on 
or before January 10, 2007.

ADDRESSES: Commenters are encouraged to submit comments electronically 
to http://www.regulations.gov (follow instructions for submission) or 
<a href="/cdn-cgi/l/email-protection#482d65071a01082c2724662f273e"><span class="__cf_email__" data-cfemail="89eca4c6dbc0c9ede6e5a7eee6ff">[email protected]</span></a>. Comments also may be addressed to the Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, Room N-5669, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attn: Supplemental Form 5500 
Revision (RIN 1210-AB14). If comments are submitted electronically, 
paper submissions are not necessary.
    Comments will be available to the public at http://www.dol.gov/ebsa 
and http://www.regulations.gov. Comments also will be available for 
public inspection at the Public Disclosure Room, N-1513, Employee 
Benefits Security Administration, 200 Constitution Avenue, NW., 
Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Ann Junkins, Internal Revenue Service 
(IRS), (202) 283-0722, for questions relating to Schedules SB, MB, and 
Schedule R, as well as general questions relating to reporting under 
the Internal Revenue Code; Amy Viener, Pension Benefit Guaranty 
Corporation (PBGC), (202) 326-4080 for questions relating to Schedules 
SB and MB, and Michael Packard, PBGC, 202 326-4080 for questions 
relating to the Schedule R, as well as questions relating to the 
general reporting requirements under Title IV of ERISA; Elizabeth A. 
Goodman or Yolanda Wartenberg, Employee Benefits Security 
Administration (EBSA), U.S. Department of Labor, (202) 693-8523, for 
questions relating to the Short Form 5500-SF, as well as general 
reporting requirements under Title I of ERISA. The telephone numbers 
referenced above are not toll-free numbers.
    To enable the public to better evaluate the proposed changes, the 
Department is making available on its Web site at http://www.dol.gov/ebsa, mock ups of the Schedules SB, MB and R. Copies of the mock ups 
may also be obtained by calling the EBSA's Public Disclosure Room at 
1.866.444.EBSA (3272).

SUPPLEMENTARY INFORMATION: 

A. Background

    Sections 101 and 104 of Title I and section 4065 of Title IV of the 
Employee Retirement Income Security Act of 1974 (ERISA), as amended, 
sections 6058(a) and 6059(a) of the Internal Revenue Code of 1986 
(Code), as amended, and the regulations issued under those sections, 
impose certain annual reporting and filing obligations on pension and 
welfare benefit plans, as

[[Page 71563]]

well as on certain other entities.\1\ The Department of Labor's 
(Department) annual reporting regulations, including 29 CFR 2520.103-1, 
are promulgated under the provisions of ERISA that authorize the 
creation of limited exemptions and simplified reporting and disclosure 
for welfare plans under ERISA section 104(a)(3), simplified annual 
reports under ERISA section 104(a)(2)(A) for pension plans that cover 
fewer than 100 participants, and alternative methods of compliance for 
all pension plans under ERISA section 110(a). Plan administrators, 
employers, and others generally satisfy these annual reporting 
obligations by the filing of the Form 5500 ``Annual Return/Report of 
Employee Benefit Plan,'' together with any required attachments and 
schedules (Form 5500 Annual Return/Report), in accordance with the 
instructions and related regulations.
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    \1\ Other filing requirements not within the scope of this 
proposal may apply to certain employee benefit plans and multiple 
employer welfare arrangements under ERISA or to other benefit 
arrangements under the Code.
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    The Form 5500 Annual Return/Report is the principal source of 
information and data available to the Department, the IRS, and the PBGC 
(Agencies) concerning the operations, funding, and investments of more 
than 800,000 pension and welfare benefit plans. These plans cover an 
estimated 150 million participants and hold an estimated $4.3 trillion 
in assets. Accordingly, the Form 5500 Annual Return/Report necessarily 
constitutes an integral part of each Agency's enforcement, research, 
and policy formulation programs, and is a source of information and 
data for use by other federal agencies, Congress, and the private 
sector in assessing employee benefit, tax, and economic trends and 
policies. The Form 5500 Annual Return/Report also serves as the primary 
means by which plan operations can be monitored by participants and 
beneficiaries and by the general public.
    The Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat. 780 
(2006) (PPA), enacted on August 17, 2006, changed certain annual 
reporting rules under ERISA and funding requirements under ERISA and 
the Code for pension plans. The PPA also required the Treasury 
Department/IRS and the Department to provide a simplified annual return 
for certain retirement plans that cover fewer than 25 participants. The 
Form 5500 Annual Return/Report, therefore, needs to be updated to 
reflect these PPA changes. The changes proposed in this document are 
limited to those needed to reflect the PPA annual reporting 
requirements and do not attempt to address comments received in 
connection with the July 2006 Proposal.\2\ One exception, however, is 
the movement of proposed asset allocation questions for certain large 
defined benefit plans to the Schedule R in conjunction with the 
proposal to eliminate the existing Schedule B and create two new 
Schedules--the Schedule SB and the Schedule MB.
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    \2\ The term ``July 2006 Proposal'' used throughout this Notice 
refers to two documents: The Notice of the Proposed Revision of 
Annual Information Return/Reports contained at 71 FR 41615 (July 21, 
2006) (sometimes referred to as ``July 2006 Notice''); and the 
proposed rule regarding Annual Reporting and Disclosure contained at 
71 FR 41392 (July 21, 2006) (sometimes referred to as ``July 2006 
Proposed Rules''), which were necessary to conform the annual 
reporting and disclosure regulations to the proposed revisions.
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B. Need To Expedite Adoption of Supplemental Proposed Revisions

    These supplemental proposed revisions to the Form 5500 Annual 
Return/Report, as well as the July 2006 Proposal, are part of the 
Agencies' move to a fully electronic filing and processing system to 
replace the existing paper-based ERISA Filing Acceptance System 
(EFAST). As part of that initiative, the Department published a final 
rule in the Federal Register on July 21, 2006, establishing an 
electronic filing requirement for the Form 5500 Annual Return/Report 
for plan years beginning on or after January 1, 2008 (Electronic Filing 
Rule). 71 FR 41359. The Department also published a Request for 
Proposal on September 1, 2006, seeking bids to develop the new wholly 
electronic system, known as EFAST2, to electronically receive, process, 
store, publicly disclose, distribute, and archive the Form 5500 Annual 
Return/Report filings that will be submitted electronically starting 
with 2008 plan year filings. See Solicitation Number DOL069RP20266 for 
EFAST2 at http://www.fedbizopps.gov (FedBizOpps.gov is the single 
government point-of-entry for federal government procurement 
opportunities over $25,000). In order for supplemental form revisions 
to be incorporated into the EFAST2 procurement process in a timely 
fashion, the supplemental form changes need to be finalized by the 
February 2007 target for finalizing the July 2006 Proposal.
    Furthermore, in light of the time constraints, the Agencies are 
publishing in this Notice charts listing the line item data elements on 
the new actuarial schedules (Schedule SB and Schedule MB) and the new 
line item data elements for the Schedule R, as well as an indication of 
which items on the Schedule SB and Schedule MB are the same, similar 
to, or different from existing Schedule B data items. To enable the 
public to better evaluate the proposed changes, the Department is also 
making available on its Web site at http://www.dol.gov/ebsa, mock ups 
of the Schedules SB, MB and R (copies of the mock ups may also be 
obtained by calling the EBSA's Public Disclosure Room at 1.866.444.EBSA 
(3272)). The Agencies believe the information being published will 
provide an adequate basis for public comments on the supplemental 
proposed form changes. The instructions for the new Schedules SB and MB 
and the new Schedule R questions will be subject to a later publication 
so that they can be developed based on guidance to be issued by the IRS 
or PBGC implementing the PPA requirements underlying the Form 5500 
Annual Return/Report data elements. For example, guidance may explain 
the manner in which the employer makes elections with respect to the 
carryover and/or prefunding balances.

C. Discussion of Supplemental Proposed Revisions

1. Replacing Schedule B With Separate Schedules for Single-Employer 
Plans (Schedule SB) and Multiemployer Plans (Schedule MB)

    The PPA significantly changed the funding requirements applicable 
to defined benefit pension plans. These changes rendered the existing 
Schedule B largely obsolete, especially for single-employer defined 
benefit pension plans. While the PPA changes for multiemployer defined 
benefit pension plans allowed for continued use of a reporting scheme 
similar to the existing Schedule B, a number of Schedule B changes were 
required even for multiemployer plans. The Agencies believe that the 
appropriate way to address the PPA changes is to eliminate the existing 
Schedule B and create two new Schedules--the Schedule SB, ``Single-
employer Defined Benefit Plan Actuarial Information,'' and the Schedule 
MB, ``Multiemployer Defined Benefit Plan and Money Purchase Plan 
Actuarial Information.''
a. New Schedule SB ``Actuarial Information Single-Employer Defined 
Benefit Plans''
    The proposed Schedule SB would be filed by all single-employer 
defined benefit plans (including multiple-employer defined benefit 
plans).\3\ The

[[Page 71564]]

Schedule SB will capture identifying information about the plan and 
plan sponsor, the type of plan, and number of participants. It will 
have basic information about plan assets, number of participants, and 
funding target information. Like the existing Schedule B, it will have 
a statement by an enrolled actuary, modified to reflect that the 
enrolled actuary no longer will be certifying as to the reasonableness 
of certain actuarial assumptions, which are prescribed by statute or 
regulation.
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    \3\ Unlike multiemployer plans within the meaning of ERISA 
sections 3(37) and 4001(a)(3) to which more than one employer is 
required to contribute, which must be maintained pursuant to one or 
more collective bargaining agreements between one or more employee 
organization and more than one employer, and which must satisfy 
other requirements prescribed in regulations issued by the 
Department of Labor at 29 CFR 2510.3-37, multiple-employer plans are 
plans that cover the employees of two or more unrelated employers 
but are treated as single-employer plans for various purposes under 
ERISA.
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    The remaining data elements are to be in a similar format to the 
current Schedule B and consist of basic actuarial worksheets designed 
to allow the Agencies to evaluate the plan's compliance with the 
funding requirements as amended by sections 101, 102, 111, and 112 of 
the PPA, and to ensure that the reporting requirements under ERISA, as 
amended by section 503 of the PPA, are included on the schedule. The 
material is divided into sections consisting of ``Basic Information,'' 
``Beginning of Year Carryover and Prefunding Balances,'' ``Funding 
Percentages,'' ``Contributions and Liquidity Shortfalls,'' 
``Assumptions Used to Determine Funding Target and Target Normal 
Cost,'' ``Miscellaneous Items,'' ``Reconciliation of Unpaid Minimum 
Required Contributions for Prior Years,'' and ``Minimum Required 
Contribution for Current Year.'' Plans for which the effective date of 
the new PPA funding rules is delayed (e.g., airlines that have frozen 
pension plans electing the alternate funding schedule, PBGC settlement 
plans, certain defense contractors, certain rural electrical 
cooperatives, etc.) will not be required to fill out all of these 
sections. Instead, additional information related to the applicable 
funding rules for such plans will be provided as an attachment. In 
addition to the supplemental schedules required in the past, additional 
attachments may be required as a result of the PPA. For example, if a 
plan is in at-risk status, additional information (e.g., whether the 
expense load applies, a breakdown by category of the at-risk funding 
target without regard to the five-year phase-in) may be required.
    Section 107 of the PPA amended section 103(d)(11) of ERISA to 
require disclosure of the ratio of the current value of the assets of 
the plan to (A) the plan's funding target (as defined in section 
303(d)(1) of the PPA, in the case of a single-employer plan), or (B) 
the plan's current liability (as defined in section 304(c)(6)(D) of the 
PPA, in the case of a multiemployer plan), if that ratio is less than 
70 percent. This requirement is included in Part III, Line 17, of 
Schedule SB.\4\ The Agencies also concluded that, although the PPA did 
not amend section 103(d)(3) or section 103(d)(7), the proposal would 
eliminate the requirement to report ``normal costs,'' ``accrued 
liabilities,'' and ``certification of the contribution necessary to 
reduce the accumulated funding deficiency to zero'' for single-employer 
plans because these terms do not have continued relevance after the PPA 
amendments to ERISA. Instead, Schedule SB requires reporting the 
``funding target,'' ``target normal cost,'' and the ``amount of unpaid 
minimum required contribution,'' which are the post-PPA terms that most 
closely relate to the information required by section 103(d)(3) and 
103(d)(7).
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    \4\ It is also included on Part I, Line 2c, of Schedule MB.
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b. New Schedule MB, ``Actuarial Information Multiemployer Defined 
Benefit Plans and Money Purchase Plans''
    Because the PPA changes to the actuarial information reporting 
requirements were less substantial for multiemployer plans and money 
purchase plans, the Agencies are proposing to use the existing Schedule 
B as the structure for the proposed new Schedule MB, which is to be 
used for multiemployer defined benefit pension plans and all money 
purchase plans (single-employer and multiemployer). The proposed 
Schedule MB would use the same basic identifying information as on the 
existing Schedule B, although revising the check boxes for type of 
plans and eliminating the check box that in the past was used to 
indicate whether the plan had 100 or fewer participants in the prior 
year. The statement of the enrolled actuary would be modified to 
reflect that the actuarial assumptions must be individually reasonable.
    Lines 1 through 3 of the existing Schedule B would remain 
essentially the same, except for the addition of a new element 1c(3) to 
report accrued liability under the unit credit cost method. To comply 
with section 503 of the PPA, the existing line 4 would be deleted and 
replaced with a new line 4 to identify information about whether the 
plan is in endangered, seriously endangered, or critical status, and, 
if so, whether the plan is complying with the applicable requirements 
for its funding improvement or rehabilitation plan. The current line 5 
identifying the actuarial cost method would be revised to incorporate 
alternative methods available only to multiemployer plans, which were 
previously reported under item 8b, and to reflect additional 
information required by section 503 of the PPA for plans using the 
shortfall method. Similarly, the Schedule MB would incorporate most of 
Schedule B current lines 6 through 9, but would eliminate information 
on the weighted average retirement age and annual withdrawal rates. New 
items would be added to Item 8 to reflect information required under 
section 503 of the PPA pertaining to extensions of periods to amortize 
bases and the use of the shortfall method. In addition, the requirement 
to provide a schedule of active participant data would be extended to 
multiemployer plans. With respect to Item 9, lines pertaining to 
additional interest charges due to late quarterly contributions, and 
any adjusted funding charges would be eliminated. Schedule MB would 
also revise the questions regarding the bases for which amortization 
periods are extended and revise the questions to conform to sections 
201, 202, 211, and 212 of the PPA the questions on the reconciliation 
account. The Part II of the current Schedule B, which does not relate 
to multiemployer plans, would be deleted.

2. Additional Schedule R Questions for Single-employer and 
Multiemployer Defined Benefit Pension Plans

    Section 503 of the PPA amended ERISA by adding ERISA section 
103(f)(2), which requires multiemployer plans to report the amount of 
assets transferred in a multiemployer plan merger, information on 
withdrawing employers and their withdrawal liability, information on 
employers contributing to multiemployer plans, and information on 
participants for whom no employers made contributions.
    The Agencies' July 2006 Proposal required plan administrators to 
identify major contributing employers to multiemployer defined benefit 
pension plans so that the PBGC could improve its ability to assess the 
financial condition of the plan and the financial risk posed to the 
plan by the financial collapse or withdrawal of one or more 
contributing employers. For these employers, the plan would be required 
to report on Schedule R: (1) Name of the

[[Page 71565]]

contributing employer; (2) the employer identification number (EIN); 
(3) dollar amount contributed; (4) contribution rate; (5) type of base 
units for the contribution; and (6) expiration date for the collective 
bargaining agreement pursuant to which contributions are required to be 
made to the plan. These questions are shown here on the new Schedule R 
because they are now also required by section 503 of the PPA. To 
conform the language of the questions to that of the PPA, the question 
now requires identification of those employers contributing more than 
five percent, rather than those contributing five percent or more, as 
in the July 2006 proposal. In addition, the July 2006 Proposal would 
have added a question on the Form 5500 seeking the total number of 
contributing employers to multiemployer plans as well as all other 
types of plans, a data item now also required by section 503 of the 
PPA.
    Several additional new questions would be added to the Schedule R 
to comply with section 503 of the PPA. The Schedule R, new Part V, 
under this proposal, would now be expanded to provide more information 
on multiemployer defined benefit plans. It would ask for information 
regarding participants for whom no employer contributions were made for 
the current plan year and the two preceding plan years and information 
regarding the number of employers withdrawing from the plan and the 
assessed and estimated withdrawal liability. A new Part VI would be 
added to Schedule R to collect funded percentage information for 
single-employer and multiemployer defined benefit pension plans with 
liabilities arising from mergers or transfers of assets during the plan 
year.
    This proposal also moves to Part VI of Schedule R the asset 
allocation questions for large defined benefit plans (1000 or more 
participants) included on the Schedule B in the July 2006 Proposal. 
Under this supplemental proposal, the Schedule R would include a new 
section requiring such plans to report the percentage of total plan 
assets held as stock; debt (with break-outs for government, investment-
grade, and high yield debt); real estate; and other. The plan would 
also be required to provide a Macaulay duration of aggregate debt 
investments. As part of the development of the new Schedules SB and MB, 
the Agencies decided to move these questions to the Schedule R from the 
Schedule B (where they appeared in the July 2006 Proposal) because the 
Agencies concluded that this essentially financial information should 
not be subject to the enrolled actuary certification requirement 
applicable to other Schedule SB and MB information. This supplemental 
proposal to include these asset distribution questions for certain 
large defined benefit plans on the Schedule R should not be construed 
as a determination by the Agencies regarding public comments received 
in response to the July 2006 Proposal on the substance of the proposed 
questions themselves.

3. Simplified Annual Reporting for Plans With Fewer Than 25 
Participants

    Section 1103(b) of the PPA requires the Secretary of the Treasury/
IRS and the Secretary of Labor to provide for the filing of a 
simplified annual return for any retirement plan which covers fewer 
than 25 participants on the first day of the plan year and which (1) 
meets the minimum coverage requirements of section 410(b) of the Code 
without being combined with any other plan of the business that covers 
the employees of the business; (2) does not cover a business that is a 
member of an affiliated service group, a controlled group of 
corporations, or a group of businesses under common control; and (3) 
does not cover a business that uses the services of leased employees 
(within the meaning of section 414(n) of the Code). The PPA provision 
does not include specific requirements as to the form or content of the 
simplified filing.
    As noted above, the July 2006 Proposal included, among other 
changes: (1) The establishment of a Form 5500-SF Annual Return/Report 
(Short Form or Short Form 5500) as a new simplified report for certain 
small plans. The Short Form is a new two-page form for small plans 
(generally, plans with fewer than 100 participants) with secure and 
easy to value investment portfolios. As set forth in greater detail in 
the July 2006 Proposal, a plan would be eligible to file the Short Form 
if the plan: (1) Covers fewer than 100 participants or would be 
eligible to file as a small plan under the 80 to 120 rule in 29 CFR 
2520.103-1(d); (2) is eligible for the small plan audit waiver under 29 
CFR 2520.104-46 (but not by virtue of enhanced bonding); (3) holds no 
employer securities; and (4) has 100% of its assets in investments that 
have a readily ascertainable fair market value. Because the Agencies 
believe that all multiemployer plans should be required to answer newly 
proposed questions on the Form 5500 Annual Return/Report and the 
Schedule R regarding contributing employers, as proposed, multiemployer 
plans were not to be eligible to file the Short Form. Most Short Form 
filers would not be required to file any schedules, although defined 
benefit pension plans would continue to be required to file Schedule 
SB, where applicable. Those small plans not eligible to use the Short 
Form could still avail themselves of the current simplified reporting 
alternatives for small pension plans.
    The Agencies believe that the requirement in the PPA to provide 
``simplified'' reporting for plans with fewer than 25 participants is 
satisfied by the simplified reporting scheme in the July 2006 Proposal. 
The Agencies believe that the Short Form 5500, as proposed, was 
targeted to provide a simplified report for plans with fewer than 25 
employees because we estimate that approximately 75% of all plans 
eligible to file the Short Form cover fewer than 25 participants. The 
Agencies propose to continue to prohibit plans that invest in employer 
securities or other hard to value assets and multiemployer plans from 
being eligible to use the Short Form 5500. The Agencies believe this 
conclusion is consistent with the PPA's emphasis on increasing 
transparency, accurate measurement of assets, greater participant 
control over the disposition of employer securities in defined 
contribution plans, and expanding the annual reporting requirements for 
multiemployer plans. As under the July 2006 Proposal, small plans not 
eligible to use the Short Form 5500 still would be able to avail 
themselves of the other simplified reporting options available to small 
plans under the Form 5500 Annual Return/Report and its schedules.\5\
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    \5\ The PPA provision requiring a simplified report for plans 
that cover fewer than 25 participants only applies to plans that 
meet the minimum coverage requirements of Code section 410(b) 
without being combined with any other plan that covers business' 
employees; does not cover a business that is a member of an 
affiliates service group, a controlled group of corporations, or a 
group of businesses under common control; and does not cover a 
business that uses leased employees (within the meaning of section 
414(n) of such Code). Since these PPA conditions focus on tax 
qualification rules under the Code, and because the PPA did not 
prohibit the Department of providing those plans with a simplified 
report pursuant to its general authority under ERISA section 
104(a)(2)(A) to establish simplified reports for pension plans that 
cover fewer than 100 participants, the Department concluded that it 
did not need to restrict the simplified report being proposed under 
Title I of ERISA with those conditions. The Department also notes 
the elimination of IRS-only schedules from the Form 5500 and from 
the Short Form 5500 as a part of the Department's adoption of a 
wholly electronic filing requirement under Title I of ERISA 
diminishes the relevance of the above PPA conditions to Form 5500 
filings under EFAST. However, as explained in the Department's 
Electronic Filing Final Rule, 71 FR 41359 (July 21, 2006), the IRS 
intends to permit plans that cover only sole proprietors or partners 
(and their spouses) that are not subject to Title I of ERISA but 
file the Form 5500-EZ to satisfy the annual reporting and filing 
obligations imposed by the Code, to satisfy the requirement to file 
the Form 5500-EZ with the IRS or by filing the Form 5500-SF 
electronically with the EFAST system.

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[[Page 71566]]

    A list of the proposed data elements for the Short Form 5500 and a 
mock-up of the Short Form and the instructions were published in the 
Federal Register as part of the July 2006 Proposal. The July 2006 
Proposal can be viewed on the Department's Web site at http://www.dol.gov/ebsa.
    Section 1103(b) of the PPA requires a simplified report to be 
available for 2007 plan year filings, i.e., filings for plan years 
beginning after December 31, 2006. This proposal addresses the 
simplified report requirement for 2008 plan years, i.e., those 
beginning after December 31, 2007. For the 2007 plan year, the Agencies 
will allow plans covering fewer than 25 participants that would meet 
the conditions for being eligible to file the Short Form 5500 if those 
conditions applied to 2007 filings to file an abbreviated version of 
the current Form 5500 Annual Return/Report available for ``small plan'' 
filers. Specifically, the Department anticipates that the simplified 
report will to a large extent replicate within the context of the 
existing Form 5500 Annual Return/Report structure the information that 
would be required to be reported on the proposed Short Form 5500 (Form 
5500-SF), possibly by allowing certain schedules to be excluded from 
the filing or requiring only certain line items to be completed on 
required schedules. The Department understands that some eligible small 
plan filers may want to wait until the 2008 plan year to file the Short 
Form in order to avoid having to implement changes to their annual 
reporting systems and procedures for their 2007 plan year filings and 
then adjust them again in 2008 to file the Short Form, and, 
accordingly, the Department intends that these plans will have the 
option of continuing to file in accordance with the normal rules for 
the 2007 plan year. Specific guidance regarding this simplified 
reporting option will be included in the instructions to the 2007 Form 
5500. The Agencies currently anticipate posting information copies of 
the 2007 forms and instructions in July 2007.

4. Electronic Filing and Web Site Display of Form 5500 Information

    Section 504 of the PPA requires that, for defined benefit pension 
plans, the basic plan identifying information and actuarial information 
included in the annual report must be filed with the Department in an 
electronic format that accommodates display on the Internet. As noted 
above, the Department has an ongoing initiative to move to a wholly 
electronic filing and processing system for all Form 5500 reports filed 
with the Department starting with reporting years beginning on or after 
January 1, 2008. The Department's Request for Proposal on the EFAST2 
system published on September 1st already calls for the system to be 
capable of electronic public disclosure of all Form 5500 filings. The 
Department intends that the new EFAST2 system and the Electronic Filing 
Rule will satisfy section 504 of the PPA's requirement regarding 
electronic filing with and display of information by the Department.

D. Findings on the Revised Form 5500 Annual Return/Report (Including 
Short Form 5500) as a Limited Exemption and Alternative Method of 
Compliance

    Section 104(a)(2)(A) of ERISA authorizes the Secretary of Labor 
(Secretary) to prescribe by regulation simplified reporting for pension 
plans that cover fewer than 100 participants. Section 104(a)(3) 
authorizes the Secretary to exempt any welfare plan from all or part of 
the reporting and disclosure requirements of Title I of ERISA or to 
provide simplified reporting and disclosure if the Secretary finds that 
such requirements are inappropriate as applied to such plans. Section 
110 permits the Secretary to prescribe for pension plans alternative 
methods of complying with any of the reporting and disclosure 
requirements if the Secretary finds that: (1) The use of the 
alternative method is consistent with the purposes of Title I of ERISA, 
provides adequate disclosure to plan participants and beneficiaries, 
and provides adequate reporting to the Secretary; (2) application of 
the statutory reporting and disclosure requirements would increase 
costs to the plan or impose unreasonable administrative burdens with 
respect to the operation of the plan; and (3) the application of the 
statutory reporting and disclosure requirements would be adverse to the 
interests of plan participants in the aggregate. For purposes of Title 
I of ERISA, the filing of a completed Form 5500 Return/Report, 
including the filing of the proposed Short Form 5500, in accordance 
with the instructions and related regulations, generally would 
constitute compliance with the limited exemption and alternative method 
of compliance in 29 CFR 2520.103-1(b).
    The Department finds under sections 104(a)(3) and 110 of ERISA that 
the use of the proposed Short Form 5500, the Schedule SB and MB to 
replace the Schedule B, and the revised Schedule R, along with the 
previously proposed revised Form 5500 Annual Return/Report, is 
consistent with the purposes of Title I of ERISA and provides adequate 
disclosure to participants and beneficiaries and adequate reporting to 
the Secretary. While the information that would be required to be 
reported on or in connection with the revised Form 5500 Annual Return/
Report and the proposed Short Form 5500 deviates, as before, in some 
respects, from that delineated in section 103 of ERISA, the information 
essential to ensuring adequate disclosure and reporting under Title I 
is required to be included on or as part of the Form 5500 Annual 
Return/Report, as proposed to be revised, and the proposed Short Form 
5500.
    The use of the Form 5500 Annual Return/Report, as revised, or the 
proposed Short Form 5500 will relieve plans subject to the annual 
reporting requirements from increased costs and unreasonable 
administrative burdens by providing a standardized format that 
facilitates reporting, eliminates duplicative reporting requirements, 
and simplifies the content of the annual report in general. The Form 
5500 Annual Return/Report, under the proposed revision, including the 
proposed Short Form, is intended to further reduce the administrative 
burdens and costs attributable to compliance with the annual reporting 
requirements.
    Taking into account the above, the Department has determined that 
application of the statutory annual reporting and disclosure 
requirements without the availability of the Form 5500 Annual Return/
Report, including the proposed Short Form 5500, would be adverse to the 
interests of participants in the aggregate. The proposed revised Form 
5500 Annual Return/Report provides for the reporting and disclosure of 
financial and other plan information described in section 103 of ERISA 
in a uniform, efficient, and understandable manner, thereby 
facilitating the disclosure of such information to plan participants 
and beneficiaries.
    Finally, the Department has determined that the use of the Short 
Form 5500 is a simplified means of reporting for purposes of the 
requirements of section 1103 of the PPA that takes into account the 
appropriate balance of reducing filing burdens for plans with fewer 
than 25 participants without impairing enforcement, research, and 
policy needs, and providing adequate disclosure to participants and 
beneficiaries, which balance is required by section 104(a) of ERISA.

[[Page 71567]]

E. Regulatory Impact Analysis

Executive Order 12866 Statement

    Under Executive Order 12866, the Department must determine whether 
a regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action that is likely 
to result in a rule (1) having an annual effect on the economy of $100 
million or more, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    Pursuant to the terms of the Executive Order, it has been 
determined that this regulatory action raises novel legal or policy 
issues arising out of legal mandates and the President's priorities. 
Therefore, this action is a ``significant regulatory action'' and 
subject to OMB review under section 3(f)(4) of Executive Order 12866. 
The Department accordingly has undertaken to assess the costs and 
benefits of this regulatory action in satisfaction of the applicable 
requirements of the Executive Order.
    In accordance with OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), Table 1 below 
depicts an accounting statement showing the net cost associated with 
the provisions of this proposal. The Department believes that some 
employee benefit plans will see a decrease in costs (e.g., Short Form 
eligible plans and single-employer defined benefit pension plans) and 
others might see an increase in costs due to this proposal (e.g., 
multiemployer defined benefit pension plans).\6\ Further information 
about the amount of increase and decrease in costs for particular plan 
types is displayed in the cost section, below. On aggregate, the 
Department estimates a cost reduction of up to $77 million in the first 
year.
---------------------------------------------------------------------------

    \6\ The reduction in costs shown in Table 1 for plans with fewer 
than 25 participants represents a portion of the savings attributed 
to the Short Form 5500 for plans with fewer than 100 participants in 
the July 2006 Proposal and supporting documents. This analysis uses 
the same methodology as used in the July 2006 Proposal to calculate 
the savings, although this analysis refines the result by breaking 
out the amount of savings attributed to plans with fewer than 25 
participants from the total savings.
---------------------------------------------------------------------------

    Unless stated otherwise, this analysis describes the increases and 
decreases in benefits, costs, and burdens that this proposal alone 
would cause as compared to the costs, benefits, and burdens created by 
current law. Where this proposal modifies a forms revision included in 
the July 2006 Proposal, we attempt to explain the nature of the 
modification, but we have not attempted to quantify any differences in 
the respective economic analyses.

    Table 1.--Accounting Statement: Estimated Cost Reduction From the
    Current Reporting Requirements to the Supplemental Proposed Forms
                                Revisions
------------------------------------------------------------------------
                Category                        Net cost  reduction
------------------------------------------------------------------------
Annualized Monetized Benefit............  $77 million.\7\
------------------------------------------------------------------------

Need for Regulatory Action

    The Form 5500 Annual Return/Report serves as the primary source of 
information concerning the operation, funding, assets, and investments 
of pension and other employee benefit plans. The Form 5500 Annual 
Return/Report is an important disclosure document for participants and 
beneficiaries, an enforcement and research tool for the Department, and 
a source of information and data for use by other federal agencies, 
Congress, and the private sector in assessing employee benefit, tax, 
and economic trends and policies. To address changes required by the 
PPA, the Department has attempted in this supplemental proposal to 
balance the interests of participants, beneficiaries, the public, and 
the Department in the protection of ERISA rights and in the 
availability of information on benefit plans with plan administrators' 
and sponsors' interest in minimizing costs attendant with the reporting 
of information to the federal government. The Department believes that 
the proposed supplemental forms revisions' benefits justify the costs. 
The basis for this conclusion is explained below.
---------------------------------------------------------------------------

    \7\ The $77 million figure reflects the cost reduction that 
would occur if this proposal alone were implemented. The $174 
million cost reduction figure from the July 2006 Proposal represents 
the cost reduction that would occur if the July 2006 Proposal alone 
were implemented. See July 2006 Proposed Rule, 71 FR at 41396.
---------------------------------------------------------------------------

Regulatory Alternatives

    Executive Order 12866 directs federal agencies promulgating rules 
to evaluate regulatory alternatives. The Department has concluded that 
its proposal to substitute separate actuarial schedules for single-
employer plans and multiemployer plans for the existing Schedule B and 
to add new questions to the Schedule R is appropriate as a means to 
collect additional information as required by the PPA. Further, the 
Department has concluded that the July 2006 Proposal to make available 
the Short Form 5500 for plans with fewer than 100 participants would be 
an appropriate way to simplify reporting and reduce filer burden for 
plans with fewer than 25 participants, as required in section 1103 of 
the PPA, while still meeting the needs of participants, beneficiaries, 
the public, and the Department in full and adequate disclosure.
    In developing form revisions and implementing regulatory changes, 
as required by the PPA, the Department considered several alternatives. 
The Department's consideration included, for example, different 
approaches to the Schedule B, R, and H changes as well as the 
eligibility criteria for the Short Form 5500.
    The public is invited to comment specifically on the decision 
points for the proposed revisions and on the adequacy of the models, 
assumptions, and data developed to evaluate regulatory burden. In 
considering these alternatives, the Department weighed the objective of 
reduced regulatory burden against the need for adequate reporting and 
disclosure, quantifying impacts where possible.\8\ For example:
---------------------------------------------------------------------------

    \8\ The Department will take into account all comments received 
in response to both this proposal and the July 2006 Proposal in 
connection with finalizing the forms revisions.
---------------------------------------------------------------------------

    <bullet> Change and add new plan funding information on Actuarial 
Information Schedule (Currently Schedule B): Schedule B is filed 
currently by defined benefit pension plans subject to the minimum 
funding schedules. In developing this proposed supplemental revision, 
the Department considered how to balance the need for information to 
help participants, beneficiaries, and the PBGC evaluate the financial 
solvency of both single and multiemployer defined benefit plans with 
the potential burden on administrators of those plans of providing the 
additional information (see discussion in preamble to the July

[[Page 71568]]

2006 Notice). The Department believes that a cost-effective way to 
gather the information required by the PPA is to replace the existing 
Schedule B with separate forms specifically tailored for single-
employer and multiemployer plans, Schedules SB and MB respectively. 
Providing each type of plan with its own actuarial schedule will 
generate cost savings and efficiencies. The Department entertained the 
alternative of simply adding the additional questions required by the 
PPA for both types of plans to the existing Schedule B instead of 
separating the Schedule B into the Schedules SB and MB. However, 
differences in the statutory requirements for single-employer and 
multiemployer plans would cause some questions to have been filled out 
only by single-employer plans and others only by multiemployer plans. 
Plan administrators would have had to spend additional time and effort 
to distinguish questions relevant for their plans. As can be seen in 
Table 2 below, collecting the information on a single Schedule B would 
result in a smaller reduction of burden than adopting the proposed 
separate Schedules SB and MB.

    Table 2.--Change in Burden Between Separate Actuarial Information
 Schedules as Proposed in the Supplemental Proposed Forms Revisions and
                         One Expanded Schedule B
------------------------------------------------------------------------
                                      Change in burden  Change in burden
                                         if separate     if changes are
                                       Schedule Bs are   made to single
                                      established  (as     Schedule B
                                          proposed)       (alternative)
------------------------------------------------------------------------
Total Change in Hours...............           -17,000           -10,000
Total Change in Costs (in Millions).            -$1.48            -$0.84
------------------------------------------------------------------------

    <bullet> Establishment of a Short Form 5500 for certain plans with 
fewer than 25 participants: As discussed in more detail in the preamble 
of the July 2006 Notice (under the heading ``A. Short Form 5500 as New 
Simplified Report for Certain Small Plans,'' 71 FR at 41618), the 
Department determined that most small plans, by virtue of their assets 
being held by regulated financial institutions and having a readily 
determinable fair market value, present reduced risks for their 
participants and beneficiaries and should be allowed a simplified 
annual report filing (i.e., the Short Form 5500). The Department 
estimates that 95% of non-403(b) plans would qualify to file the Short 
Form 5500, 75% of which are plans with fewer than 25 participants.\9\ 
In considering how to provide the simplified filing required by the 
PPA, the Department considered allowing all plans with fewer than 25 
participants, regardless of their investments, to file the Short Form 
5500. The Department estimates that this would affect about 29,000 
plans.
---------------------------------------------------------------------------

    \9\ Previously, in the July 2006 Proposed Rules, the Department 
estimated that 90% of non-403(b) plans would be eligible for filing 
the Short Form 5500. 71 FR at 41397. The Department has revised this 
estimate to conclude that an estimate of 95% eligibility is a more 
accurate estimate. These numbers do not include any estimate 
regarding 403(b) plans because this RIA, which is limited only to 
the changes required by the PPA, is based on current law. Using 
proposed forms revisions, 403(b) plans are treated as having only 
limited reporting requirements of current law, but this supplemental 
notice should not be construed as a substantive determination in 
response to the comments received on the July 2006 Proposal. As 
noted before, the Department anticipates combining all changes to 
the 2008 Form 5500 proposed in the July 2006 Proposal and this 
supplement and addressing the comments on both comprehensively into 
a final notice.
---------------------------------------------------------------------------

    However, the Department continues to believe, as noted in the July 
2006 Proposal, that prohibiting use of the Short Form 5500 by plans 
with employer securities or other assets that are difficult to value is 
consistent with important policy objectives. The importance of those 
policies is underscored by the PPA's emphasis on increasing plan 
transparency, accurate measurement of assets, greater participant 
control over the disposition of employer securities in defined 
contribution plans, and expanding the annual reporting requirements for 
multiemployer plans. All plans with fewer than 25 participants will be 
able to file a simplified annual return. In most cases that simplified 
return will be the Short Form 5500, but as under the July 2006 
Proposal, small plans not eligible to use the Short Form 5500 still 
will be able to avail themselves of the other simplified reporting 
options available to small plans under the Form 5500 Annual Return/
Report and its schedules.
    <bullet> Additional data elements reported on Schedule R: Moving 
the asset distribution questions to Part VI of Schedule R presents an 
alternative to the treatment of these items in the July 2006 Proposal, 
which placed them on Schedule B (now Schedules SB and MB). As noted 
earlier in the preamble, this proposal's placement of these items on 
the Schedule R should not be construed as a determination by the 
Agencies regarding public comments on the substance of the questions 
received in response to the July 2006 Proposal.

Benefits and Costs

    Benefits--The use of the Short Form 5500 for eligible plans to 
satisfy the simplified reporting requirement in the PPA and of the Form 
5500, Schedules SB and MB, and Annual Return/Report and Schedule R, as 
modified, to obtain the additional annual reporting required by the 
PPA, will provide a standardized, streamlined alternative means of 
compliance with applicable statutory reporting requirements, as well as 
providing appropriate simplified annual reports and exemptions under 
section 104(a)(2) and (3) of ERISA. In so doing, they will both ease 
plan administrators' burden of compliance with reporting requirements 
and enhance the utility and accessibility of information reported to 
the government, participants and beneficiaries, and others. In 
particular, the regulations and forms, together with the Department's 
planned program for assisting filers in the preparation and electronic 
submission of filings, will give plan administrators clear guidance and 
a supportive, routine mechanism for satisfying the new reporting 
obligations. They also will make it possible to efficiently capture and 
assemble the information into an electronic data system, as also 
required by the PPA. The data will then be processed and analyzed in 
the service of many beneficial activities. These include monitoring 
compliance with ERISA's reporting and other requirements; targeting and 
carrying out prompt and effective enforcement actions; informing 
participants and beneficiaries of the characteristics, operations, and 
financial status of their benefit plans; producing statistics on the 
employee benefit system, monitoring

[[Page 71569]]

trends therein, and informing the public; and assembling information 
and conducting research that advances knowledge and fosters the 
formulation of sound public policies toward employee benefits. The 
Department believes that the benefits of the proposed supplemental 
revisions justify the costs as further detailed below.
    Separate actuarial schedules for single-employer plans and 
multiemployer plans to reflect PPA changes in funding and annual 
reporting requirements: As noted below, this revision is expected to 
decrease reporting costs for single-employer plans and increase 
reporting costs for multiemployer plans. The Agencies believe, however, 
that the cost increases for multiemployer plans are justified by the 
need to better monitor plan funding. This information is needed by 
participants, beneficiaries, and the PBGC to improve their ability to 
assess the financial condition of the plan.
    Additional data elements reported on Schedule R: As noted below, 
this revision will increase reporting costs for affected plans. The PPA 
requires Multiemployer defined benefit plans to report additional 
information that is needed by participants, beneficiaries, and the PBGC 
to assess the financial risk posed to the plan by a financial collapse 
or withdrawal of one or more contributing employers. Some of the 
additional data elements are already included in the July 2006 Proposal 
and, as further described in the July 2006 Proposed Rule (see 
discussion in preamble to the July 2006 Proposed Rule under the heading 
``Adding Multiemployer Plan Contributing Employer Information,'' 71 FR 
at 41398), where it was stated that the PBGC believes that it is 
prudent to begin monitoring companies that are major contributors to 
multiemployer plans, especially because the financial conditions of 
many multiemployer plans have been deteriorating. Similarly, 
multiemployer plan mergers, information on withdrawing employers and 
their withdrawal liability, and information on participants for whom no 
employer makes contributions are important. Identification of companies 
and plans affected by such changes and gathering additional information 
on their impact is essential to making accurate assessments of the 
potential risks to which these plans are exposed.
    Establishment of a Short Form 5500 for certain small plans: The 
Agencies estimate that this change will result in a reduced burden on 
the affected small plans. As noted in the July 2006 Proposal and as 
further described in the July 2006 Proposed Rule (see discussion in the 
preamble to the July 2006 Proposed Rule under the heading 
``Establishment of a Short Form 5500 for certain small plans,'' 71 FR 
at 41397), the Short Form 5500 was being developed with the specific 
intent of reducing reporting costs while still collecting sufficient 
information to preserve ERISA protections and satisfying the 
enforcement, research, and regulatory needs of the Agencies, and the 
disclosure needs of participants and beneficiaries. The Agencies 
determined that less information is needed in the case of small plans 
that invest in secure assets issued by regulated financial institutions 
and having a fair market value that is easily determined. The Agencies 
believe that the eligibility conditions for Short Form 5500 filers, 
including the requirements relating to security and valuation of the 
plan's investments, ensure that the Short Form 5500 will provide 
adequate disclosure to the participants and beneficiaries in the plan 
and adequate annual reporting to the Agencies. Small plans that are not 
eligible to file the Short Form 5500 would continue to be able to file 
simplified reports as under the current system.
    Electronic Filing and Web site Display of Form 5500 Information: 
This will give participants and beneficiaries an additional option on 
how to monitor the financial status of their pension plans. They will 
be able to access important information instantaneously and without any 
additional costs involved, as plans must be capable of electronic 
public disclosure beginning with the 2008 reporting years.
    Costs--The Supplemental Proposed Forms Revisions will reduce the 
burden for small plans eligible to file the Short Form 5500, but 
increase the burden for plans that must report additional information 
on Schedules SB or MB, R and H. As shown in Table 3, the aggregate cost 
of reporting under the existing rules is estimated to be $775 million 
annually,\10\ shared across the 780,000 filers subject to the filing 
requirement. The Department estimates that the supplemental proposed 
forms revisions, however, reduce the annual cost burden by $77 
million.\11\
---------------------------------------------------------------------------

    \10\ For reasons explained in footnote 20 and in the technical 
appendix, the cost of current reporting requirements contained int 
his proosal is different from the cost calculated for the July 2006 
Proposal.
    \11\ These cost estimates take only the PPA changes into 
account. They take the changes included in the July 2006 Proposal 
into account only to the extent that the PPA also requires them. As 
noted before, the Department intends to consolidate all changes into 
the final revisions expected to be published in 2007.

 Table 3.--Summary of Costs: Current Requirements vs. Requirements Under
                   the Supplemental Proposed Revision
------------------------------------------------------------------------
                                                          Total burden
                                      Total costs (in       hours (in
                                         millions)          millions)
------------------------------------------------------------------------
Current Reporting Requirements.....             $774.8              9.42
Change due to the Supplemental                   -77               -0.94
 Proposed Revision.................
Requirements under the Supplemental              698                8.48
 Proposed Revision.................
------------------------------------------------------------------------
Note: Number of affected plans: 445,000.
The Requirements under the Supplemental Proposed Revision do not include
  the reporting requirements that are included in the July 2006 Proposal
  but not in the Supplemental Proposed Revisions.

    Similar to the July 2006 Proposal, the Department assumes that 
substantial revisions to the existing reporting requirements will 
entail some one-time transition costs, but that such costs are 
generally loaded into the prices paid by plans for affected services 
and products, spread both across plans and across the expected life of 
the service and product changes. The Department's estimates provided 
here are therefore intended to reflect such spreading and loading of 
these transaction costs.
    In addition to estimating the total impact of the proposed 
revisions on aggregate costs, the Department has broken down the change 
in costs by individual revisions in the following way:

[[Page 71570]]

    1. Separate actuarial schedules for single-employer plans and 
multiemployer plans to reflect PPA changes in funding and annual 
reporting requirements. Under the Supplemental Proposed Forms Revisions 
the Schedule B will be separated into a Schedule SB for single-employer 
and multiple-employer defined benefit plans and a Schedule MB for 
multiemployer defined benefit and money purchase plans. Relative to the 
current filing requirement, the establishment of Schedule SB will 
reduce the total annual burden for 43,000 affected filers by a little 
more than 18,000 hours. Applying an hourly labor rate of $88 for 
service providers and $61 for plan sponsors, the Department estimates 
that this will lower the annual reporting cost by an estimated $1.59 
million.\12\ On the other hand, the establishment of Schedule MB will 
increase the total annual burden for 1,500 affected filers by 1,200 
hours. Applying an hourly labor rate of $88 for service providers and 
$61 for plan sponsors, the Department estimates that this will increase 
the annual reporting cost by an estimated $105,000. On aggregate, the 
separation of the Schedule B will decrease the aggregate total annual 
burden by 17,000 hours, or by an estimated $1.48 million.
---------------------------------------------------------------------------

    \12\ For purpose of the burden analysis, the Department assumes 
that 4% to 8% of the burden hours of Schedule B are incurred by the 
plan sponsors and 92% to 96% by service providers. The displayed 
numbers in the text might not multiply to the totals due to 
rounding. The labor rates were updated from the rates used in the 
July 2006 Proposed Notice. See 71 FR at 41399. Please see the 
Technical Appendix for details.
---------------------------------------------------------------------------

    2. Additional Data Elements on Schedule R. The provision of this 
information is anticipated to add an estimated additional annual cost 
of $1.07 million (13,000 hours) for 20,000 affected filers when 
applying an hourly rate of $88 for service providers and $61 for plan 
sponsors.\13\
---------------------------------------------------------------------------

    \13\ For purpose of the burden analysis, the Department assumes 
that 29% to 32% of the burden hours of Schedule R are incurred by 
the plan sponsors and 68% to 71% by service providers. The displayed 
numbers in the text might not multiply to the totals due to 
rounding.
---------------------------------------------------------------------------

    3. Establishment of a Short Form 5500 for certain small plans. A 
large majority of small plans, or 425,000 of the 629,000 total small 
plan filers, are estimated to be eligible to use the Short Form 5500, 
thereby saving an estimated $77 million (942,000 hours) annually. 
Again, the Department is applying an hourly rate of $88 for service 
providers and $61 for plan sponsors.\14\
---------------------------------------------------------------------------

    \14\ For purpose of the burden analysis, the Department assumes 
that 19% to 24% of the burden hours of the Short Form 5500 are 
incurred by the plan sponsors and 76% to 81% by service providers. 
The displayed numbers in the text might not multiply to the totals 
due to rounding.
---------------------------------------------------------------------------

    4. Electronic Filing and Web site Display of Form 5500 Information. 
This requirement is not anticipated to add any additional costs, as 
plans must be capable of electronic public disclosure beginning with 
the 2008 reporting year due to the Electronic Filing Rule.
    A summary of the changes in costs and burden hours that were 
allocated to the groups of proposed supplemental changes as outlined 
above, as well as the number of affected employee benefit plans, can be 
found in Table 4 below.

  Table 4.--Summary of Supplemental Proposed Changes to the Reporting Requirements: Costs, Burden, and Affected
                                                      Plans
----------------------------------------------------------------------------------------------------------------
                                                                     Change in       Change in       Number of
            Supplemental proposed revisions for 2008                 costs (in     burden hours   affected plans
                                                                   millions) \1\        \1\             1 2
----------------------------------------------------------------------------------------------------------------
Separate Schedule Bs............................................          -$1.48         -17,000          44,500
Short Form 5500.................................................          -76.75        -942,000         425,000
Schedule R......................................................           +1.07         +13,000          20,000
                                                                 -----------------------------------------------
    Total.......................................................          -77.17        -944,000         445,000
----------------------------------------------------------------------------------------------------------------
\1\ Note: The displayed numbers might not sum up to the totals due to rounding.
\2\ Some plans are affected by more than one individual revision. Consequently, the total number of affected
  plans is lower than the summation of the number of plans affected by the three individual revisions.

Assumptions, Methodology, and Uncertainty

    The cost and burden associated with the annual requirement for any 
given plan will vary according to a variety of factors, including the 
plan's characteristics, practices, and operations, which in turn 
determine what information must be provided. A small, single-employer 
defined contribution pension plan filing a new Short Form 5500 
generally will incur far lower costs than a large, multiemployer 
defined benefit plan that merges with another multiemployer plan and 
invests in employer securities or other hard to value assets. 
Therefore, as in the July 2006 Proposal, in arriving at its aggregate 
cost estimates the Department separately considered the cost to 
different types of plans of providing different types of information. 
The basis for the Department's estimates is the methodology designed 
and peer reviewed for the July 2006 Proposal and repeated below.
    Assumptions Underlying This Analysis--The Department's analysis of 
the costs and benefits of these supplemental proposed revisions assumes 
that all benefits and costs will be realized in the first year of the 
reporting cycle to which the amendments apply and within each year 
thereafter. This assumption is based on the nature of the statutory 
reporting provisions, which require that each plan complete a filing 
within a yearly period. The Department has used a ``status quo'' 
baseline for this analysis, assuming that the world absent this 
proposal and absent the July 2006 Proposal will resemble the 
present.\15\
---------------------------------------------------------------------------

    \15\ Further detail can be found in the Technical Appendix.
---------------------------------------------------------------------------

    Methodology--The underlying cost data was developed by Mathematica 
Policy Research, Inc. (MPR), and has been used by the Agencies in 
various burden estimates related to the Form 5500 Annual Return/Report 
during recent years. See, 65 FR 21068, 21077-78 (April 19, 2000); 
Borden, William S., ``Estimates of the Burden for Filing Form 5500: The 
Change in Burden from the 1997 to the 1999 Forms,'' Mathematica Policy 
Research, submitted to the U.S. Dept. of Labor May 25, 1999.\16\ It is 
grounded in surveys of filers and their service providers, which 
measured the unit cost burden of providing various types of 
information. Aggregate estimates were produced by interacting these 
unit cost measures

[[Page 71571]]

with historical counts of Form 5500 Annual Return/Report filers.
---------------------------------------------------------------------------

    \16\ The Mathematica report can be accessed at the Department's 
Web site at http://www.dol.gov/ebsa. Further detail can be found in 
the Technical Appendix.
---------------------------------------------------------------------------

    A new burden estimating model, based on the Form 5500 Burden Model 
that MPR most recently used for estimating burdens in October 2004, was 
assembled by Actuarial Research Corporation (ARC) for the July 2006 
Proposal and subsequent burden estimates. ARC assembled a simplified 
model, drawing on implied burdens associated with subsets of filer 
groups represented in the MPR model. The model used the level of detail 
consistent with reflecting burden differences associated with the 
various proposed forms revisions. In the following, the ARC model is 
described in broad terms. Further details about the model are explained 
in the Technical Appendix that can be accessed at the Department's Web 
site at http://www.dol.gov/ebsa.
    To estimate aggregate burdens, the types of plans that have similar 
reporting requirements were grouped together. Thus, calculations were 
prepared for different subsets of types of plans as appropriate based 
on the specifics of the supplemental revisions to the reporting 
requirements. Table 5 below shows the particular types of plans 
considered, the number of plans affected by the proposed revisions, as 
well as the aggregate costs under current and supplemental proposed 
requirements. As can be seen from the Total line in Table 5, aggregate 
cost under current and proposed regulations add up to $775 million and 
$698 million, respectively. The universe of filers was divided into 
three basic plan types: defined benefit pension plans, defined 
contribution pension plans, and welfare plans, and each of these major 
plan types was further subdivided into multiemployer and single-
employer plans. Defined contribution Code section 403(b) plans were 
treated separately from other defined contribution plans. Since the 
filing requirements differ substantially for small and large plans, the 
plan types were also divided by plan size. For large plans (100 or more 
participants), the defined benefit plans were further divided between 
very large (1000 or more participants) and other large plans (at least 
100 participants, but less than 1000 participants). Small plans were 
divided into very small (less than 25 participants) and small (at least 
25 participants, but less than 100 participants). For each of these 
sets of respondents, burden hours per respondent were estimated for the 
Form 5500 Annual Return/Report itself and for up to eight schedules.

        Table 5.--Number of Affected Filers and Cost Under Current vs. Supplemental Proposed Requirements
----------------------------------------------------------------------------------------------------------------
                                                                                                  Aggregate cost
                                                                                 Aggregate cost       under
                                                                    Number       under current     supplemental
                         Type of plan                              affected       requirements       proposed
                                                                                 (in millions)     requirements
                                                                                                  (in millions)
----------------------------------------------------------------------------------------------------------------
5500 Large Plans (> = 100 participants)......................          151,800
    DB, ME, 100-1,000 participants...........................              600          $4.67            $4.78
    DB, ME, > 1,000 participants.............................              900           6.53             6.84
    DB, SE, 100-1,000 participants...........................            7,000          51.91            51.54
    DB, SE, > 1,000 participants.............................            3,400          25.00            25.49
    DC, ME, non-403(b).......................................            1,700           8.15             8.15
    DC, ME, 403(b)...........................................              100           0.0035           0.0035
    DC, SE, non-403(b).......................................           57,400         261.97           261.96
    DC, SE, 403(b)...........................................            7,200           0.31             0.31
    Welfare, ME..............................................            4,100           7.78             7.78
    Welfare, SE..............................................           69,200          92.60            92.60
    5500 Very Small Short Form Eligible (< 25 participants)..          428,700
    DB.......................................................           28,600          33.40            17.84
    DC, non-403(b)...........................................          396,200         145.18            83.28
    5500 Small Short Form Ineligible.........................          200,000
    DB.......................................................            7,700           9.91             9.80
    DC, non-403(b)...........................................          180,500         123.68           123.68
    DC, 403(b)...............................................            8,900           0.39             0.39
    Welfare..................................................            6,800           3.30             3.30
                                                              --------------------------------------------------
        Total................................................          780,450         774.8            697.74
----------------------------------------------------------------------------------------------------------------
Note: The displayed numbers might not sum up to the totals due to rounding.
DB--defined benefit plans.
DC--defined contribution plans.
SE--single-employer plans.
ME--multi employer plans.
Large plans--100 participants or more.
Small plans--less than 100 participants.

    In addition to separating plans by type and size, costs were 
estimated separately for the form and for each schedule. When items on 
a Form 5500 Annual Return/Report 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 whether only a single 
item on a schedule is required by more than one agency or whether 
several or all of the items are required by more than one agency. 
Filers must read not only the instructions for particular items but 
also instructions pertaining to the general filing requirements, and 
the burden associated with reading the instructions is tallied and 
allocated accordingly.
    A plan's reporting burden is estimated in light of the specific 
items and schedules it must complete as well as its size, funding 
method, and investment structures. For example, the annual report for a 
large fully insured welfare plan would consist of only a few questions 
on the Form 5500, Schedule A, and Schedules C and G, where applicable. 
The requirement that this

[[Page 71572]]

plan provide very limited information on the Form 5500 Annual Return/
Report is reflected in the estimates of reporting burden time. By 
contrast, a large defined benefit pension plan that is intended to be 
tax-qualified and that uses a trust fund and invests in insurance 
contracts 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 or MB (Actuarial Information), Schedule C 
(Service Provider Information), Schedule D (DFE/Participating Plan 
Information), Schedule G where applicable, Schedule H (Financial 
Information), and Schedule R (Retirement Plan Information), and would 
be required to submit an IQPA's report and opinion. The Agencies' 
methodology attempts to capture, through its categorization, these 
different reporting burdens, thereby providing meaningful estimates of 
significant differences in the burdens placed on different categories 
of filers.
    Burden estimates for each schedule were adjusted for the proposed 
revisions, reflecting the numbers of items added or deleted in each 
schedule, and the average burden currently attributable to items on 
each of the corresponding current schedules. The burden for the 
proposed Short Form 5500 was built from the estimated current burden 
associated with the various line items included in it.
    The Department has not attributed a recordkeeping burden to the 
Form 5500 Annual Return/Report either here or in its Paperwork 
Reduction Act analysis because it believes that plan administrators' 
practice of keeping financial records necessary to complete the Form 
5500 Annual Return/Report 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 filed multiplied by the estimated aggregate number of forms 
and schedules. The simplified model draws on Form 5500 Annual Return/
Report data representing each plan's filing for plan year 2003 (the 
most recent year for which complete data is available), both for 
estimating the impact of changes in the numbers of filings associated 
with the introduction of the Short Form 5500 for most small filers as 
well as for estimating the impact of changes in filing obligations 
associated with other schedules.\17\ In summary, the model estimates 
that due to $77 million in cost reductions the proposed revisions would 
lead to aggregate costs of $698 million. While there is a net reduction 
in costs, the Department estimates that some large plans might 
experience cost increases, while small plans will experience cost 
reductions. The total burden estimates, as well as the burden broken 
out by type of plan can be found in Table 5 above.
---------------------------------------------------------------------------

    \17\ While the July 2006 Proposal used burden estimates drawing 
from 2002 Form 5500 data, 2003 Form 5500 data has become recently 
available and is used for making burden estimates for the 
Supplemental Proposed Revisions.
---------------------------------------------------------------------------

    Uncertainty within Estimates--The Department acknowledges that 
there are several areas of uncertainty that might affect the estimates, 
in particular the unit cost estimates. While the Department has a good 
sense for the filing universe and for the number of filers that file 
the different schedules of the Form 5500, the unit costs under the 
current requirements as well as the way they would change due to the 
proposed revisions are more uncertain. The Department has no direct 
measure for the unit costs, but rather uses a proxy adapted from the 
existing MPR model, which was developed in the late 1990s. Additional 
uncertainty is added due to the supplemental proposed revisions. Some 
of the revisions just move items from the current Schedule B to the 
single-employer or multiemployer schedule. The impact of these changes 
can be estimated more accurately than the impact of the revisions that 
require the reporting of new items. Consequently, the unit cost 
estimates would benefit from updated information and the Department 
welcomes comments that would provide information on this matter.

Peer Review

    In December 2004, OMB issued a Final Information Quality Bulletin 
for Peer Review, 70 FR 2664 (January 14, 2005) (Peer Review Bulletin), 
establishing that important scientific information shall be peer 
reviewed before it is disseminated by the Federal government. The Peer 
Review Bulletin applies to original data and formal analytic models 
used by the Department in Regulatory Impact Analyses. The Department 
determined that the data and methods employed in the regulatory 
analysis of the July 2006 Proposal constituted ``influential scientific 
information'' as defined in the Peer Review Bulletin. Accordingly, a 
peer review was conducted under Section II of the Bulletin. The peer 
review report concluded that the methodology and data generally were 
sound and produced plausible estimates. The current proposal uses the 
same methodology and, accordingly, the Department is relying on the 
Peer Review Report prepared in connection with the July 2006 Proposal 
for its proposed use of the Short Form 5500 to satisfy the simplified 
reporting requirement and additional reporting requirements for defined 
benefit pension plans contained in the PPA.\18\ The Peer Review Report 
can be accessed at the Department's Web site at http://www.dol.gov/ebsa.
---------------------------------------------------------------------------

    \18\ The current analysis uses the same methodology as was used 
in the July 2006 Proposal, except that the Department slightly 
updated some components. Information about the updates was included 
in the material given to the peer reviewer. The Department also used 
a newer data set (2003 Form 5500 data, rather than 2002 data) to 
estimate the burden. Further information about these updates can be 
found in the section ``Costs'' above.
---------------------------------------------------------------------------

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely 
to have a significant economic impact on a substantial number of small 
entities. Unless an agency certifies that a proposed rule will not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities, section 603 of the RFA requires that the agency 
present an initial regulatory flexibility analysis at the time of the 
publication of the notice of proposed rulemaking describing the impact 
of the rule on small entities and seeking public comment on such 
impact. Small entities include small businesses, organizations, and 
governmental jurisdictions.
    For purposes of analysis under the RFA, EBSA proposes to continue 
to consider a small entity to be an employee benefit plan with fewer 
than 100 participants. The basis of this definition is found in section 
104(a)(2) of ERISA, which permits the Secretary to prescribe simplified 
annual reports for pension plans that cover fewer than 100 
participants. Under ERISA section 104(a)(3), the Secretary may also 
provide for exemptions or for simplified reporting and disclosure for 
welfare benefit plans. Pursuant to the authority of ERISA section 
104(a)(3), the Department has previously issued at 29 CFR 2520.104-20, 
2520.104-21, 2520.104-41, 2520.104-46, and 2520.104b-10 certain 
simplified reporting provisions and limited exemptions from reporting 
and disclosure requirements for small plans,

[[Page 71573]]

including unfunded or insured welfare plans, that cover fewer than 100 
participants and satisfy certain other requirements.
    Further, while some large employers may have small plans, in 
general small employers maintain most small plans. Thus, EBSA believes 
that assessing the impact of this proposal on small plans is an 
appropriate substitute for evaluating the effect on small entities. The 
definition of small entity considered appropriate for this purpose 
differs, however, from a definition of small business that is based on 
size standards promulgated by the Small Business Administration (SBA) 
(13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 631 et 
seq.). EBSA therefore requests comments on the appropriateness of the 
size standard used in evaluating the impact of this proposal on small 
entities. EBSA has consulted with the SBA Office of Advocacy concerning 
use of this participant count standard for RFA purposes. See 13 CFR 
121.902(b)(4). The following seven subsections address specific 
requirements of the RFA.
    (1) The Department is proposing to revise the forms relating to the 
annual reporting and disclosure requirements of section 103 of ERISA to 
satisfy requirements of the PPA.
    The Department 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 for reporting requirements to satisfy these objectives changes 
over time. Benefit plan designs and practices evolve over time in 
response to market trends, including trends in labor markets, financial 
markets, health care and insurance markets, and markets for various 
services used by plans. Partly as a result of those changes, the nature 
and mix of compliance issues and risks to ERISA rights change over 
time. Frequent amendments to ERISA, the Code, and to associated 
regulations also change the parameters of ERISA rights and the methods 
needed to protect those rights. In addition, the technologies available 
to manage and transmit information continually advance. It is incumbent 
on the Department to revise its reporting requirements from time to 
time to keep pace with such changes. The Department is proposing these 
forms revisions to readjust its reporting requirements to take into 
account the PPA as well as certain recent changes in markets, the law, 
and technology, many of which are referenced above in this preamble.
    (2) Section 103 of ERISA requires every employee benefit plan 
covered under part 1 of Subtitle B of Title I of ERISA to publish and 
file an annual report concerning, among other things, the financial 
conditions and operations of the plan. Section 109 of ERISA authorizes 
the Secretary to prescribe forms for the reporting of information that 
is required to be included in the annual report. Section 104(a)(2)(A) 
of ERISA authorizes the Secretary to prescribe by regulation simplified 
annual reporting for pension plans that cover fewer than 100 
participants. Section 104(a)(3) of ERISA authorizes the Secretary to 
exempt any welfare plan from all or part of the reporting and 
disclosure requirements of Title I of ERISA or to provide simplified 
reporting and disclosure if the Secretary finds that such requirements 
are inappropriate as applied to such plans. Section 110 of ERISA 
permits the Secretary to prescribe for pension plans alternative 
methods of complying with any of the reporting and disclosure 
requirements if the Secretary finds that: (1) The use of the 
alternative method is consistent with the purposes of Title I of ERISA, 
and it provides adequate disclosure to plan participants and 
beneficiaries and adequate reporting to the Secretary; (2) application 
of the statutory reporting and disclosure requirements would increase 
costs to the plan or impose unreasonable administrative burdens with 
respect to the operation of the plan; and (3) the application of the 
statutory reporting and disclosure requirements would be adverse to the 
interests of plan participants in the aggregate.
    The Department proposes to find that use of the Form 5500 Annual 
Return/Report, as revised, along with the proposed Short Form 5500, 
constitutes an alternative method of compliance, an exemption, and/or a 
simplified report, as applicable, consistent with these conditions. 
Generally, the Department believes that use of the revised Form 5500 
Annual Return/Report and the proposed Short Form 5500 would relieve 
plans of all sizes of increased costs and burdens by providing a 
standard format that facilitates reporting required by the statute, 
eliminating duplicative reporting requirements, and streamlining the 
content of the annual return/report.
    The objectives of these proposed supplemental forms revisions are 
to implement applicable provisions of the PPA, as well as to streamline 
reporting and reduce aggregate reporting costs, particularly for small 
plans, while preserving and enhancing protection of ERISA rights. These 
purposes are detailed above in this preamble.
    (3) These supplemental proposed forms revisions do not alter the 
number of small plans required to comply with the annual reporting 
requirements, but do implement a new Short Form 5500, which is designed 
specifically to further streamline the limited reporting requirements 
presently applicable to small plans. The Department estimates that more 
than six million small, private-sector employee pension and welfare 
benefit plans are covered under Title I of ERISA. However, a large 
majority of these are fully insured or unfunded welfare benefit plans, 
which currently are exempt from annual reporting requirements and will 
continue to be exempt under these proposed forms revisions. 
Approximately 629,000 small plans, including small pension plans and 
small funded welfare plans, currently are required to file annual 
reports and will continue to be so required under these supplemental 
forms revisions. Of these, under the supplemental forms revisions an 
estimated 425,000 small pension plans will be eligible to use the 
proposed new Short Form 5500. Use of the Short Form 5500 is expected to 
reduce these plans' reporting costs while preserving or enhancing the 
protection of their participants' ERISA rights.
    (4) The proposed reporting requirements applicable to small plans 
are detailed above. For a large majority of the 629,000 small plans 
subject to annual reporting requirements, or an estimated 396,000 
pension plans, submission of the Short Form 5500 alone will fully 
satisfy their annual reporting requirements. All of these plans are 
eligible for the waiver of audit requirements, and none are defined 
benefit pension plans. Therefore, for such plans satisfaction of their 
applicable annual reporting requirements is not expected to require the 
services of an IQPA or auditor, but will require the use of a mix of 
clerical and professional administrative skills. For an additional 
29,000 small defined benefit pension plans that would be eligible to 
use the streamlined Short Form 5500, satisfaction of the reporting 
requirements also will require services of an actuary and submission of 
Schedule SB. The remaining 204,000 small plans will not be eligible to 
use the Short Form 5500 under the PPA and will continue to be required 
to file the Form 5500 Annual Return/Report. Of these, 8,000 are defined 
benefit plans that must use an actuary and file Schedule SB or MB. All 
will require a mix of clerical and professional

[[Page 71574]]

administrative skills to satisfy their reporting requirements.
    Satisfaction of annual reporting requirements under these proposed 
forms revisions is not expected to require any additional recordkeeping 
that would not otherwise be part of normal business practices.
    The Table 6 below compares the Department's estimates of small 
plans' reporting costs under the current requirements with those under 
the supplemental proposed requirements for various classes of affected 
plans. As shown, costs under the supplemental proposed requirements 
will be lower on aggregate and for most classes of plans. These 
estimates take account of the quantity and mix of clerical and 
professional skills required to satisfy the reporting requirements for 
various classes of plans.

            Table 6.--Small Plan Reporting Costs Under Current vs. Supplemental Proposed Requirements
----------------------------------------------------------------------------------------------------------------
                                                                                                 Aggregate cost
                                                                              Aggregate cost         under
                                                                              under current       supplemental
                     Class of plan                        Number affected   requirements  (in       proposed
                                                                                millions)      requirements  (in
                                                                                                   millions)
----------------------------------------------------------------------------------------------------------------
Defined Benefit Pension, Short Form eligible...........             29,000             $33.40             $17.84
Defined Benefit Pension, Short Form ineligible.........              8,000               9.91               9.80
Code Section 403(b), Short Form ineligible.............              9,000               0.39               0.39
Other Defined Contribution, Short Form eligible........            393,000             145.18              83.28
Other Defined Contribution Pension, Short Form                     180,000             123.68             123.68
 ineligible............................................
Funded Welfare.........................................              7,000               3.30               3.30
                                                        --------------------------------------------------------
    Total for all affected small plans.................            629,000             315.85             238.28
----------------------------------------------------------------------------------------------------------------
Note: The displayed numbers might not sum up to the totals due to rounding.

    The Department notes that the estimated reporting costs amount to 
less than $400 on average for each of the 629,000 small plans subject 
to annual reporting requirements. This compares with roughly $3,000 on 
average for each of the 152,000 affected large filers.
    (5) Except for the July 2006 Proposal, the Department is unaware of 
any relevant federal rules for small plans that duplicate, overlap, or 
conflict with these proposed forms revisions. The July 2006 Proposal 
includes provisions that overlap and duplicate with some of the form 
changes proposed in this notice of supplemental proposed forms 
revisions. For example, the July 2006 Proposal proposes the Short Form 
5500 not only for certain small pension plans with less than 25 
participants, but also for certain small pension and welfare plans with 
less than 100 participants. As noted above, the Department anticipates 
combining the forms revisions under the July 2006 Proposal and the 
supplemental proposed forms revisions when it finalizes the forms 
revisions.
    (6) In developing the forms revisions, the Department considered a 
number of alternative provisions directed at small plans. For example, 
as discussed in the July 2006 Proposal, the Department considered both 
narrower and broader eligibility criteria for use of the Short Form 
5500, settling on criteria that limit eligibility to plans holding 
relatively safe and protected assets, which nonetheless includes a 
large majority of small plans. The Department also considered the 
inclusion of more or fewer of the items of information formerly 
collected from small plans in the Form 5500 Annual Return/Report, 
retaining only those items it believes to be necessary and adequate to 
the protection of small plan participants' ERISA rights.
    (7) The Department invites interested persons to submit comments 
regarding the impact on small plans of these Supplemental Proposed 
Forms Revisions, and on the Department's assessment thereof. The 
Department also requests comments on the alternatives it considered and 
its conclusions regarding those alternatives; on any additional 
alternatives it should have considered; on what, if any, special 
problems small plans might encounter if the proposal were to be 
adopted; and what changes, if any, could be made to minimize those 
problems.

Paperwork Reduction Act Statement

    As part of continuing efforts to reduce paperwork and respondent 
burden, the general public and Federal agencies are generally invited 
to comment on proposed and/or continuing collections of information in 
accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 
3506(c)(2)(A)). This helps to ensure that requested data will be 
provided in the desired format, reporting burden (time and financial 
resources) will be minimized, collection instruments will be clearly 
understood, and the impact of collection requirements on respondents 
can be properly assessed. Concurrent with publication of the July 2006 
Proposal, the Department submitted an information collection request 
(ICR) to OMB, in accordance with 44 U.S.C. 3507(d), for its review of 
the Department's proposed revisions to the information collections 
previously approved by OMB under OMB Control No. 1210-0110.
    On August 29, 2006, OMB issued a notice indicating that it would 
continue its approval of the information collections under Control No. 
1210-0110 as currently in effect, but would not approve the 
Department's request for approval of the proposed revisions until after 
the Department considers public comment and promulgates a final rule 
describing and explaining any changes. The IRS and the PBGC indicated, 
in the July 2006 Proposal, that they intend to submit separate requests 
for OMB review and approval based upon the final forms revisions, and 
the Department now indicates its intention to do so as well. The 
Department solicits comments on any information collection burdens 
described in this Notice of Supplemental Proposed Forms Revisions.

Congressional Review Act

    The notice of proposed forms revisions being issued here is subject 
to the Congressional Review Act provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and, 
if finalized, will be transmitted to the Congress and the Comptroller 
General for review.

[[Page 71575]]

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, the proposal does not include 
any Federal mandate that may result in expenditures by state, local, or 
tribal governments in the aggregate of more than $100 million, or 
increased expenditures by the private sector of more than $100 million.

Federalism Statement

    Executive Order 13132 (August 4, 1999) outlines fundamental 
principles of federalism and requires adherence to specific criteria by 
federal agencies in the process of their formulation and implementation 
of policies that have substantial direct effects on the States, the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. This proposal does not have federalism implications because 
they would have no substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. Section 514 of ERISA provides, with certain exceptions 
specifically enumerated, that the provisions of Titles I and IV of 
ERISA supersede any and all laws of the States as they relate to any 
employee benefit plan covered under ERISA. The requirements implemented 
in this proposal does not alter the fundamental provisions of the 
statute with respect to employee benefit plans, and as such would have 
no implications for the States or the relationship or distribution of 
power between the national government and the States.

Appendix A

  Data Items for 2008 (and Later) Schedule SB (Single-Employer Defined
                   Benefit Plan Actuarial Information)
------------------------------------------------------------------------
                                                   Comparison  with 2006
                      Item                              Schedule B
------------------------------------------------------------------------
                         Identifying Information
------------------------------------------------------------------------
Plan year
A. Name of plan.................................  Same.
B. Plan number..................................  Same.
C. Plan sponsor's name..........................  Same.
D. EIN..........................................  Same.
E. Type of plan (Single-Employer, Multiple-       Similar.
 Employer).
F. Prior year plan size (100 or fewer, 101-500,   Similar.
 More than 500).
------------------------------------------------------------------------
                        Part I--Basic Information
------------------------------------------------------------------------
1. Valuation date...............................  Same.
2. Assets
    a. Market value.............................  Same.
    b. Actuarial value..........................  Similar.
3. Funding target and participant count
 breakdown (separate participant count and
 funding target figures for: retired
 participants and beneficiaries receiving
 payment; terminated vested participants; active
 participants by nonvested benefits, vested
 benefits, and total active; and totals.
    a. Number of participants column............  Same.
    b. Funding target column....................  Similar.
4. Additional information for plans that are at-
 risk
    a. Funding target disregarding prescribed at- New.
     risk assumptions.
    b. Funding target reflecting at-risk          New.
     assumptions, but disregarding transition
     rule for plans that have been at risk for
     fewer than five consecutive years.
5. Effective interest rate......................  New.
6. Target normal cost...........................  Similar.
Statement by Enrolled Actuary--To the best of my  Similar.
 knowledge, the information supplied in this
 schedule and accompanying schedules, statements
 and attachments, if any, is complete and
 accurate. Each prescribed assumption was
 applied in accordance with applicable law and
 regulations. In my opinion, each other
 assumption is reasonable (taking into account
 the experience of the plan and reasonable
 expectations) and such other assumptions, in
 combination, offer my best estimate of
 anticipated experience under the plan.
Signature, Name, Date, Most recent enrolled       Similar.
 actuary number, Firm name, Telephone number,
 Address of firm, and check box to indicate if
 actuary has not fully reflected any regulation
 or ruling promulgated under the statute in
 completing the schedule.
------------------------------------------------------------------------
 Part II--Beginning of Year Carryover/Prefunding Balance Reconciliation
------------------------------------------------------------------------
7. Balance at beginning of prior plan year after  Similar.
 applicable adjustments (carryover balance and
 prefunding balance).
8. Portion used to satisfy prior year's funding   New.
 requirement (carryover balance and prefunding
 balance).
9. Remaining amount (carryover balance and        New.
 prefunding balance).
10. Interest earned during prior year (carryover  New.
 balance and prefunding balance).
11. Prior year's excess contributions to be       New.
 added to prefunding balance (carryover balance
 and prefunding balance).
    a. Excess contributions.....................  New.
    b. Interest on (a) using prior year's         New.
     effective rate.
    c. Total available at beginning of current    New.
     plan year to add to prefunding balance.
    d. Portion of (c) to be added to prefunding   New.
     balance.
12. Voluntary reduction (carryover balance and    New.
 prefunding balance).
13. Balance at beginning of current year = Item   New.
 9 + item 10 + item 11 - item 12 (carryover
 balance and prefunding balance).
------------------------------------------------------------------------

[[Page 71576]]

 
                      Part III--Funding Percentages
------------------------------------------------------------------------
14. Funding Target Attainment Percentage........  New.
15. Adjusted Funding Target Attainment            New.
 Percentage.
16. Prior year's funding percentage for purposes  New.
 of determining whether carryover/prefunding
 balance may be used to reduce current year's
 funding requirement.
17. If the current value of the assets of the     Similar.
 plan is less than 70 percent of the funding
 target, enter such percentage..
------------------------------------------------------------------------
             Part IV--Contributions and Liquidity Shortfalls
------------------------------------------------------------------------
18. Contributions made to the plan for the plan   Same.
 year by employer(s) and employees by (a) date,
 (b) amount paid by employer, and (c) amount
 paid by employees.
19. Discounted plan contributions...............  New.
    a. Contributions allocated toward unpaid      New.
     minimum required contribution from prior
     years.
    b. Contributions made to avoid restrictions   New.
     adjusted to valuation date.
    c. Contributions allocated toward minimum     New.
     required contribution for current year
     adjusted to valuation date.
20. Quarterly contributions and liquidity
 information
    a. Did the plan have a ``funding shortfall''  New.
     for the prior year?.
    b. If 20a is yes, were required quarterly     New.
     installments for the current year made in
     timely manner.
    c. If 20a is yes, complete table showing      Same.
     liquidity shortfall as of the end of each
     quarter of the plan year.
------------------------------------------------------------------------
                           Part V--Assumptions
------------------------------------------------------------------------
21. Discount rate
    a. Segment rate(s) for 1st, 2nd and 3rd       New.
     segments or indicate that full yield curve
     is used.
    b. Applicable month.........................  New.
22. Weighted average retirement age.............  Same.
23. Mortality table--indicate whether prescribed  New.
 table(s) or substitute table used.
------------------------------------------------------------------------
                      Part VI--Miscellaneous items
------------------------------------------------------------------------
24. Has a change been made in the non-prescribed  Same.
 actuarial assumptions for the current plan
 year? If yes, see instructions for required
 attachment.
25. Has a method change been made for the          Same.
 current plan year? If yes, see instructions for
 required attachment.
26. Is the plan required to provide a Schedule    Same.
 of Active Participants? If yes, see
 instructions for required attachment.
27. If the plan is eligible for (and is using)     New.
 alternative funding rules, enter applicable
 code. If yes, see instructions for required
 attachment.
------------------------------------------------------------------------
  Part VII--Reconciliation of Unpaid Minimum Required Contributions for
                               Prior Years
------------------------------------------------------------------------
28. Unpaid minimum required contribution for all  New.
 prior years.
29. Discounted employer contributions allocated   New.
 toward unpaid minimum required contribution
 from prior years (Item 19a).
30. Remaining amount of unpaid minimum required   New.
 contributions (item 28 minus item 29).
------------------------------------------------------------------------
        Part VII--Minimum Required Contribution for Current Year
------------------------------------------------------------------------
31. Target normal cost (item 6).................  Similar.
32. Amortization charges
    a. Net Shortfall amortization charges (and    Similar.
     outstanding balance).
    b. Waiver amortization charges (and           Similar.
     outstanding balance).
33. If a waiver has been approved for this plan   Similar.
 year, enter the date of the ruling letter
 granting the approval and the waived amount.
34. Total funding requirement before reflecting   New.
 carryover and prefunding balances (Item 31 +
 item 32a + item 32b - item 33).
35. Enter Carryover and prefunding balance used   New.
 to offset funding requirement.
36. Additional cash requirement after reflecting  New.
 carryover and prefunding balances (item 34
 minus item 35).
37. Contributions allocated toward minimum         New.
 required contribution for current year adjusted
 to valuation date (item 19c).
38. Excess contributions for current year         New.
 (excess, if any, of item 37 over item 36).
39. Unpaid minimum required contribution for      New.
 current year (excess, if any, of item 36 over
 item 37).
40. Unpaid minimum required contribution for all  New.
 years.
------------------------------------------------------------------------

Appendix B

[[Page 71577]]



   Data Items for 2008 (and Later) Schedule MB (Multiemployer Defined
       Benefit Plan and Money Purchase Plan Actuarial Information)
------------------------------------------------------------------------
                                                  Comparison with 2006
                     Item                              Schedule B
------------------------------------------------------------------------
Plan year....................................  Same.
A. Plan name.................................  Same as item A.
B. Plan number...............................  Same as item B.
C. Plan sponsor's name.......................  Same as item C.
D. Employer identification number............  Same as item D.
E. Type of plan (multiemployer DB plan, money  Similar to item E (item F
 purchase plan).                                deleted).
1a Valuation date............................  Same as line 1a.
1b Assets:
    (1) Current value of assets..............  Same as line 1b(1).
    (2) Actuarial value of assets............  Same as line 1b(2).
1c Accrued liability information:
    (1) Accrued liability for plans using      Same as line 1c(1).
     immediate gain methods.
    (2) Information for plans using spread     Same as line 1c(2).
     gain methods.
    (3) Accrued liability under unit credit    New.
     method.
1d Information on current liabilities:
    (1) Amount excluded attributable to pre-   Same as line 1d(1).
     participation service.
    (2) ``RPA `94'' information
        (a) Current liability................  Same as line 1d(2)(a).
        (b) Expexted increase in current       Same as line 1d(2)(b).
         liability due to benefits accuring
         during the plan year.
        (c) Expexted release from ``RPA '94''  Same as line 1d(2)(d)
         current liability for the plan year.   (line 1d(20(c) deleted).
    (3) Expected release from ``RPA '94''      Same as line 1d(3).
     current liability for the plan year.
Statement by Enrolled Actuary--To the best of  Similar.
 my knowledge, the information supplied in
 this schedule and accompanying schedules,
 statements and attachments, if any, is
 complete and accurate. Each prescribed
 assumption was applied in accordance with
 applicable law and regulations. In my
 opinion, each other assumption is reasonable
 (taking into account the experience of the
 plan and reasonable expectations) and such
 other assumptions in combination, offer my
 best estimate of anticipated experience
 under the plan.
2 Operational information as of beginning of
 the plan year
    2a Current value of assets...............  Same as line 2a.
    2b (column 1). Participant count           Same information as line
     breakdown by category (terminated          2b, column 1 except for
     vested, retired, active).                  amended format.
    2b (column 2). ``RPA `94'' current         Amended to incorporate
     liability.                                 information from line
                                                2b, columns 2 and 3
                                                (column 3 deleted).
    2c Current liability funded percentage...  Same as line 2c.
3 Contributions (employer(s) and employees)..  Same as item 3.
4 Plan status--Code to indicate plan's status  New (replaces existing
 in accordance with instructions for            item 4).
 attachment of supporting evidence of plan's
 status. For certain codes, the rest of line
 4 is skipped. Funded percentage for
 monitoring plan's status. Whether the plan
 is making the schedule progress with any
 applicable funding improvement or
 rehabilitation plan. If the plan is in
 critical status, whether any adjustable
 benefits were reduced, and if so, the
 reduction in liability resulting from the
 reduction in adjustable benefits, measured
 as of the valuation date.
5 Information on actuarial cost method
    5a-g Actuarial cost method used--Check     Similar to lines 5a-g.
     boxes to identify the actuarial cost       Note that multiple boxes
     method(s) used as the basis for this       may be checked.
     plan year's funding standard account
     computations: Attained age normal, entry
     age normal, accrued benefit (unit
     credit), aggregate, frozen initial
     liability, individual level premium,
     individual aggregate, shortfall,
     reorganization, other (specify).
    5h Shortfall method......................  New--previously addressed
                                                in line 8b and
                                                attachments for
                                                multiemployer plans.
    5i Reorganization........................  New--previously addressed
                                                in line 8b and
                                                attachments for
                                                multiemployer plans.
    5j Other (specify).......................  Same as line 5h.
    5k Period of use, shortfall method.......  New, required under ERISA
                                                section 103(f) (2)(F).
    5l-n Change in funding method--Must state  Same as lines 5i-k except
     if there was a change in funding method    for updated line
     for the plan year, and if so, whether it   references.
     was made pursuant to Revenue Procedure
     2000-40. If there was a change in
     funding method, but it was not made
     pursuant to Revenue Procedure 2000-40,
     then the date of the ruling letter
     (individual or class) approving the
     change in funding method must be entered.
6 Actuarial assumptions
    6a Interest rate for current liability...  Same as line 6a (line 6b
                                                deleted).
    6b Rates specified in insurance or         Same as line 6c.
     annuity contracts.
    6c Mortality table (males, females)......  Same as line 6d.
    6d Valuation liability interest rate.....  Same as line 6e.
    6e Expense loading.......................  Same as line 6f (line 6g
                                                deleted).
    6f Salary scale..........................  Same as line 6h.
    6g-h Estimated investment return on        Same as lines 6i-j.
     assets.
7 Information on new amortization bases--(1)   Same as item 7.
 type of base (2) initial balance (3)
 amortization charge/credit.

[[Page 71578]]

 
8 Miscellaneous information
    8a Funding waiver--If a waiver of a        Similar to line 8a,
     funding deficiency has been approved for   amended to apply only to
     this plan year, enter the date of the      funding waivers (line 8b
     ruling letter granting the approval..      deleted; information
                                                reflected in lines 5h-
                                                i).
    8b Schedule of Active Participant Data...  New for multiemployer
                                                plans, same as line 8c
                                                for single-employer
                                                plans.
    8c Amortization extension under 304(d)--   New.
     Are any of the plan's amortization bases
     operating under an extension of time
     under section 412(e) (as in effect prior
     to 2008) or section 431(d)(1) of the
     Code?
    8d(1)-(2) Automatically-approved           New.
     extensions--If yes, was an extension
     granted automatic approval under section
     431(d)(1) of the Code? If yes, enter the
     number of years by which the
     amortization period was extended.
    8d(3)-(5) IRS-approved extensions--Was an  New.
     extension approved by the Internal
     Revenue Service under section 412(e) (as
     in effect prior to 2008) or 431(d) of
     the Code? If yes, enter the number of
     years by which the amortization period
     was extended (not including the number
     of years granted automatic approval
     under section 431(d)(1) of the Code),
     the date of the ruling letter approving
     the extension.
    8d(6) Pre-PPA extensions--the              New.
     amortization base eligible for
     amortization using interest rates
     applicable under section 6621(b) of the
     Code for years beginning after 2007.
    8e Effect of shortfall method or           New--required under
     amortization extension--If the shortfall   103(f)(2) (E) and (F).
     method is used as the basis for this
     year's funding standard account
     computations or any of the plan's
     amortization bases are operating under
     an extension of time under section
     412(e) (as in effect prior to 2008) or
     section 431(d)(1) of the Code, enter the
     difference between the minimum required
     contribution for the year and the
     minimum that would have been required
     without using the shortfall method or
     extending the amortization base(s).
9 Funding standard account
    9a Prior year funding deficiency.........  Same as line 9a.
    9b Normal cost...........................  Same as line 9b.
    9c Amortization charges..................  Similar to line 9c, but
                                                amended to distinguish
                                                between funding waivers
                                                and extended bases using
                                                the valuation interest
                                                rate versus the rate
                                                under section 6621(b) of
                                                the Code.
    9d Interest..............................  Same (lines 9e-f
                                                deleted).
    9e-n Funding standard account items......  Same as lines 9g-p except
                                                for updated line
                                                references.
    9o Accumulated reconciliation account
        9o(1) Due to waived funding            Based on line 9o(3), but
         deficiencies and extended              amended to distinguish
         amortization bases, accumulated        between funding waivers
         prior to the 2008 plan year.           (pre-PPA) and extended
                                                amortization bases
                                                (lines 9o(1) and (2)
                                                deleted).
        9o(2) Adjustments for extended         Similar to line 9o(3),
         amortization bases.                    but amended to apply to
                                                extended amortization
                                                bases only.
        9o(3) Total accumulated                Similar to line 9o(4).
         reconciliation account.
10 Contribution necessary to avoid an          Similar to line 10.
 accumulated funding deficiency.
11 Change in assumptions check box...........  Same as line 11.
Part II--Additional information for plans      Deleted in its entirety.
 other than multiemployer plans.
------------------------------------------------------------------------

Appendix C

 Additional Information for 2008 (and Later) Schedule R (Retirement Plan
                              Information)
  [Parts I-IV remain as proposed on July 21, 2006. Part V expanded and
                             Part VI added]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Part V--Additional Information for Multiemployer Defined Benefit Pension
                                  Plans
------------------------------------------------------------------------
13. Enter the following information for each employer who contributed
 more than 5% of total contributions to the plan during the plan year
 (measured in dollars). See instructions: Name of contributing employer,
 EIN, date collective bargaining agreement expires, dollar amount
 contributed, contribution rate, contribution base unit measure as
 hourly, weekly, unit of product or other (specify). Complete as many
 entries as needed to report all applicable employers.
14. Enter the number of participants on whose behalf no contributions
 were made by an employer for: 14a current year, 14b the plan year
 immediately preceding the current plan year, and 14c the second
 preceding plan year.
15. Provide the ratio of (a) item 14a to item 14b and (b) item 14a to
 item 14c.
16. Information with respect to any employers who withdrew from the plan
 during the preceding plan year:
    a. Enter the number of employers who withdrew during the preceding
     plan year.
    b. If item 16a is greater than 0, enter the aggregate amount of
     withdrawal liability assessed or estimated to be assessed against
     such withdrawn employers.

[[Page 71579]]

 
17. If assets and liabilities from another plan have been transferred to
 or merged with this plan during the plan year, check box and see
 instructions regarding supplemental information to be included as an
 attachment.
------------------------------------------------------------------------
  Part VI--Additional Information for Single-Employer and Multiemployer
                      Defined Benefit Pension Plans
------------------------------------------------------------------------
18. If any liabilities to participants or their beneficiaries under the
 plan as of the end of the plan year consist (in whole or in part) of
 liabilities to such participants and beneficiaries under two or more
 pension plans as of immediately before such plan year, check box and
 see instructions regarding supplemental information to be included as
 an attachment.
19. If the total number of participants is 1,000 or more, complete items
 (a) through (c).
    a. Enter the percentage of plan assets held as Stock, Debt, Real
     Estate, Other.
    b. Provide the percentage held of each type of debt security:
     Government debt, Investment Grade Corporate Debt, and High-Yield
     Corporate Debt.
    c. Provide the Macaulay Duration for the total portfolio.
------------------------------------------------------------------------

Statutory Authority

    Accordingly, pursuant to the authority in sections 101, 103, 104, 
109, 110 and 4065 of ERISA and section 6058 of the Code, the Form 5500 
Annual Return/Report and the instructions thereto are proposed to be 
amended as set forth herein, including the addition of the proposed 
Short Form 5500.

    Signed at Washington, DC, this 6th day of December 2006.
Bradford P. Campbell,
Acting Assistant Secretary, Employee Benefits Security Administration, 
U.S. Department of Labor.
Joseph H. Grant,
Director, Employee Plans, Tax Exempt and Government Entities Division, 
Internal Revenue Service.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
[FR Doc. 06-9633 Filed 12-8-06; 8:45 am]
BILLING CODE 4510-29-P


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