51542 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

1Other filing requirements may apply to 

employee benefit plans under ERISA or to other 

benefit arrangements under the Code, and such 

other filing requirements are not within the scope 

of this proposal. For example, Code sec. 6033(a) 

imposes an additional reporting and filing 

obligation on organizations exempt from tax under 

Code sec. 501(a), which may be related to 

retirement trusts that are qualified under sec. 401(a) 

of the Code. Code sec. 6047(e) also imposes an 

additional reporting and filing obligation on 

pension benefit plans that are employee stock 

ownership plans (ESOPs). 

2For purposes of the annual reporting 

requirements under the Code, certain pension 

benefit arrangements that cover only business 

owners or partners (and their spouses), which are 

not employee benefit plans under Title I of ERISA, 

are permitted to file the Form 5500–EZ to satisfy 

filing requirements under the Code. See 

instructions to the Form 5500–EZ to determine who 

may currently file the Form 5500–EZ. 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2520 

RIN 1210–AB04 

Electronic Filing of Annual Reports 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Proposed regulation. 

SUMMARY: This document contains a 

proposed regulation that, upon 

adoption, would establish an electronic 

filing requirement for certain annual 

reports required to be filed with the 

Department of Labor by plan 

administrators and other entities. The 

Employee Retirement Income Security 

Act of 1974 (ERISA) and the Internal 

Revenue Code (the Code), and the 

regulations issued thereunder, impose 

certain annual reporting obligations on 

pension and welfare benefit plans, as 

well as on certain other entities. These 

annual reporting obligations generally 

are satisfied by filing the Form 5500 

Series. Currently, the Department of 

Labor, the Pension Benefit Guaranty 

Corporation, and the Internal Revenue 

Service (the Agencies) use an automated 

document processing system—the 

ERISA Filing Acceptance System—to 

process the Form 5500 Series filings. As 

part of the Department’s efforts to 

update and streamline the current 

processing system, the Department has 

determined that improvements and cost 

savings in the filing processes can best 

be achieved by adopting a wholly 

electronic filing processing system and 

eliminating the currently accepted 

paper filings. The Department believes 

that a wholly electronic system will 

result in, among other things, reduced 

filer errors and, therefore, reduced 

correspondence and potential for filer 

penalties; more timely data for public 

disclosure and enforcement, thereby 

enhancing the protections for 

participants and beneficiaries; and 

lower annual report processing costs, 

benefiting taxpayers generally. As part 

of the move to a wholly electronic filing 

system, the regulation contained in this 

document would, upon adoption, 

require Form 5500 filings made to 

satisfy the annual reporting obligations 

under Title I of ERISA to be made 

electronically. In order to ensure an 

orderly and cost-effective migration to 

an electronic filing system by both the 

Department and Form 5500 filers, under 

the proposal the requirement to file 

electronically would not apply until 

plan years beginning on or after January 

1, 2007, with the first electronically 

filed forms due in 2008. Upon adoption, 

this regulation would affect employee 

pension and welfare benefit plans, plan 

sponsors, administrators, and service 

providers to plans subject to Title I of 

ERISA. 

DATES: Written comments must be 

received by the Department of Labor on 

or before October 31, 2005. 

ADDRESSES: Comments should be 

addressed to the Office of Regulations 

and Interpretations, Employee Benefits 

Security Administration (EBSA), Room 

N–5669, U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210. Attn: Form 5500 E-filing 

regulation (RIN 1210–AB04). Comments 

also may be submitted electronically to 

e-ori@dol.gov or by using the Federal 

eRulingmaking Portal: http:// 

www.regulations.gov (follow 

instructions provided for submission of 

comments). EBSA will make all 

comments available to the public on its 

Web site at http://www.dol.gov/ebsa. 

The comments also will be available for 

public inspection at the Public 

Disclosure Room, N–1513, EBSA, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

FOR FURTHER INFORMATION CONTACT: 

Yolanda R. Wartenberg, Office of 

Regulations and Interpretations, 

Employee Benefits Security 

Administration, (202) 693–8510. This is 

not a toll-free number. 

SUPPLEMENTARY INFORMATION: 

A. Background 

Sections 104(a) and 4065 of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA), and 

sections 6057(b) and 6058(a) of the 

Internal Revenue Code of 1986, as 

amended (the Code), and the regulations 

issued under those sections, impose 

certain annual reporting and filing 

obligations on pension and welfare 

benefit plans, as well as on certain other 

entities.1 Plan administrators, 

employers, and others generally satisfy 

these annual reporting obligations by 

filing the Form 5500 Annual Return/ 

Report of Employee Benefit Plan, 

together with any required attachments 

and schedules for the particular plan 

(Form 5500).2

Currently, the Department of Labor, 

the Pension Benefit Guaranty 

Corporation, and the Internal Revenue 

Service (the Agencies) use an automated 

document processing system—the 

ERISA Filing Acceptance System 

(EFAST)—maintained by the 

Department of Labor (the Department) to 

process annual reports. Using the 

EFAST system, the Department 

annually receives and processes 

approximately 1.4 million filings. For 

the 2002 plan year, these filings 

translated into approximately 25 million 

paper pages. 

Developed in 1998 and 1999, the 

EFAST system relies on a mixture of 

filing and processing methods to accept, 

compile, and monitor the Form 5500 

filings. The EFAST system currently 

accepts filings generated using any of 

three different formats: (1) Government 

printed ‘‘hand-print’’ forms, which must 

be filed on paper; (2) computergenerated paper forms identical in 

format to government-printed handprint forms, which also must be filed on 

paper and are treated in processing the 

same as hand-print forms; and (3) 

computer-generated forms in which 2D 

bar code technology is used to encode 

filer data (known as the ‘‘machineprint’’ version of the forms), which may 

be filed either on paper or 

electronically. As indicated, only the 

computer-generated machine-print 

forms may be filed electronically, and 

the Agencies currently accept machineprint filings through any of the 

following electronic methods of 

transmission: (1) Via modem using file 

transfer protocol (FTP), or (2) on 

magnetic or optical media, such as CD– 

ROM, computer diskette, or magnetic 

tape. To process the different filing 

formats, the system uses a variety of 

computer technologies, such as optical 

character recognition technology to read 

data from the hand-print forms; 2D barcoding technology to read coded filer 

information printed on the ‘‘machineprint’’ forms submitted on paper; 

scanning technology to retain images of 

paper filings; etc. 

A private contractor performs the 

EFAST processing under a time-limited 

contract with EBSA. The end of the 

time-limited contracting cycle and the 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51543 

3The Request for Comment may be reviewed at: 

http://www.efast.dol.gov/efastrfc.html. 

4The Department specifically identified technical 

deficiencies involving the process for obtaining and 

using electronic signatures, the use of outdated 

transmission methods, and the continued use of 

paper for post-filing communications. The Request 

for Comment suggested various technical design 

changes to address these and other deficiencies, 

including creating an Internet-based method of 

filing; requiring that approved software be designed 

only for Internet transmission of computergenerated filings; adopting improved data exchange 

technology based on widely-accepted standards, 

such XML; improving the technical handling of 

third-party attachments and attestations; and 

eliminating differences in treatment between paper 

and electronic filings with respect to acceptance 

and rejection. 

5Comments received in response to the Request 

for Comment may be reviewed at: http:// 

www.dol.gov/ebsa/regs/cmt_efastrfc.html. 

6 In connection with this proposal, the 

Department is providing in this document further 

information respecting the technical design and 

Form 5500 content projects underway within the 

Department concerning the Form 5500 Series. The 

Department believes the information about those 

two other projects will assist the public in 

evaluating this proposal; however, the Department 

notes that it is not asking for public comment at this 

time on those two separate projects. The proposal 

contained in this notice concerns only the mandate 

of electronic filing. The public will have adequate 

separate opportunity for public comment on the 

Form 5500 regulatory initiative prior to its 

finalization and ample time to make necessary 

practical changes prior to implementation of the 

new processing system. 

beginning of another contracting cycle 

present a significant opportunity for 

EBSA to evaluate the system and to 

make changes to take advantage of 

technological advances. In connection 

with that process, in March, 2004, the 

Department posted a request for public 

comments (Request for Comment) on its 

website relating to updating the current 

EFAST processing system.3

The Request for Comment set out the 

Department’s preference for enhanced 

electronic filing and described in detail 

its understanding of the deficiencies in 

the EFAST design that impede use of 

the current electronic filing option. The 

Request for Comment stated that the 

Department’s goal in developing a new 

processing system is to make it ‘‘more 

accessible to its user base through 

Internet and Web-based technology, 

devoid of paper to the greatest extent 

possible, faster, less expensive, and 

more accurate’’ and to ensure that 

‘‘electronic filing becomes more 

convenient and beneficial for all users 

and stakeholders.’’ The Department 

noted that ‘‘[t]he full benefits of 

electronic processing have not * * * 

been realized * * * because [EFAST’s] 

electronic filing option has been 

underutilized.’’ 4 The Request for 

Comment noted the benefits to be 

gained from electronic filing, explaining 

that, compared with electronic filings, 

using paper-based forms is less accurate 

in terms of data capture and less 

efficient in terms of processing—paper 

filings take three times as long as 

electronic filings to process and have 

nearly twice as many errors, which 

often trigger follow-up letters from the 

Agencies seeking corrections or 

clarifications concerning the filed 

information. Such filings may also 

result in the imposition of penalties 

under ERISA and the Code. 

Signaling the Department’s interest in 

moving to an electronic filing system for 

the Form 5500 Series, the Request for 

Comment specifically requested 

comment on whether a reduction in the 

available filing methods, up to and 

including adoption of an electronic 

filing mandate, would be an appropriate 

solution to the problems caused by 

underutilization of electronic filing. 

In response to the Request for 

Comment, the Department received 

many constructive and useful comments 

from a diverse group of interested 

parties, including small business 

owners, sponsors and administrators of 

small and large plans, actuaries, 

accountants, entrepreneurs involved in 

the development and sale of EFASTapproved software, and firms that 

prepare Form 5500 filings for a wide 

variety of employee benefit plans.5

Public comment was largely in accord 

with the Department’s analysis of 

EFAST’s technical deficiencies as laid 

out in the Request for Comment. 

Based on what appears to be a 

consensus as to the current technical 

deficiencies of EFAST, the Department 

has begun the technical process 

necessary for the development of a new 

processing system. At the same time, the 

Agencies separately are undertaking a 

comprehensive review of the Form 5500 

Series in an effort to determine what, if 

any, design or data changes should be 

made, in anticipation of the new 

processing system. Neither the technical 

project for development of a new 

processing system, nor the Form 5500 

Series project, however, is the subject of 

this proposal.6 Any Form or related 

regulation changes will be proposed for 

public comment as part of a separate 

rulemaking. 

The subject of this proposal is the 

Department’s determination that any 

new processing system designed to 

replace EFAST must have as its core 

component a requirement that all Form 

5500s be submitted through electronic 

means. The Department’s determination 

that electronic filing must be the sole 

method available under the new 

processing system is not dependent on 

the extent or type of data that will be 

required of filers or the form or forms 

in which it must be provided; nor is it 

dependent on the exact software or 

hardware that will ultimately be devised 

to accommodate electronic filing, either 

by the Federal government or by the 

private sector. Rather, this 

determination arises from the 

Department’s conclusion that electronic 

filing will benefit plan sponsors, 

participants and beneficiaries, and the 

taxpayer, based on the Department’s 

investigation and analysis, described 

more fully below, of the practical 

alternatives. The proposal for an 

electronic filing requirement contained 

in this notice is therefore being 

published in advance of the other 

projects related to the Form 5500 Series 

and processing because the Department 

has concluded, based on considerations 

explained more fully below, that it is 

essential to the success of any redesign 

of EFAST that it provide filers and other 

affected parties adequate time to make 

the transition to a fully electronic 

method of filing the Form 5500 Series. 

Given the importance of the 

contemplated transition, the Department 

is publishing this proposal separately to 

describe the reasoning behind its 

conclusion and to solicit public 

comment on how best to proceed with 

the transition to electronic filing. 

B. Public Comment and Alternatives 

Virtually all of the public comments 

submitted in response to the Request for 

Comment recognized the value of 

electronic filing over paper filing and 

expressed support for increasing the use 

of electronic filing. The majority of 

comments also endorsed the concept of 

a gradual transition to 100 percent 

electronic filing. A clear consensus 

among commenters further favored the 

development of a secure Internet 

website on which a filer could file the 

Form 5500 through direct input of data, 

provided it was cost-free to the filer. 

Nonetheless, the commenters opposed 

an immediate mandate of electronic 

filing as the next step in EFAST 

development. The commenters argued 

that an immediate mandate would 

impose economic burdens on small 

businesses and small plans, which may 

not have easy access to the Internet. The 

commenters urged the Department to 

make only incremental changes, 

building on the current system and 

taking into account the substantial 

investments that the filing public has 

already made to accommodate EFAST. 

One representative commenter, 

speaking on behalf of a large number of 

large employers and service providers to 

employers of all sizes, suggested that, 

although electronic filing provides 

51544 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

7This approach is congruent with 

recommendations of the Government 

Accountability Office, which, in a June, 2005, 

Report to Congressional Committees, stated that 

‘‘[g]iven the improved timeliness and reduced 

errors associated with electronic filing, Labor, IRS 

and PBGC should require the electronic filing of the 

Form 5500.’’ See Private Pension—Government 

Actions Could Improve the Timeliness and Content 

of Form 5500 Pension Information (GAO–05–491) at 

44. The Report went on to state ‘‘[i]n doing so, 

Labor should also make improvements to the 

current electronic filing process to make it less 

burdensome, such as revising the procedure for 

signing and authenticating an electronic filing.’’

8Title XVII, Pub. L. 105–277, 112 Stat. 2681 (Oct. 

21, 1998). 

9Pub. L. 107–347, 116 Stat. 2899 (Dec. 17, 2002). 

10For further information on the Department of 

Labor’s Strategic Plan and EBSA’s relationship to it, 

see http://www.dol.gov/_sec/stratplan/main.htm. 

11See fn. 7, above. 

12See Private Pensions—Government Actions 

Could Improve the Timeliness and Content of Form 

5500 Pension Information (GAO–05–491) at 28, fig. 

9 at 32. GAO also noted that, where errors in a filing 

are detected, additional processing delays of up to 

120 more days occur. 

many advantages to both the public and 

the government, the Department should 

phase in any mandate over time by 

market segment, starting first with the 

largest employers who are already 

familiar with electronic filing, such as is 

required by the Securities and Exchange 

Commission. Other commenters asked 

the Department to allow sufficient time 

for experimentation and testing before 

inaugurating a mandate. 

In developing this proposed 

regulation, the Department sought to 

advance two main goals. One was to 

maximize the speed, efficiency, and 

accuracy with which annual reports are 

transmitted, accepted, and processed, 

thereby enhancing the protection of 

participants’ rights. The other was to 

minimize the burden placed on filers. In 

pursuit of these goals, the Department 

considered and analyzed several 

alternatives, taking into account the 

costs and benefits attendant to each. 

These included the following: (1) 

Creating a new processing system that 

could continue to process both 

electronic and paper submissions 

without limitation; (2) continuing the 

present, primarily paper-based 

processing system on an interim basis 

alongside a new, solely electronic 

processing system; (3) developing a 

new, primarily electronic processing 

system with a temporary capacity to 

process a limited number of paper 

filings, which would be made available 

under criteria targeting those filers most 

likely to desire a longer transition 

period; and (4) transitioning to a new, 

solely electronic processing system 

under a uniformly applicable 

requirement to file electronically. 

The Department considered the costs 

and benefits of each of these 

alternatives, and its economic analysis 

is described below under the heading 

‘‘Regulatory Impact Analysis.’’ Based on 

its analysis of the alternatives, the 

Department has concluded that the 

maintenance of any paper filing system, 

even on a reduced scale and/or for 

limited periods of time, which would be 

required under any of the first three 

alternatives, would be inherently 

inefficient and unnecessarily costly. It is 

also the Department’s view that any 

economic benefit that might accrue to 

some class of filers under those 

alternatives would be outweighed by the 

benefits to participants and beneficiaries 

at large, and to the Department and 

taxpayers generally, of implementing a 

single, wholly electronic system. 

Accordingly, the Department has 

decided to propose adoption of a 

uniform requirement to file 

electronically, as detailed further 

below.7

In so doing, the Department believes 

that transitioning to a new wholly 

electronic processing system will not 

present the problems suggested by the 

public responses to the Request for 

Comment. First, as explained more fully 

below, the Department intends to ensure 

that the new processing system will 

remedy the existing technical 

difficulties that underlie the perceived 

limitations of EFAST’s current 

electronic filing design and will provide 

an electronic filing process that will be 

simpler, easier, and more attractive to 

filers. 

Second, the Department does not 

believe that transitioning to the new 

processing system will impose undue 

burdens on small plans or small 

employers. Rather, the Department’s 

analysis indicates that filers’ costs of 

transitioning from paper filing to 

electronic transmission will be 

relatively modest and surpassed by 

benefits that will accrue in subsequent 

years. 

Finally, the Department intends to 

delay implementation of any electronic 

mandate until the due date for the filing 

of Form 5500 Series for the plan year 

beginning in 2007, generally July 2008 

or later. The Department believes that 

this substantial time delay of the 

proposed full electronic mandate will 

provide the public with adequate time 

to make adjustments in advance of the 

implementation of the new filing 

system. 

The Department’s conclusions 

concerning the public comments and 

alternatives are grounded in the 

Regulatory Impact Analysis presented 

below. 

The Department invites comment on 

the need for an exception to 

accommodate any potentially significant 

impediments to some filers’ transition to 

electronic filing. Commenters are 

encouraged to provide specific 

examples of such impediments, as well 

as to address the specific conditions for, 

and necessary scope of, relief under a 

hardship exception. 

C. Electronic Filing 

After careful consideration of the 

comments on the Request for Comment, 

as well as the need to develop a more 

efficient, cost-effective processing 

system for annual return/reports, the 

Department has determined, consistent 

with the goals of E-government, as 

recognized by the Government 

Paperwork Elimination Act 8 and the EGovernment Act of 2002,9 to require 

electronic filing of the Form 5500 to 

satisfy the reporting requirements of 

section 104(a) of Title I of ERISA. A 

mandate of electronic filing of benefit 

plan information, among other program 

strategies, will facilitate EBSA’s 

achievement of its Strategic Goal of 

‘‘enhancing pension and health benefits 

of American workers.’’ EBSA’s strategic 

goal directly supports the Secretary of 

Labor’s Strategic Goals of ‘‘protecting 

workers benefits’’ and of ‘‘a competitive 

workforce,’’ as well as promoting job 

flexibility and minimizing regulatory 

burden.10 A cornerstone of our 

enforcement program is the collection, 

analysis, and disclosure of benefit plan 

information. Requiring electronic filing 

of benefit plan information, with the 

resulting improvement in the timeliness 

and accuracy of the information, would, 

in part, assist EBSA in its enforcement, 

oversight, and disclosure roles, which 

ultimately enhance the security of plan 

benefits. As the Government 

Accountability Office noted in its June, 

2005, report on the Form 5500 Series,11

the current necessity for handling paper 

filings under EFAST creates a 

substantial delay between receipt of a 

filing and the availability of its 

information for any enforcement and 

oversight purposes. Stating that ‘‘the 

abundance of paper filings results in 

long processing times,’’ the GAO 

estimated, for purposes of illustration, 

that the processing time for a paper 

filing under EFAST averages 90 days 

from date of receipt where no filing 

errors are detected.12 Electronic filing 

would eliminate virtually all of this 

processing time, improving outcomes 

for all of the users of the Form 5500 

information. In this regard, the PBGC 

has advised the Department that 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51545 

13 It should be noted that all administrators of 

plans required to file reports under ERISA sec. 4065 

also are required to file reports for purposes of sec. 

104(a) of ERISA. 

14See, e.g., 26 CFR 301.6033–4T (mandating 

electronic filing of certain corporate income tax 

returns and returns of organizations required to be 

filed under Code sec. 6033); 26 CFR 1.6033–4T 

(returns required to be filed on magnetic media 

under 26 CFR 301.6033–4T must be filed in 

accordance with IRS revenue procedures, 

publications, forms, or instructions). 

electronic filing will enable PBGC to 

receive important information about 

defined benefit plans more quickly and 

efficiently, improving the PBGC’s ability 

to monitor plan funding; calculate 

bankruptcy claims; estimate the impact 

of non-bankruptcy reportable events; 

evaluate exposure and expected claims; 

study plan formation and termination 

trends; and assess compliance with 

PBGC premium requirements. 

In order to ensure an orderly and costeffective migration to an electronic 

filing requirement and a new processing 

system, the requirement to file the Form 

5500 electronically would apply only to 

annual return/reports required to be 

filed under ERISA section 104(a) for 

plan years beginning on or after January 

1, 2007. 

For purposes of the annual reporting 

requirements under section 4065 of 

Title IV of ERISA, the Pension Benefit 

Guaranty Corporation (PBGC) has 

advised the Department that a plan 

administrator’s electronic filing of a 

Form 5500 for purposes of ERISA 

section 104(a), together with the 

required attachments and schedules and 

otherwise in accordance with the 

instructions to the Form, will be treated 

as satisfying the administrator’s annual 

reporting obligation under section 4065 

of Title IV of ERISA.13 Similarly, for 

purposes of the annual filing and 

reporting requirements of the Code, the 

Internal Revenue Service (IRS) has 

advised the Department that, although 

there are no mandatory electronic filing 

requirements for a Form 5500 under the 

Code or the regulations issued 

thereunder, the electronic filing of a 

Form 5500 by plan administrators, 

employers, and certain other entities for 

purposes of ERISA section 104(a), 

together with the required attachments 

and schedules and otherwise in 

accordance with the instructions to the 

Form, will be treated as satisfying the 

annual filing and reporting 

requirements under Code sections 

6058(a) and 6059(a). The IRS intends 

that plan administrators, employers, and 

certain other entities that are subject to 

various other filing and reporting 

requirements under Code sections 

6033(a), 6047(e), and 6057(b) must 

continue to satisfy these requirements in 

accordance with IRS revenue 

procedures, publications, forms, and 

instructions. 

With respect to annual reporting and 

filing obligations imposed by the Code 

but not required under section 104(a) of 

ERISA, such as are currently satisfied by 

the filing of the Form 5500–EZ, the IRS 

has advised the Department that it is 

currently working with taxpayers to 

explore how best to make a transition 

from paper filing to electronic filing in 

a manner that minimizes the burdens on 

taxpayers and practitioners. In this 

regard, the IRS has promulgated 

regulations mandating or permitting 

electronic filing of certain returns filed 

by pension and welfare benefit plans.14

With regard to the development of a 

new annual return/report electronic 

processing system, the Department is 

committed to resolving the electronic 

filing impediments identified by 

commenters on the Request for 

Comment, in particular those 

impediments relating to electronic 

signatures, attachments, and attestations 

furnished by third parties (e.g., 

accountants, actuaries, etc.). 

It is anticipated that the new 

electronic filing system will incorporate 

the Internet as the sole medium for 

transmission of all filings and that the 

system will incorporate immediate 

validity and accuracy checks that will 

reduce both the error and rejection rate 

of filings and eliminate much of the 

costly post-filing paper correspondence 

and related potential penalties. The 

Department does not anticipate charging 

any filing fees in connection with the 

new system. 

It is intended that the new electronic 

filing system will provide more than 

one vehicle for the electronic 

submission of annual return/reports. 

First, it is intended that the new filing 

system will offer users of approved, 

privately developed Form 5500 

computer software (service providers to 

plans as well as plan administrators) a 

secure Internet-based method for 

transmission of Form 5500s created 

through the use of the software. This 

Internet-based transmission process will 

supercede all of the other currently 

available methods of transmitting 

machine-print versions of the Form 

5500, including use of computer 

diskette, CD–ROM, magnetic tape, and 

modem. As the Department made clear 

in the Request for Comment, in making 

a transition to 100 percent electronic 

filing, the Department does not intend 

to supplant private software developers, 

vendors, or service providers to plans. 

Rather, it is contemplated that the new 

system will continue to provide support 

to these private industries, and the 

Department believes that filers will 

continue to rely on a variety of privately 

developed software products and 

services to facilitate plan 

administration, including the 

preparation and filing of the annual 

return/report. Indeed, it is expected that 

third-party software will remain the 

primary means of producing Form 

5500s, with the simple difference that 

the reports will be filed electronically 

rather than through the use of paper. It 

is intended that service providers and 

software developers that provide valueadded services for plan sponsors will be 

able to incorporate the new system’s 

method of transmission into their 

services effectively and efficiently. 

Software file specifications will be nonproprietary so that users of different 

software may freely share information 

across different platforms. In this regard, 

the Department specifically invites 

public comment on how best to 

configure the new electronic filing 

architecture to provide the necessary 

flexibility to accommodate the needs of 

the diverse community of employee 

benefit plans. 

Second, the Department also intends 

to include in the new system, as a 

separate filing method, a dedicated, 

secure Internet website through which 

plan administrators (or other return/ 

report preparers) will be able to input 

data and to complete and submit Form 

5500 filings on an individual plan-byplan basis. It is anticipated that the 

Internet website will provide the filer 

with the capability of entering and 

saving data for an individual filing 

through multiple sessions, authorizing 

input for that filing from multiple 

parties (service providers, accountants, 

actuaries, etc.), uploading attachments, 

saving return/reports to a repository, 

and retrieving, updating, and editing 

stored filings, as well as creating and 

submitting amended filing data to 

EBSA. 

As mentioned above, in connection 

with implementation of the redesign of 

EFAST, the Department, in coordination 

with the IRS and the PBGC, is 

conducting a thorough content review of 

the Form 5500. This review will be 

conducted as a three-agency regulatory 

initiative and will provide notice and 

comment opportunities for the public. 

The Department intends to consider, in 

conducting the content review of the 

Form 5500, changes that would 

facilitate electronic filing, as well as 

recommendations made by the ERISA 

Advisory Council on electronic 

reporting and on reporting by health 

51546 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

15See, e.g., Report of the ERISA Advisory Council 

Working Group on Electronic Reporting (Nov. 8, 

2002), at http://www.dol.gov/ebsa/publications/ 

AC_1108a02_report.html. 

and welfare plans.15 That regulatory 

project will undertake to produce 

revised forms to be used for annual 

return/reports for the 2007 plan year, 

which will be due to be filed in 2008, 

when the new processing system will be 

implemented and the electronic filing 

requirement will begin to apply. Within 

the next few months, the Department 

intends to publish a separate notice 

inviting public comment on proposed 

changes to the Form 5500 and related 

rules. 

D. Proposed Rule 

The proposed rule contained in this 

notice is necessary to establish a 

requirement for the electronic filing of 

the Form 5500 for purposes of the 

annual reporting provisions of Title I of 

ERISA. Although at this time it is not 

possible to provide full technical details 

regarding the new electronic filing 

system, as many of the technological 

aspects of the redesign are still in 

development, filing requirements and 

compliance instructions will be 

provided to filers in advance of any due 

date for filing the Form 5500 under a 

final regulation requiring electronic 

submissions. 

The proposal, upon adoption, would 

add a new section 2520.104a–2, 

Electronic Filing of Annual Reports, to 

Subpart E of Part 2520 of Title 29 of the 

Code of Federal Regulations. The 

proposal provides that any Form 5500 

Annual Return/Report to be filed with 

the Secretary of Labor (Secretary) for 

any plan year beginning on or after 

January 1, 2007, shall be filed 

electronically in accordance with 

instructions and such other guidance as 

the Secretary may provide, applicable to 

such annual report. Because the Form 

5500 is also filed by certain non-plan 

entities, such as common or collective 

trusts, pooled separate accounts, and 

entities described in 29 CFR 2520.103–

12, which file for the fiscal year ending 

with or within the plan year for which 

a plan’s annual report is filed, the 

proposal makes further reference to the 

first ‘‘reporting year’’ beginning on or 

after January 1, 2007, for such entities. 

The proposal is intended to ensure 

that all Form 5500s filed with the 

Department, as well as any statements 

or schedules required to be attached to 

the report, including those filed by 

administrators (29 CFR 2520.103–1(a)(2) 

and (e)), group insurance arrangements 

(29 CFR 2520.103–2), common or 

collective trusts and pooled separate 

accounts (29 CFR 2520.103–3, 

2520.103–4, and 2520.103–9), and 

entities described in 29 CFR 2520.103–

12, are required (to the extent of the 

Department’s authority) to be filed 

electronically. Following the 

development of a new electronic filing 

system, the Department intends to 

provide specific instructions and 

guidance concerning methods of filing 

in the instructions for the annual report 

form(s) and via its website. 

As indicated above in the discussion 

under ‘‘Electronic Filing,’’ the proposal 

would not apply to any reporting 

requirements imposed solely under the 

Code (i.e., not required under section 

104(a) of ERISA). As discussed above, 

issues relating to transition from paper 

filing to electronic filing for such 

reporting requirements are under 

consideration at the IRS. Accordingly, 

the regulation would not apply to any 

attachment, schedule, or report required 

to be completed by a tax-qualified 

pension benefit plan solely in order to 

provide the IRS with information 

concerning compliance with Code 

section 410(b) for a plan year, even if 

such attachment, schedule, or report is 

required to accompany the Form 5500 

Annual Report/Return for that year. The 

proposal also would not apply to 

attachments, schedules, or reports that 

the IRS requires (1) under Code section 

6033(a) to be filed by a trustee of a trust 

created as part of an employee benefit 

plan described in Code section 401(a) or 

by a custodian of a custodial account 

described in Code section 401(f), or (2) 

under Code section 6047(e) to be filed 

with respect to an employee stock 

ownership plan (ESOP). 

The proposal, at 29 CFR 2520.104a–

2(b), makes clear that the requirement to 

file annual reports electronically does 

not affect a person’s record retention or 

disclosure obligations. In other words, 

the obligations of persons to retain 

records for purposes of sections 107 and 

209 of ERISA would not be altered by 

the fact that the annual report would be 

required to be filed in electronic form. 

Similarly, a plan administrator’s 

obligation to make the latest annual 

report available for examination and to 

furnish copies upon request, in 

accordance with sections 104(b)(2) and 

104(b)(4) of ERISA, will not be affected 

by an electronic filing requirement. 

Conforming changes are being 

proposed to 29 CFR 2520.103–1(f) 

[contents of the annual report], 

2520.103–2(c) [contents of the annual 

report for a group insurance 

arrangement], 2520.103–9(d) [direct 

filing for bank or insurance carrier trusts 

and accounts], and 2520.103–12(f) 

[limited exception and alternative 

method of compliance for annual 

reporting of investments in certain 

entities]. 

E. Regulatory Impact Analysis 

Summary 

The Department has considered the 

potential costs and benefits of this 

proposed regulation. Costs to plans 

would consist mainly of a one-time, 

transition or start-up cost to make the 

change to electronic filing, generally to 

be incurred in 2008, which is estimated 

to be $23 million. Benefits to plans 

would include ongoing savings on 

material and postage and efficiency 

gains from the early detection and 

correction of more potential filing errors 

in the course of electronic filing, 

estimated to total $10 million annually, 

and realized each succeeding year 

beginning in 2008. Over time the 

ongoing savings attributable to this 

proposed regulation are expected to 

outweigh its one-time transition costs. 

Aggregate savings are estimated to 

exceed aggregate costs by $23 million 

over the first five years (discounting 

future savings at a rate of 7 percent). 

Additional benefits are expected to 

accrue to the government and the public 

in the forms of substantially reduced 

processing costs and more timely 

availability of accurate filing data for 

use in enforcement and for other 

purposes of benefit to plans and 

participants. 

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). Under section 3(f) of the 

Executive Order, a ‘‘significant 

regulatory action’’ is 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 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51547 

16The economic analysis of the proposed 

regulation pertains only to those plans that file a 

Form 5500 to satisfy filing requirements under Title 

I of ERISA. Because the Form 5500–EZ is filed to 

satisfy filing requirements under the Code, data 

related to Form 5500–EZ filers is not included in 

this analysis. 

17Economy theory predicts that producers in 

competitive markets pass costs and savings on to 

buyers. 

18A very small fraction of all hand-print filers, 

typically a few percent, files computer-generated 

forms that are similar to and processed in the same 

way as government printed forms. These filers 

might tend to incur smaller transition costs than 

other hand-print filers. Because of their small 

numbers and the difficulties in separately 

identifying them in the data used for this analysis, 

the Department did not attempt to adjust its 

estimates to reflect this possible difference. This 

omission may slightly bias upwards the estimated 

aggregate transition cost for hand-print filers. 

19This assumption is consistent with 

observations made by the ERISA Advisory Council 

Working Group on Electronic Reporting in its Nov. 

8 Report. See fn. 15, above. 

Order. OMB has determined that this 

action is significant under section 3(f)(4) 

because it raises novel legal or policy 

issues arising from the President’s 

priorities. Accordingly, the Department 

has undertaken below an analysis of the 

costs and benefits of the proposed 

regulation. 

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 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless an 

agency determines that a proposed rule 

is not likely to 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 section 

104(a)(3) of ERISA, the Secretary may 

also provide for exemptions or 

simplified annual reporting and 

disclosure for welfare benefit plans. 

Pursuant to the authority of 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, 

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 these proposed rules 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 these 

proposed rules on small entities. 

These proposed rules may have a 

significant impact on a substantial 

number of small entities. The 

Department has therefore prepared an 

initial regulatory flexibility analysis, 

presented below under the heading 

‘‘Small Plans.’’ Additional relevant 

material also appears below under the 

heading ‘‘Alternatives Considered.’’

Costs and Benefits 

The Department has considered the 

potential costs and benefits of this 

proposed regulation. Costs to plans 

would include a one-time transition or 

start-up cost to make the change to 

electronic filing, estimated to be $23 

million. Benefits would include ongoing 

savings on material and postage and 

efficiency gains from the early detection 

and correction of more potential filing 

errors in the course of electronic filing, 

estimated to total $10 million annually. 

Over time the ongoing savings 

attributable to this proposed regulation 

are expected to outweigh its one-time 

transition costs. Aggregate savings are 

estimated to exceed aggregate costs by 

$23 million over the first five year 

(discounting future savings at a rate of 

7 percent). Additional benefits are 

expected to accrue to the government 

and the public in the forms of reduced 

processing costs and more timely 

availability of accurate filing data. 

Beyond that, it is not immediately clear 

how the costs and benefits of mandatory 

electronic filing will compare with that 

of current filing modes, and the 

Department invites comments on this 

point. 

The costs and benefits of this 

proposed regulation would accrue 

primarily to 832,000 plans that file 

Form 5500.16 Non-plan entities that file 

Form 5500 generally do so in their 

capacity as service providers to plans 

and therefore are expected to pass their 

own costs and benefits from the 

regulation on to the plans they serve.17

Transition Costs 

The proposed regulation would entail 

some one-time transition costs, incurred 

in making the transition to electronic 

filing. The magnitude of the transition 

costs is likely to vary with filers’

previous filing methods, reflecting the 

extent to which their existing filing 

infrastructure supports electronic filing. 

It is also expected that different filers 

will make the transition to electronic 

filing in different ways, depending on 

their circumstances and preferences. It 

is intended that all filers will have a 

number of methods of electronic filing 

from which to choose. For example, 

filers may enter information directly 

into a government-provided web site 

(using their own Internet service or one 

available for a fee at a local business 

center or free of charge at a public 

library or other facility). They may use 

commercial software equipped for 

electronic filing. They may hire a 

service provider (or rely on an existing 

relationship with a service provider) to 

provide electronic filing services. 

In 2002, the bulk of all filings, 87 

percent, were submitted on machineprint forms; 12 percent were submitted 

on hand-print forms; and 1 percent were 

submitted electronically. 

Hand-print Filers—Hand-print filers 

as a group are likely to face larger 

transition costs than others. These filers 

by and large currently file government 

printed forms, filled out by hand or by 

using a typewriter.18 Like all other 

filers, they will have the option of 

preparing and submitting their filings 

via a government provided web site. It 

is likely that many (but not all) already 

have the electronic infrastructure 

(mainly a personal computer and 

Internet service) to support electronic 

filing. It is also likely that others will 

have access to the Internet at no charge 

at a local library or other location.19

Nonetheless, hand-print filers are likely 

to incur some expense to learn about the 

new requirement, and some will incur 

additional costs, such as in locating and 

becoming familiar with Internet access, 

51548 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

20The total labor cost is derived from wage and 

compensation data from the Bureau of Labor 

Statistics’ (BLS) 2004 National Occupational 

Employment and Wage Estimates from the 

Occupational Employment Survey and BLS 2004 

Employment Cost for Compensation. This data can 

be found at: http://www.bls.gov/news.release/ 

ocwage.t01.htm and http://www.bls.gov/ 

news.release/archives/ecec_09152004.pdf. The 

estimate assumes a 3 percent annual rate of 

compensation growth and includes an overhead 

component which is a multiple of compensation 

based on the Government Cost Estimate. 

as well as in establishing a secured 

filing account. 

For the 104,000 current hand-print 

filers, the Department estimates a onetime, aggregate transition cost to 

electronic filing of $12 million. This 

assumes that a professional-level 

employee, who costs the plans on 

average $58.80 per hour in wages, 

benefits, and overhead,20 would require 

on average two hours to make the 

transition to electronic filing. The cost 

might be devoted to one or more onetime, transition activities such as 

learning about the electronic filing 

system, registering for a secure filing 

account, selecting and acquiring 

software, selecting and hiring a service 

provider, or locating an Internet access 

site and becoming familiar with a webbased interface. Different types of 

transition activities will have different 

costs. Selecting and hiring a service 

provider might be an example of a 

potential activity that would cost more 

than average, while registering for a 

secure account might be an example of 

one that would cost less. The activities 

and the cost will vary from filer to filer. 

For example, transition activities might 

be limited and costs low for a filer that 

is a highly experienced Internet user 

already carrying out other aspects of 

business management (such as buying 

supplies and selling products, reporting 

wages to SSA, etc.) on line. Activities 

might be more extensive and costs 

higher for a filer lacking Internet and 

computing expertise who needs to 

acquire a computer and Internet 

connection or select and hire a service 

provider. The Department invites 

comments on transitional activities and 

costs. 

Machine-print Filers—Machine-print 

filers as a group are likely to incur 

smaller transition costs than hand-print 

filers. It is likely that a large proportion 

of machine-print filings are prepared by 

service providers, while the remainder 

are prepared by filers using commercial 

software. Filers that currently rely on 

service providers to prepare and submit 

their filings may opt to continue in this 

manner, relying on the service provider 

to file electronically. Service providers’

transition costs will be passed back to 

and spread across the filers they serve. 

Other machine-print filers may rely on 

the vendors of their software to 

incorporate electronic filing features 

into the 2007 plan-year software 

(probably as part of an otherwise normal 

annual software update typically carried 

out to incorporate any form and 

instruction changes). It is likely that a 

majority already have the Internet 

service required for such software 

features to function, and some that 

currently do not have such service 

would have acquired it by the time the 

plan-year 2007 filings are due (for 

reasons unrelated to this regulation). For 

many machine-print filers the transition 

to electronic filing will be largely 

transparent, but will nonetheless entail 

at least some activities, such as 

registration for a secure filing account. 

For the 726,000 current machine-print 

filers, the Department estimates a onetime, aggregate transition cost to 

electronic filing of $11 million. This 

assumes that one-half of machine-print 

filers will rely entirely on their existing 

service providers to make the transition 

and that the service providers will 

spread their own transition costs across 

the filers they serve. The Department, 

lacking data on the number of affected 

service providers, did not attempt to 

estimate their transition cost, and such 

costs are not included here. Because 

these costs would be spread across 

filers, the amount passed on to any 

single filer is expected to be minimal. 

The remaining one-half of machineprint filers are assumed to shoulder the 

transition costs themselves. The 

Department’s estimate assumes that 

these filers will require on average thirty 

minutes of a professional-level 

employee’s time to make the transition 

to electronic filing. The Department 

invites comments on these transition 

costs. 

Ongoing Costs and Benefits 

Preparation Costs—This proposed 

regulation pertains to the filing, and not 

to the preparation, of the Form 5500. 

However, it is possible that, for some 

filers, mandatory electronic filing would 

prompt changes in preparation methods. 

For example, hand-print filers may 

currently prepare their filings using a 

government printed form and a 

typewriter. Such filers might prepare 

future filings by entering information 

into a government website. The 

Department considered the cost of 

making such transitions in preparation 

methods to be part of the overall 

transition cost of the proposed 

regulation, included in the estimates 

presented above. 

With respect to ongoing preparation 

costs, it is likely that some filers will 

incur higher costs in connection with 

new preparation methods prompted by 

this regulation and enabled by the new 

electronic filing system than with their 

current methods, but that others will 

incur lower costs. For example, it is not 

immediately determinable whether 

entering information into a website will 

take more or less time than typing it 

onto a paper form. The Department 

expects that commercial preparation 

software will incorporate features that 

ease preparation, such as integrated 

access to form instructions and 

automatic filling of data fields based on 

entries in other fields or in prior filings. 

The Department also intends that the 

new government filing website interface 

will be designed with attention to ease 

of preparation. Lacking an immediate 

basis to quantify the magnitude or costs 

and savings from possible changes in 

preparation methods, the Department 

did not attribute any such costs or 

savings to this proposed regulation, but 

invites comments on the potential 

magnitude of any such costs and 

benefits. 

Filing Cost Savings—Filing costs 

generally are expected to be reduced by 

the implementation of this proposed 

regulation. Savings are foreseen from 

the elimination of materials and mailing 

costs and from a reduction in filing 

errors and subsequent corrections. 

Electronic transmission will eliminate 

certain costs otherwise attendant to 

paper filing, including materials and 

postage. The Department estimates that, 

by changing to electronic filing, 829,000 

plans will benefit from approximately 

$900,000 in cost-savings annually, 

assuming savings of $0.0167 per sheet of 

paper and $0.57 for postage per filing. 

In addition, automated checks for 

errors and omissions upon electronic 

transmission, together with automated 

error checks and integrated instructions 

common to filing preparation software, 

will ease compliance with reporting 

requirements. Importantly, these 

features will reduce the need for 

subsequent amendments to submitted 

filings, as well as helping to avoid 

reporting penalties that might otherwise 

be assessed for deficient filings. 

Historically, filers that use a softwarebased system generally have fewer filing 

errors. In 2002, 7 percent and 16 percent 

of electronic and machine-print filings, 

respectively, had filing errors compared 

to 40 percent of hand-print filings. The 

filing errors include items such as 

missing signatures, attestations, 

schedules, or back-up documents that 

resulted in an incomplete filing. As a 

result of filer errors and the need for 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51549 

21 Joanne H. Pratt, ‘‘E-Biz: Strategies for Small 

Business Success’’ 32 (2002) (prepared for the SBA 

Office of Advocacy), available at http://www.

sba.gov/advo/research/rs220tot.pdf. 

22 Id. at 6. 

23 Id. 

24 Id. at 6–8. 

25 Id. at 11. 

26 Id. at 23–24. 

27SBA Office of Advocacy, ‘‘Self Employment 

and Computer Usage,’’ 3 (2003), available at 

http://www.sba.gov/ADVO/stats/sepc.pdf. 

28Stephen B. Pociask, TeleNomic Research, LLC, 

‘‘A Survey of Small Businesses’

Telecommunications Use and Spending’’ 71 (2004) 

(prepared for SBA Office of Advocacy), available at 

http://www.sba.gov/advo/research/rs236tot.pdf. 

29See, e.g., ‘‘Electronic Government: Challenges 

Must Be Addressed with Effective Leadership and 

Management,’’ Hearing on S.803 Before the Senate 

Comm. in Governmental Affairs, 106th Cong. 1 (July 

Continued 

additional information or clarifications 

about Form 5500 filings for the 2002 

plan year, the Department mailed 

160,000 letters to filers requesting 

corrections or additions. This process 

ultimately delays the final submission 

and requires plans to incur additional 

costs to address deficiencies. The 

electronic filing system’s intended error 

detection capability may largely 

eliminate the Department’s need to 

forward correspondence to plans with 

deficient filings. This enhancement is 

likely to save time for filers. If the need 

for correspondence can be eliminated, 

the aggregate annual cost savings to 

affected filers could be as high as $10 

million, assuming elimination of 

correspondence with the Department 

saves an average of one hour of a 

professional’s time, at an average of 

$58.80 per hour, plus the value of 

associated postage and materials. A 

disproportionate share of this savings, 

estimated at $2.4 million, would accrue 

to current hand-print filers (reflecting 

their historically higher filing error 

rates), while $7.1 million would accrue 

to machine-print filers. The Department 

(and by extension taxpayers) would 

realize additional savings from this 

reduced need to correct filing errors. 

Societal Benefits 

Additional benefits are expected to 

accrue to the government and the public 

in the forms of reduced processing costs 

and more timely availability of accurate 

filing data. 

Participants will benefit from the 

transition to a fully electronic method of 

filing. The new filing procedures will 

provide participants and beneficiaries 

with access to more accurate plan 

information since software-based forms 

are generally less prone to error, the 

new system will process filings more 

quickly, and reports disclosing 

information about plans’ administrative 

and financial status will be available to 

the public sooner than would otherwise 

be possible. This improved access can 

enhance the quality of interaction 

between plans, participants, and 

beneficiaries. 

The Federal government and the 

public at large will also benefit from the 

change to electronic filing. The decrease 

in correspondence will constitute 

immediate savings to the Federal 

government that will, in turn, yield 

savings to the taxpayers. Finally, 

improvements in the accuracy of the 

data contained in submitted filings and 

the expected acceleration in processing 

may make possible more timely 

production of reliable national statistics 

on private employee benefit plans. Such 

statistics historically have been 

produced at a substantial lag of up to 

four years after the end of the filing 

year. 

Additional Considerations 

Proliferation of Technology—In 

proposing this regulation, and in 

assessing its economic impacts, the 

Department took into consideration the 

high and increasing rates of use of 

electronic information technologies by 

businesses, including by small 

businesses in particular. Such 

technologies include office computing 

hardware and software that process, 

organize, store, and transmit 

information electronically. The 

proliferation of such technologies, and 

of expertise and familiarity with using 

them, is expected to moderate the cost 

of compliance with this proposed 

regulation. 

The Department believes that most 

filers already have access to a computer 

and the Internet. The use of computers 

and the Internet has become the norm 

among U.S. businesses. Most or all 

industries in the economy are beginning 

to use the Internet as a means of 

conducting at least some of their daily 

operations and to remain competitive. 

Moreover, it is possible that plan 

sponsors as a group are more likely than 

other companies to be using information 

technologies. The Department believes 

that few, if any, plan sponsors will 

purchase a computer or subscribe to 

Internet service for the sole purpose of 

electronically filing their Form 5500. (If 

some do, they may realize collateral 

benefits as they put their newly 

acquired technologies to additional 

uses.) Furthermore, the Department 

believes that the number of firms 

offering pension and welfare plans that 

do not have a computer and/or Internet 

access is a relatively small number, 

especially given the substantial growth 

of computer and Internet usage over the 

past decade. The Department also 

believes that the number of plans that 

will not have a computer or Internet 

access by the year 2008 will be small. 

The Department’s views on the 

proliferation of technologies are 

grounded in its review of various 

studies of the topic. 

According to a 2002 study for the 

SBA,21 the Internet offers unparalleled 

new opportunities for small businesses. 

Fifty-seven percent of small businesses 

already used the Internet; of those most 

had their own websites; and more than 

one-third were selling their products on 

line.22 Of those not using the Internet, 

two-thirds did use computers.23

The most popular uses of the Internet 

among small firm users were 

communicating with customers and 

suppliers (83 percent), gathering 

business information (80 percent), and 

purchasing goods and services (61 

percent).24 Some also used the Internet 

to conduct banking or other financial 

transactions (27 percent) or bid on 

contracts (21 percent). Most firms with 

websites either broke even financially or 

made money through use of the sites. 

Also according to this study, use of 

Internet technology is growing. Among 

small firms with websites, two-thirds 

had been operating the site for less than 

one year.25 Business use of on-line 

technologies is being driven up by 

increasing use of such technologies by 

consumers. Increasing availability and 

use of affordable, fast broad-band 

Internet services is helping to drive both 

trends. Market forecasters predicted 

rapid growth in world e-commerce, 

reaching as much as several trillion 

dollars by 2004.26

A 2003 report by SBA 27 found that 

self-employed computer users 

numbered 10.5 million in 2000, up from 

9.2 million two years earlier. Over the 

same two years, self-employed 

individuals’ access to the Internet 

increased by 50 percent, reaching 83 

percent of all such individuals. 

A 2004 study for SBA 28 of small firms 

with fewer than 500 employees found 

that only 27 percent did not currently 

subscribe to Internet service. 

Benefits of E-government—The 

proposed regulation will advance the 

goals of administration articulated in 

the Government Paperwork Elimination 

Act and the E-Government Act of 2002. 

The Department expects this 

proposed regulation to advance the 

general trend toward the efficiencies of 

E-government. Federal, State, and local 

government agencies have already 

implemented numerous E-government 

initiatives.29 These initiatives reduce 

51550 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

11, 2001) (statement of David McClure, Director, 

Information Technology Management Issues, GAO), 

available at http://www.gao.gov/new.items/

d01959t.pdf. 

30Susie Trinkle, Capella Univ., ‘‘Moving Citizens 

from in line to Online: How the Internet is 

Changing How Government Serves its Citizens’’

(Sept. 10, 2001, available at http://oma.od.nih.gov/ 

ma/bps/bpkm/Resource/Y_MovingCitizens

FromLineOn.doc. 

31Hart-Teeter, ‘‘E-Government: the Next 

American Revolution’’ (Sept. 28, 2000) available at 

http://www.excelgov.org/displaycontent.

asp?keyword=mReleases&NewsItemID=2559. 

32Testimony of David A. McClure, GAO, before 

the Subcommittee on Government Management, 

Information and Technology, Committee on 

Government Reform, House of Representatives 

(2000), as reported in Karen Laynea and Jungwoo 

Leeb, Government Information Quarterly 18 (2001), 

122–136. 

33William D. Eggers, Global Director, Deloitte 

Research-Public Sector, ‘‘Citizen Advantage: 

Enhancing Economic Competitiveness Through eGovernment’’ 1 (2004). 

34 Gassan Al-Kibsi; Kito de Boer; Mona Mourshed; 

Nigel P. Rea; ‘‘Putting citizens on-line, not in line,’’

McKinsey Quarterly 2001 no. 2. 

35See Eggers, supra note 25 at 7, 14. 

the government’s burden on businesses 

by eliminating redundant collection of 

data. Citizens receive faster, more 

convenient services from a more 

responsive and informed government.30

According to one study, citizens see the 

most important benefits of Egovernment as increased government 

accountability to citizens (36 percent), 

greater public access to information (23 

percent), and more efficient/costeffective government (21 percent).31 The 

GAO has indicated that government 

agencies that reported using the Internet 

as a medium for core business 

operations delivered information and 

services more quickly, less expensively, 

and to wider groups of users.32

Another study suggests that one of the 

most powerful ways to reduce 

compliance costs is through Egovernment. Web-enabling can save 

businesses and citizens a considerable 

amount of time and money, as the 

following examples demonstrate: (1) 

The State of Oregon’s on-line permitting 

and reporting process for building 

construction approvals saved Oregon’s 

construction industry $100 million 

annually. Deloitte’s estimate suggests 

that if governments at all levels were to 

follow Oregon’s lead, the United States’

construction industry, as a whole, could 

save in the range of $15 billion to $20 

billion annually. (2) The SBA’s Business 

Compliance One Stop website saves 

businesses about $526 million a year, by 

helping them find, understand, and 

comply with regulations. (3) In Canada, 

the province of British Columbia’s 

OneStopBC website cuts down on 

government paperwork costs for 

businesses by allowing on-line business 

license registrations. The cost savings to 

businesses are estimated to be in the 

range of $14 million to $27 million 

annually.33

Time Rebates—Time considerations 

affect all interactions and activities in 

business. When citizens and businesses 

can go on line, instead of waiting in 

line, they can obtain faster, more 

convenient access to government 

services.34 E-government can provide 

what has come to be described as a 

‘‘time rebate’’—cutting down on the 

time it takes to comply with government 

regulations and to complete 

transactions. 

For example, the Commonwealth of 

Pennsylvania’s ‘‘PA Open for Business’’

website allows a business to enter all 

the information needed to register with 

the State in one place, instead of having 

to go to five different agencies. A 

process that once took days or weeks 

has been reduced to one hour.35

The Department intends that the new 

electronic filing system will be 

equipped to streamline submissions and 

reduce time and burden on filers. The 

proposed regulation should benefit all 

parties because the information 

contained in the Form 5500 would be 

directly entered into the Department’s 

records. This would improve 

transaction accuracy, reduce cycle 

times, improve cost efficiencies, 

enhance information accessibility, and 

provide more timely availability of the 

information contained in the Form 5500 

return/reports. 

Alternatives Considered 

As noted earlier in this preamble, 

before electing to pursue the approach 

taken in this proposed regulation, the 

Department considered alternative 

options for reconfiguring the filing 

methods for the Form 5500 Series, 

focusing in particular on the gradual 

approach advocated generally in the 

public comments. The following 

discusses three such alternatives that 

the Department considered but rejected, 

along with the reasons why each was 

rejected in favor of a uniform 

requirement to file electronically 

beginning with filings for the 2007 plan 

year. Fuller discussion of the third 

alternative, which would provide a 

time-limited exception from mandatory 

electronic filing for certain small plans, 

follows under the heading ‘‘Small 

Plans.’’

First, the Department considered 

developing a new processing system 

that could continue to process both 

electronic and paper submissions 

without limitation. Such a system might 

be popular with the filing public and 

might result over time in virtually 

complete conversion to electronic filing, 

provided that the new system 

successfully incorporated the 

contemplated technological advances. 

Such a ‘‘dual method’’ processing 

system would permit filers to choose 

between electronic and paper filing. It 

therefore would likely appear to some 

filers to be more cost-efficient than the 

uniform requirement to file 

electronically that the Department is 

proposing. However, while a ‘‘dual 

method’’ processing system might be 

popular with some filers, such a system 

would perpetuate the inefficiencies 

inherent in paper filings—larger number 

of filing errors, required correspondence 

with filers, increased likelihood of civil 

penalties, delays in reviews of filings, 

and increased risks to participants and 

beneficiaries resulting from erroneous 

data or delayed enforcement. It therefore 

does not appear to be in the interest of 

plans or participants to maintain such a 

system. In addition, the maintenance of 

such a system would entail additional 

costs for the Federal government (and 

by extension taxpayers) because it 

would be necessary to incorporate into 

the system the ability to receive and 

process a potentially large number of 

paper filings. In the Department’s view, 

the additional costs for such a complex 

processing system would be virtually 

prohibitive for the Federal government 

in light of current budgetary constraints 

on the Federal government generally 

and on the Department in particular. 

Under such constraints, maintaining a 

paper filing system would consume 

resources that would be better devoted 

to enhancing the system’s electronic 

filing capabilities or carrying out other 

Department functions. 

Second, the Department considered 

the alternative of continuing the present 

paper processing system on a short-term 

interim basis during the initial years of 

operating a new, solely electronic 

processing system. This alternative 

would enable filers to gain familiarity 

with the new paperless system as part 

of the transition process. As with the 

prior approach, this approach would 

continue, albeit for a limited period, the 

current inefficiencies of a paper system 

and the substantial costs of maintaining 

tandem operations, particularly since 

continuing the old processing system 

would require ‘‘sole source’’ noncompetitive yearly contractual 

negotiations with the current contractor, 

with ever increasing additional costs. 

For example, in fiscal year 2006 the 

Department requested an additional 

$2.1 million to maintain current 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51551 

operations in the first year of a sole 

source contract. 

Third, the Department considered 

developing a new processing system 

that would have the temporary capacity 

to process paper filings from a targeted 

group of filers under an exception from 

the electronic filing requirement. For 

reasons described below under ‘‘Small 

Plans,’’ the Department considered it 

appropriate to limit the exception to 

small plans that had previously filed 

government printed ‘‘hand-print’’ forms 

and that are not subject to the audit 

requirement. The Department believes 

that making such an exception 

available, at least for the first few years 

of operating the new processing system, 

might provide a small net benefit to at 

least some proportion of this class of 

filers. However, the Department believes 

this potential benefit, which could 

amount (as explained further below) to 

as little as $14 per plan on average for 

74,000 plans or as much as $249 per 

plan on average for 7,400 plans, is 

outweighed by the benefits to 

participants and beneficiaries at large, 

and to the Department and taxpayers 

generally, of implementing a single, 

wholly electronic filing system 

beginning with reports for the 2007 plan 

year. The maintenance of any paper 

system, even on a reduced scale, is 

inherently inefficient and unnecessarily 

costly and could undermine full 

realization of the potential benefits of 

electronic filing for ERISA compliance 

and enforcement, thereby exposing 

some plans and participants to 

unnecessary risk. Accordingly, the 

Department rejected this alternative, 

along with the other two considered 

alternatives, in favor of a uniform 

requirement to file electronically. 

The Department’s consideration of 

this third alternative, and its basis for 

rejecting it in favor of a uniform 

requirement to file electronically, is 

detailed below under the heading 

‘‘Small Plans.’’

Small Plans 

The Department believes this 

regulation may have a significant impact 

on a substantial number of small plans. 

As for all other plans, costs and benefits 

for small plans are expected to vary 

with the plans’ circumstances. Most will 

likely incur moderate transition costs 

and subsequently realize moderate 

ongoing savings. Some, however, may 

experience larger impacts, including 

both larger transition costs and/or 

ongoing net cost increases rather than 

ongoing net savings. For example, some 

small plans may lack experience with or 

easy access to the Internet. Such plans 

may incur larger than typical transition 

costs to gain access to the Internet (or to 

enlist a service provider with access) 

and may find it more time consuming, 

and therefore more costly, to prepare 

their filing on a government website (or 

to interact with a service provider) than 

to prepare their filing using a 

government printed form that is 

completed ‘‘by hand’’ and filed on paper 

through the mails. The Department 

expects that only a minority of plans 

might be so affected, but that minority 

might nonetheless represent a 

substantial number. 

The Department therefore conducted 

an initial regulatory flexibility analysis, 

repeating the above analysis while 

limiting the scope to include only small 

plans—that is, those with fewer than 

100 participants. On that basis, it is 

estimated that 667,000 small plans will 

incur one-time transition costs of $18 

million, including $9 million for 78,000 

current hand-print filers and $9 million 

for 589,000 current machine-print filers. 

It is further estimated that small plans 

would realize ongoing materials and 

postage savings of approximately 

$700,000 annually and could realize up 

to $7 million in savings annually from 

the elimination of the need to correct 

deficient filings (including $2 million 

accruing to hand-print filers and $5 

million to machine-print), for a total of 

approximately $8 million in annual 

savings. As with all other plans, over 

time the aggregate ongoing savings 

realized by small plans are expected to 

outweigh their aggregate one-time 

transition costs. Over five years, savings 

are estimated to exceed costs by $17 

million (discounting future savings at a 

rate of 7 percent). The Department 

believes that impacts may vary among 

small plans, depending for example on 

their (or their service providers’) access 

to and familiarity with associated 

technologies, and possibly on their size. 

The Department, however, lacks a basis 

on which to estimate such variations. 

The Department invites comments on 

this assessment of the impact of the 

proposed regulation on small plans. 

The Department also assessed the 

costs and benefits of alternative 

approaches. As noted above, the 

Department considered proposing a 

temporary exception from the 

requirement to file electronically for 

certain small plans. The Department 

undertook to develop as an alternative 

to a uniform electronic filing 

requirement an exception provision that 

would maximize benefits and minimize 

costs to affected parties including plans, 

participants, and taxpayers. 

The Department first considered the 

criteria that should be adopted to 

designate filers eligible to continue to 

file on paper under the exception. The 

Department selected as the first criterion 

plan size. Small plans (and the small 

businesses that sponsor them) may be 

less likely than large ones to use 

computers and the Internet or to have 

current expertise in such usage. They 

may be harder pressed to devote 

resources to making a transition to 

electronic filing. Moreover, transition 

costs may be largely fixed costs 

(invariant to plan size) and therefore 

more burdensome to small than to large 

plans. The Department considered 

alternative plan size thresholds, 

including plans with fewer than 100, 

fewer than 25, or fewer than 10 

participants. The threshold of fewer 

than 100 participants seemed most 

desirable. It is consistent with the 

threshold used for other distinctions in 

annual reporting requirements and 

therefore would not add additional 

complexity to reporting requirements. In 

addition, the overall systems 

requirements associated with an 

exception for plans with fewer than 100 

participants would be expected to differ 

little from those associated with an 

exception limited to smaller plans. The 

cost of building, maintaining and 

periodically updating a system capable 

of accepting and processing paper 

filings is largely invariant to the number 

of paper filings to be accepted. 

Moreover, the number of plans eligible 

for the exception would not vary much 

across the thresholds considered. 

Among plans not subject to the audit 

requirement and filing by the hand-print 

method, the Department estimates that 

74,000 have fewer than 100 participants, 

59,000 fewer than 25, and 46,000 fewer 

than 10. 

The second criterion identified by the 

Department was past filing method. As 

noted above, it is likely that hand-print 

filers will confront higher average 

transition costs than machine-print 

filers. Machine-print filers currently 

prepare their filings electronically, even 

if they do not file them electronically. 

In contrast, some fraction of hand-print 

filers may be entirely without 

computing infrastructure. 

A third criterion identified by the 

Department was potential risk to 

participants. As noted above, hand-print 

filings are more prone to error than 

machine-print or electronic filings. In 

addition, processing of paper filings is 

inherently slower than processing of 

electronic filings. Therefore, continued 

acceptance of paper filings has the 

potential to slow both detection of 

ERISA violations and enforcement 

51552 Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 

36This concerns not merely reporting violations, 

but all potential ERISA violations, including those 

which might directly jeopardize plan assets or 

participants’ benefits. 

37This assumption seems reasonable insofar as an 

estimated 94 percent of all small hand-print filers 

were not subject to the audit requirement and 

therefore would be eligible for the exception. 

actions to address such violations.36 The 

Department therefore considered 

approaches that would limit the 

exception to situations where risks of 

violations (and associated threats to 

participants) were less, such as in 

connection with plans that, because of 

the presence of other safeguards and/or 

absence of certain risks, were not 

required to provide financial audits 

with their annual reports. 

Finally, the Department considered 

the appropriate duration of such an 

exception. To accommodate such an 

exception, the Department’s new 

processing system would need to 

incorporate an ability to receive and 

process some number of paper filings. 

The incorporation of this ability into the 

system would entail a relatively large, 

up-front development cost, followed by 

smaller but substantial ongoing costs to 

process paper filings. It therefore 

seemed reasonable to consider as the 

duration of such an exception the 

expected minimum ‘‘lifetime’’ of the 

new system (which corresponds to the 

expected duration of the contract that 

will develop and maintain it), which is 

five years. The Department next 

considered whether a five-year 

exception would be sufficient to 

accomplish the exception’s goal of 

easing small plans’ transition to 

electronic filing. Assuming continued 

rapid proliferation of computer and 

Internet usage, it seems likely that five 

years would be sufficient to accomplish 

this goal. 

Based on this reasoning, the 

Department considered, as an 

alternative to a uniform 100 percent 

electronic filing requirement, a five-year 

exception for plans that: (1) Have fewer 

than 100 participants, (2) previously 

filed their annual reports using 

government printed ‘‘hand-print’’ forms, 

and (3) are not subject to the audit 

requirement for annual reporting under 

Title I of ERISA. The Department 

estimates that use of these criteria 

would create a class of 74,000 filers 

eligible for the temporary exception 

from electronic filing. 

As noted above, small plans are 

estimated to face an aggregate transition 

cost of $18 million, followed by ongoing 

annual savings of $8 million. Over time 

the aggregate savings will outweigh the 

cost. But, also as noted above, a 

disproportionate share of the transition 

cost, $9 million, is estimated to accrue 

to the small minority of small plans that 

file via the hand-print method. The 

savings accruing to these filers, being 

attributable to reduced materials and 

postage and, more important, reduced 

filing errors, if proportionate to their 

numbers, will amount to $2 million. 

The Department undertook to 

carefully consider the potential costs 

and benefits to small plans of the 

exception defined above. 

Approximately 74,000 plans could be 

eligible for the exception. The 

Department considered two potential 

scenarios. 

In the first scenario, the Department 

assumed that all eligible plans would 

file on paper, for an average of three of 

the five years for which paper filings 

would be permitted. The Department 

assumed further that these plans’

average transition costs and ongoing 

savings would be the same as the 

average assumed earlier for all small 

plan hand-print filers.37 The 

Department also assumed that, by taking 

advantage of the exception, these filers 

would reduce their transition cost to the 

level assumed earlier to be incurred by 

machine-print filers, but would delay 

commencement of the ongoing savings 

available through electronic filing until 

they began filing electronically (on 

average after three years). In this 

scenario, the 74,000 filers taking 

advantage of the exception would 

reduce their transition costs by $6.5 

million on aggregate, while sacrificing 

$5.5 million in potential ongoing 

savings, thereby realizing a net benefit 

of approximately $1 million, or $14 per 

filer. 

In the second scenario, the 

Department considered the possibility 

that the transition cost might vary 

widely across filers. The Department 

assumed that just 10 percent of eligible 

filers would take advantage of the 

exception (again for an average of three 

years), but that these filers would face 

a transition cost (absent the exception) 

of three times the average assumed for 

all hand-print filers. Other assumptions 

were the same as in the first scenario. 

In this scenario, 7,400 filers taking 

advantage of the exception would 

reduce their transition costs by $2.4 

million on aggregate, while sacrificing 

$550,000 in potential ongoing savings, 

thereby realizing a net benefit of 

approximately $1.8 million, or $249 per 

filer. 

On the basis of these scenarios, the 

Department believes that some filers 

would likely benefit from the exception. 

However, as noted above, the potential 

net benefit to a given filer from the 

exception would be modest. In the first 

scenario, the average net benefit would 

amount to just $12 per plan using the 

exception; in the second, $249 per plan. 

Further, the availability of the exception 

would create significant risks to 

participants and costs to the government 

(and taxpayers). As discussed above, the 

maintenance of any paper system, even 

on a relatively small scale, is inherently 

inefficient and costly. Also, as discussed 

above, paper filings take longer to 

process and therefore pose unnecessary 

compliance risks. Therefore, the 

Department concluded that the potential 

benefit of a limited exception would be 

outweighed by the associated cost to the 

government (and to taxpayers) and the 

potential risks to participants and that 

adoption of a limited exception could 

not be justified. For these reasons, the 

Department rejected the alternative of 

providing an exception in favor of a 

uniform requirement to file 

electronically. 

Paperwork Reduction Act 

This proposed regulation does not 

introduce, or materially modify, any 

information collection requirement, but 

furthers the Department’s goal of 

automating the submission of the Form 

5500 return/report. As such, this notice 

of proposed rulemaking is not subject to 

the requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.) because it does not contain a 

‘‘collection of information’’ as defined 

in 44 U.S.C. 3502(3). 

Congressional Review Act 

The notice of proposed rulemaking 

being issued here is subject to the 

provisions of 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. 

Unfunded Mandates Reform Act 

Pursuant to provisions of the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), this rule does not 

include any Federal mandate that may 

result in expenditures by State, local, or 

tribal governments, or the private sector, 

which may impose an annual burden of 

$100 million or more. 

List of Subjects in 29 CFR Part 2520 

Employee benefit plans, pensions, 

reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Department proposes to 

amend 29 CFR part 2520 as follows: 

Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Proposed Rules 51553 

1. The authority section of Part 2520 

continues to read as follows: 

Authority: 29 U.S.C. 1021–1025, 1027, 

1029–31, 1059, 1134, and 1135; Secretary of 

Labor’s Order 1–2003, 68 FR 5374 (Feb. 3, 

2003). Sec. 2520.101–2 also issued under 29 

U.S.C. 1132, 1181–1183, 1181 note, 1185, 

1185a–b, 1191, and 1191a–c. Secs. 2520.102–

3, 2520.104b–1, and 2520.104b–3 also issued 

under 29 U.S.C. 1003, 1181–1183, 1181 note, 

1185, 1185a–b, 1191, and 1191a–c. Secs. 

2520.104b–1 and 2520.107 also issued under 

26 U.S.C. 401 note, 111 Stat. 788. 

2. Add § 2520.104a–2 after 

§ 2520.104a–1 to read as follows: 

§ 2520.104a–2 Electronic Filing of Annual 

Reports. 

(a) Any Form 5500 Annual Return/ 

Report (including accompanying 

statements or schedules) to be filed with 

the Secretary for any plan year (or 

reporting year, in the case of common or 

collective trusts, pooled separate 

accounts, and similar non-plan entities) 

beginning on or after January 1, 2007, 

shall be filed electronically in 

accordance with the instructions, and 

such other guidance as the Secretary 

may provide, applicable to such report. 

(b) Nothing in paragraph (a) of this 

section is intended to alter or affect the 

duties of any person to retain records or 

to disclose information to participants, 

beneficiaries, or the Secretary. 

3. Amend § 2520.103–1 by revising 

paragraph (f) as follows: 

§ 2520.103–1 Contents of the annual 

report. 

* * * * * 

(f) Electronic filing. Except as 

provided in § 2520.104a–2 of this 

chapter, the Form 5500 ‘‘Annual 

Return/Report of Employee Benefit 

Plan’’ may be filed electronically or 

through other media in accordance with 

the instructions accompanying the form, 

provided the plan administrator 

maintains an original copy, with all 

required signatures, as part of the plan’s 

records. 

4. Amend § 2520.103–2 by revising 

paragraph (c) as follows: 

§ 2520.103–2 Contents of the annual report 

for a group insurance arrangement. 

* * * * * 

(c) Electronic filing. Except as 

provided in § 2520.104a–2 of this 

chapter, the Form 5500 ‘‘Annual 

Return/Report of Employee Benefit 

Plan’’ may be filed electronically or 

through other media in accordance with 

the instructions accompanying the form, 

provided the trust or other entity 

described in § 2520.104–43(b) maintains 

an original copy, with all required 

signatures, as part of the trust’s or 

entity’s records. 

5. Amend § 2520.103–9 by revising 

paragraph (d) as follows: 

§ 2520.103–9 Direct filing for bank or 

insurance carrier trusts and accounts. 

* * * * * 

(d) Method of filing. Except as 

provided in § 2520.104a–2 of this 

chapter, the Form 5500 ‘‘Annual 

Return/Report of Employee Benefit 

Plan’’ may be filed electronically or 

through other media in accordance with 

the instructions accompanying the form, 

provided the bank or insurance 

company which maintains the common 

or collective trust or pooled separate 

account maintains an original copy, 

with all required signatures, as part of 

its records. 

6. Amend § 2520.103–12 by revising 

paragraph (f) as follows: 

§ 2520.103–12 Limited exemption and 

alternative method of compliance for annual 

reporting of investments in certain entities. 

* * * * * 

(f) Method of filing. Except as 

provided in § 2520.104a–2 of this 

chapter, the Form 5500 ‘‘Annual 

Return/Report of Employee Benefit 

Plan’’ may be filed electronically or 

through other media in accordance with 

the instructions accompanying the form 

provided the entity described in 

paragraph (c) of this section maintains 

an original copy, with all required 

signatures, as part of its records. 

Signed at Washington, DC, this 23d day of 

August, 2005. 

Ann L. Combs, 

Assistant Secretary, Employee Benefits 

Security Administration. 

[FR Doc. 05–17185 Filed 8–29–05; 8:45 am] 

BILLING CODE 4510–29–U