20874 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

29 CFR Parts 2560 and 2570

RIN 1210–AA49

Employee Retirement Income Security

Act of 1974; Administration and

Enforcement, Delinquent Filer

Voluntary Compliance Program

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Rule related notice, reduced

civil penalty.

SUMMARY: This Notice announces the

implementation of a new Delinquent

Filer Voluntary Compliance Program by

the Department of Labor’s Pension and

Welfare Benefits Administration

(PWBA). This Program is intended to

encourage, through the assessment of

reduced civil penalties, delinquent plan

administrators to comply with their

annual reporting obligations under Title

I of the Employee Retirement Income

Security Act of 1974, as amended,

(ERISA).

EFFECTIVE DATE: April 27, 1995.

FOR FURTHER INFORMATION CONTACT:

PWBA’s Delinquent Filer Voluntary

Compliance Program Hotline, (202)

219–8776 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Executive Order 12866 Statement

Under Executive Order 12866 (58 FR

51735, Oct. 4, 1993), the Department

must determine whether the regulatory

action is ‘‘significant’’ and therefore

subject to review by the Office of

Management and Budget (OMB) and the

requirements of the Executive Order.

Under section 3(f), the order 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, the Department has determined

that this program creates a novel

method for statutory compliance that

will reduce paperwork and regulatory

compliance burdens on businesses,

including small businesses and

organizations, and make better use of

scarce federal resources, in accord with

the mandates of the Paperwork

Reduction Act, the Regulatory

Flexibility Act, and the President’s

priorities. Therefore, this notice is

‘‘significant’’ and subject to OMB

review.

Regulatory Flexibility Act Statement

The Regulatory Flexibility Act of 1980

requires each Federal agency to perform

a regulatory flexibility analysis for all

rules that are likely to have a significant

economic impact on a substantial

number of small entities. Small entities

include small businesses, organizations,

and governmental jurisdictions.

Given the existing requirement on

small businesses to file the Form 5500

Series Annual Return/Reports, we

believe this delinquency program

imposes no significant additional

burden on small entities. First, no entity

is required to file under this program.

Thus, unless a plan sponsor chooses to

take advantage of the relief offered by

this program, this program would not

impose any increased burden on small

entities that sponsor pension and

welfare benefit plans. Second, the

additional documentation that would be

required to be submitted under this

program is minimal. Third, the program

offers a substantial reduction in the

penalties that might otherwise be

imposed on the entities, including small

entities, that participate in the program.

A second tier of requirements, in the

form of further reduced penalties, has

been provided for small plans (those

filing Form 5500–C).

Paperwork Reduction Act Statement

Public reporting burden for this

collection of information is estimated to

average 21 minutes per response,

including the time for reviewing

instructions, searching existing data

sources, gathering and maintaining the

data needed, and completing and

reviewing the collection of information.

If you have any comments regarding this

estimate or any other aspect of this

information collection, including

suggestions for reducing this burden,

please send them to the Department of

Labor, Office of IRM Policy, Room N–

1301 (1210–0XXX), 200 Constitution

Avenue, NW, Wash., DC 20210, and to

Allison Herron Eydt, PWBA Desk

Officer, Office of Management and

Budget, Room 10235, New Executive

Office Building, Washington, DC 20507.

Section 1—Background

The Secretary of Labor has the

authority, under section 502(c)(2) of

ERISA, to assess civil penalties of up to

$1,000 a day against plan administrators

who fail or refuse to file complete and

timely annual reports (Form 5500 Series

Annual Return/Reports) as required

under section 101(b)(4) of ERISA and

the Secretary’s regulations codified in

29 CFR Part 2520. Pursuant to 29 CFR

2560.502c–2 and 2570.60 et seq., PWBA

has maintained a program for the

assessment of civil penalties for

noncompliance with the annual

reporting requirements. Under this

program, plan administrators filing

annual reports after the date on which

the report was required to be filed may

be assessed $50 per day for each day an

annual report is filed after the date on

which the annual report(s) was required

to be filed, without regard to any

extensions for filing. Plan

administrators who fail to file an annual

report may be assessed a penalty of $300

per day, up to $30,000 per year, until a

complete annual report is filed.

Penalties are applicable to each annual

report required to be filed under Title I

of ERISA. The Department may, in its

discretion, waive all or part of a civil

penalty assessed under section 502(c)(2)

upon a showing by the administrator

that there was reasonable cause for the

failure to file a complete and timely

annual report.

The Department has determined that

the possible assessment of the above

described civil penalties may deter

certain delinquent filers from

voluntarily complying with the annual

reporting requirements under Title I of

ERISA. In an effort to encourage annual

reporting compliance, therefore, the

Department has decided to implement

the Delinquent Filer Voluntary

Compliance (DFVC) Program, described

herein, under which administrators

otherwise subject to the assessment of

higher civil penalties will be permitted

to pay reduced civil penalties for

voluntarily complying with the annual

reporting requirements under Title I of

ERISA.

Section 2—The Delinquent Filer

Voluntary Compliance (DFVC) Program

.01 General. The DFVC Program is

intended to afford eligible plan

administrators (described in subsection

.02 of this Section) the opportunity to

avoid the assessment of civil penalties

otherwise applicable to administrators

who fail to file timely annual reports for

plan years beginning on or after January
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations 20875

1, 1988. Eligible administrators may

avail themselves of the DFVC Program

by complying with the filing

requirements and paying the civil

penalties specified in Section 3 or

Section 4, as appropriate, of this Notice.

.02 Eligibility for DFVC Program.

The DFVC Program is available only to

a plan administrator who complies with

each of the requirements of Section 3 or

Section 4, as appropriate, of this Notice

prior to the date on which the

administrator:

(a) is notified in writing, pursuant to

29 CFR 2560.502c–2, of the

Department’s intention to assess a civil

penalty under section 502(c)(2) of

ERISA for failure to file a timely annual

report; or

(b) is otherwise notified in writing by

the Department of a failure to file a

timely annual report under Title I of

ERISA.

.03 Effective date. The DFVC

Program described herein shall be

effective April 27, 1995. The

Department of Labor intends the DFVC

Program to be of indefinite duration;

however, the Program may be modified

from time to time or terminated in the

sole discretion of the Department upon

publication of notice in the Federal

Register.

Section 3—Administrators Filing

Annual Reports

.01 Plan administrators electing to

file a late Form 5500 Series Annual

Report under the DFVC Program shall:

(a) File with the Internal Revenue

Service. Except as provided in Section

3.02, file a complete Form 5500 or Form

5500–C (but not the Form 5500–R), as

appropriate, with all required schedules

and attachments, by entering at the top

center of the first page of the Form, in

red, bold print ‘‘DFVC Program’’ and

mailing the complete Form, along with

all required schedules and attachments,

to the Internal Revenue Service Center

designated in the Form 5500 Series

instructions. Do not send checks paying

penalties under the DFVC Program to

the Internal Revenue Service Center.

Note: If a joint employer-union board of

trustees or committee is the administrator, at

least one employer representative and one

union representative must sign the Form.

Current forms and instructions can be

obtained by dialing 1–800–TAX–FORM

(this is a toll-free number). For prior

years, obtain the most current form

available. If necessary, mark through the

year at the top of the first page and enter

the appropriate prior year in red bold

print.

(b) File with the U.S. Department of

Labor and Pay Applicable Penalty

Amount. Send a signed and dated copy

of the first page of the Form 5500 Series

Annual Report filed with the Internal

Revenue Service and a check payable to

the ‘‘U.S. Department of Labor’’ in the

amount of the applicable penalty, as

determined under Section 3.03, to:

DFVC Program, Pension and Welfare

Benefits Administration, P.O. Box

277025, Atlanta, GA 30384–7025.

The items that are required to be sent

to the Department pursuant to this

Section 3.01(b) (i.e., the completed first

page of the Form 5500 Series annual

report as well as the check made

payable to the U.S. Department of

Labor) also should contain the notation,

in red, bold print ‘‘DFVC Program’’. The

notation should be located at the top

center of each item.

.02 A plan administrator who filed a

complete Form 5500 Series Annual

Report, including all required schedules

and attachments, with appropriate

Internal Revenue Service Center prior to

the effective date of this DFVC Program,

but after the due date for the report,

shall only be required to comply with

the provision of paragraph (b) of Section

3.01 and, therefore, shall not be required

to refile the Form 5500 Series Annual

Report with the Internal Revenue

Service Center solely for purposes of the

DFVC Program.

.03 For each annual report filed

under this Section 3, the applicable

penalty amount shall be determined as

follows:

(a) In the case of an annual report

which is filed on or before twelve (12)

months after the date on which the

annual report was due (without regard

to any extensions), $50 per day for each

day the annual report is filed after the

date on which the annual report was

due (without regard to any extensions),

up to a maximum of $2,500 for From

5500 filers and $1,000 for Form 5500–

C filers; or

(b) In the case of an annual report

which is filed more than twelve (12)

months after the date on which the

annual report was due (without regard

to any extensions), $5,000 for Form

5500 filers and $2,000 for Form 5500–

C filers.

Note: The plan administrator is personally

liable for the payment of civil penalties

assessed under section 502(c)(2) of ERISA.

Therefore, civil penalties, including penalties

paid under this DFVC Program, may not be

paid from the assets of an employee benefit

plan.

.04 Annual reports that are filed

with the IRS pursuant to the DFVC

Program may be subject to the usual edit

checks. Plan administrators will have an

opportunity to correct deficiencies, in

accordance with the procedures

described in 29 CFR 2560.502c–2. The

failure to correct deficiencies in

accordance with these procedures may

result in the assessment of further

penalties.

PWBA has prepared a booklet, ‘‘The

Trouble-Shooter’s Guide To Filing

ERISA Annual Reports,’’ to assist in

preparing the Form 5500 Series. The

booklet explains how forms are

processed and how to avoid potential

filing errors. Copies are available by

written request to: U.S. Department of

Labor, Pension and Welfare Benefits

Administration, Room N–5656, 200

Constitution Ave. N.W., Washington,

D.C. 20210.

Section 4—Administrators Electing To

File Statements for Apprenticeship and

Training Plans or ‘‘Top Hat’’ Plans

.01 Administrators of apprenticeship

and training plans, described in 29 CFR

2520.104–22, and administrators of

pension plans for a select group of

management or highly compensated

employees, described in 29 CFR

2520.104–23(a) (‘‘top hat plans’’), who

elect to file the applicable statement(s),

described in §§ 2520.104–22, and

2520.104–23, respectively, as a

condition of relief from the annual

reporting requirements may, in lieu of

filing any past due annual report and

paying otherwise applicable civil

penalties, comply with the following

filing requirements:

(a) Send Form and Pay Applicable

Penalty Amount to the U.S. Department

of Labor. For purposes of this

requirement, plan administrators must

complete items 1a–1c, 2a–2c, 5a–5c, 6a

or 6b (as applicable) of the first page of

the Form 5500 Annual Report and enter

at the top center of the Form, in red,

bold print, either ‘‘Apprenticeship and

Training Plan/DFVC Program’’ or ‘‘Top

Hat Plan/DFVC Program’’, as

appropriate. For purposes of completing

item 5c, the plan number for all top hat

plans should be 888, and the plan

number for all apprenticeship and

training plans should be 999. The plan

administrator must sign and date the

Form.

Note: If a joint employer-union board of

trustees or committee is the administrator, at

least one employer representative and one

union representative must sign the Form.

Send the first page of the completed

Form 5500 Annual Report, and a check

payable to the ‘‘U.S. Department of

Labor’’ for the applicable penalty

amount, as determined under section

4.01(c), to: DFV Program, Pension and

Welfare Benefits Administration, P.O.

Box 277025, Atlanta, GA 30384–7025.
20876 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Rules and Regulations

The check that is made payable to the

U.S. Department of Labor also should

contain the notation, in red, bold print

‘‘DFVC Program.’’ The notation should

be located at the top center of the check.

(b) File Applicable Statement with the

U.S. Department of Labor. Prepare and

file a statement meeting the

requirements of §§ 2520.104–22, or

2520.104–23, as appropriate.

The apprenticeship and training plan

statement described in § 2520.104–22

must be sent to: Apprenticeship and

Training Plan Exemption, Pension and

Welfare Benefits Administration, Room

N–5638, U.S. Department of Labor, 200

Constitution Avenue NW., Washington,

DC 20210.

The ‘‘top hat’’ statement described in

§ 2520.104–23 must be sent to: Top Hat

Plan Exemption, Pension and Welfare

Benefits Administration, Room N–5638,

U.S. Department of Labor, 200

Constitution Avenue NW., Washington,

DC 20210.

Note: A plan sponsor maintaining more

than one ‘‘top hat’’ plan is not required to file

a separate statement for each such plan. See

§ 2520.104–23(b).

(c) Applicable penalty amount. For

purposes of the statements filed under

this Section 4, the applicable penalty

amount is $2,500, without regard to the

number of plans maintained by the

same plan sponsor for which statements

are filed pursuant to Section 4.01(b) and

without regard to the number of plan

participants covered under such plan or

plans.

Note: The plan administrator is personally

liable for the payment of civil penalties

assessed under section 502(c)(2) of ERISA,

therefore, civil penalties, including penalties

paid under this DFVC Program, may not be

paid from the assets of an employee benefit

plan.

(d) Multiple ‘‘top hat’’ plans. In the

case of plan sponsors maintaining more

than one pension plan for a select group

of management or highly compensated

employees described in § 2520.104–23,

the plan administrator shall, for

purposes of the DFVC Program, be

required to send a copy of the first page

of the Form 5500, completed in

accordance with Section 4.01(a),

without regard to the number of such

plans maintained by the plan sponsor,

provided that each plan maintained by

the sponsor is clearly identified on the

first page of the Form 5500 or

attachment thereto filed with the

Department of Labor.

.02 Administrators who have

complied with the requirements of this

Section 4 shall be considered as having

elected compliance with the

exemption(s) and/or alternative method

of compliance prescribed in

§§ 2520.104–22, or 2520.104–23, as

appropriate, for all subsequent plan

years.

.03 Acceptance by the Department of

a filing and penalty payment made

pursuant to this Section 4 does not

represent a determination by the

Department of Labor as to the status of

the arrangement as a plan or particular

type of plan under Title I or ERISA or

a determination by the Department of

Labor that the provisions of

§§ 2520.104–22, or 2520.104–23 have

been satisfied.

Section 5—Waiver of Right to Notice

and Abatement of Assessment

.01 Payment of a penalty under the

terms of this DFVC Program constitutes

a waiver of an administrator’s right both

to receive notice of assessment under 29

CFR 2560.502c–2 from the Department

and to contest the Department’s

Assessment of the penalty amount. It

should also be noted that payment of a

penalty under the DFVC Program does

not preclude the assessment of nonfiling or late-filing penalties by other

Federal agencies, including the Internal

Revenue Service and the Pension

Benefit Guaranty Corporation.

.02 The Internal Revenue Code

(Code) and regulations thereunder

require information to be filed on the

Form 5500 Series Annual Return/Report

and provides penalties for failing to

timely file. Under the Code, these

penalties apply unless it is shown that

the failure to timely file is due to

reasonable cause. If the late filing of a

Form 5500 Series Annual Return/Report

required by the Code may be due to

reasonable cause, a cover letter,

demonstrating that the failure to timely

file was due to reasonable cause, should

be attached to the completed Form 5500

Series Annual Return/Report that is

filed with the IRS.

Signed at Washington, DC, this 24th day of

April, 1995.

Olena Berg,

Assistant Secretary, Pension and Welfare

Benefits Administration.

[FR Doc. 95–10403 Filed 4–26–95; 8:45 am]

BILLING CODE 4510–29–M