Proposed Revision of Annual Information Return/Reports, 51488-51575 [2021-19714]

Download as PDF 51488 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Employee Benefits Security Administration 29 CFR Part 2520 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 PENSION BENEFIT GUARANTY CORPORATION 29 CFR Part 4065 RIN 1210–AB97 Proposed Revision of Annual Information Return/Reports Employee Benefits Security Administration, Labor; Internal Revenue Service, Treasury; Pension Benefit Guaranty Corporation. ACTION: Notice of proposed forms revisions. AGENCY: This document contains proposed changes to the Form 5500 Annual Return/Report forms filed for employee pension and welfare benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code). The proposed form revisions primarily relate to statutory amendments to ERISA and the Code enacted as part of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). The Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) (collectively ‘‘Agencies’’) are also proposing certain additional changes intended to improve reporting on multiemployer defined benefit pension plan funding, update Form 5500 financial reporting to make the financial information collected on the Form 5500 more useful and usable, enhance the reporting of certain tax qualification and other compliance information by retirement plans, and, transfer to the DOL Form M–1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)) (Form M–1) participating employer information for multiple employer welfare arrangements that are required to file the Form M–1. The proposed revisions would affect employee pension and welfare benefit plans, plan sponsors, administrators, and service providers to plans subject to annual reporting requirements under ERISA and the Code. khammond on DSKJM1Z7X2PROD with PROPOSALS2 SUMMARY: VerDate Sep<11>2014 17:43 Sep 14, 2021 Written comments must be received by the Department of Labor on or before November 1, 2021. ADDRESSES: You may submit written comments, identified by RIN 1210– AB97, by one of the following methods: Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. To facilitate receipt and processing of comments, the Agencies encourage interested parties to submit their comments electronically. Mail: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N–5655, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: Proposed Form 5500 Revisions RIN 1210–AB97. Instructions: All submissions must include the agency name and Regulatory Identifier Number (RIN) for this rulemaking. The Agencies will share any comment submitted to one of the Agencies individually with the other Agencies. To avoid unnecessary duplication of effort, the DOL also will treat public comments submitted in response to this Notice of Proposed Forms Revisions as public comments on the Notice of Proposed Rulemaking to the extent they include information relevant to the proposed regulatory amendments. If you submit comments electronically, do not submit paper copies. Comments will be available to the public, without charge, online at: http://www.regulations.gov and http:// www.dol.gov/agencies/ebsa and at the Public Disclosure Room, Employee Benefits Security Administration, Suite N–1513, 200 Constitution Ave. NW, Washington, DC 20210. Warning: Do not include any personally identifiable or confidential business information that you do not want publicly disclosed. Comments are public records posted on the internet as received and can be retrieved by most internet search engines. FOR FURTHER INFORMATION CONTACT: Janet Song or Colleen Brisport Sequeda, Office of Regulations and Interpretations, Employee Benefits Security Administration, U.S. Department of Labor, (202) 693–8500 for questions related to reporting requirements under Title I of ERISA. For information related to the IRS changes and questions under the Internal Revenue Code, contact Cathy Greenwood, Employee Plans Program Management Office, Tax Exempt and Government Entities, (470) 639–2503. For information related to PBGC changes, including proposed changes to the actuarial schedules, contact Karen B. DATES: DEPARTMENT OF LABOR Jkt 253001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 Levin, Regulatory Affairs Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, (202) 229–3559. Customer service information: Individuals interested in obtaining general information from the DOL concerning Title I of ERISA may call the EBSA Toll-Free Hotline at 1–866–444– EBSA (3272) or visit the DOL’s website (www.dol.gov/agencies/ebsa). SUPPLEMENTARY INFORMATION: I. Overview of the Proposal A. Background of Form 5500 Annual Return/Report of Employee Benefit Plan Sections 101 and 104 of Title I and section 4065 of Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) and sections 6057(b), 6058(a), and 6059(a) of the Internal Revenue Code of 1986 (Code), and related regulations, impose annual reporting and filing obligations on pension and welfare benefit plans, as well as on certain other entities. Plan administrators, employers, and others generally satisfy these annual reporting obligations by filing the Form 5500, Annual Return/Report of Employee Benefit Plan (Form 5500), or Form 5500–SF, Short Form Annual Return/ Report of Small Employee Benefit Plan (Form 5500–SF) (together ‘‘Form 5500 Annual Return/Report’’).1 Specifically, filing of the Form 5500 or the Form 5500–SF, as applicable, with any required schedules and attachments in accordance with the instructions and related regulations, constitutes compliance with the applicable annual reporting requirements under Title I of ERISA and the Department’s implementing regulations.2 Filing of a 1 Certain one-participant plans and foreign plans that are not subject to the requirements of section 104(a) of ERISA are required to file Form 5500–EZ, Annual Return of One Participant (Owners/Partners and Their Spouses) Retirement Plan or a Foreign Plan. Beginning with 2020 forms filed on or after January 1, 2021, the Form 5500–EZ is required to be filed electronically through the same system as the Form 5500—the Form 5500 Electronic Filing Acceptance System (EFAST2). From 2009 to 2019, such plans had been permitted to file the Form 5500–SF electronically in lieu of filing the Form 5500–EZ on paper with the IRS. See instructions for 2020 Form 5500–EZ and Form 5500–SF. 2 ERISA section 103 broadly sets out annual reporting requirements for employee benefit plans. The Form 5500 Annual Return/Report and the DOL’s implementing regulations generally are promulgated under the ERISA provisions authorizing limited exemptions to these requirements and simplified reporting and disclosure for welfare plans under ERISA section 104(a)(3), simplified annual reports under ERISA section 104(a)(2)(A) for pension plans that cover fewer than 100 participants, and alternative methods of compliance for all pension plans under ERISA section 110. The forms, instructions, and related regulations are also promulgated under the E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 Form 5500 or Form 5500–SF, together with the required attachments and schedules in accordance with the instructions, by plan administrators, employers, and certain other entities also satisfies the annual filing and reporting requirements under Code sections 6057(b), 6058(a), and 6059(a). Filing the Form 5500 Annual Return/ Report will also satisfy an applicable plan administrator’s annual reporting obligation under section 4065 of Title IV of ERISA. The Form 5500 Annual Return/Report serves as the principal source of information and data available to the Agencies concerning the operations, funding, and investments of approximately 843,000 pension and welfare benefit plans that file.3 ERISA plans cover roughly 154 million workers, retirees, and dependents of private sector pension and welfare plans 4 with estimated assets of $12.2 trillion.5 Accordingly, the Form 5500 Annual Return/Report is essential to each Agency’s enforcement, research, and policy formulation programs, as well for the regulated community, which makes increasing use of the information as more capabilities develop to interact with the data electronically. The data is also an important source of information and data for use by other federal agencies, Congress, and the private sector in assessing employee benefit, tax, and economic trends and policies. The Form 5500 Annual Return/Report also serves as a primary means by which the operations of plans can be monitored by participating employers in multiple employer plans and other group arrangements, plan participants and beneficiaries, and by the general public. The last time the Agencies implemented significant changes to the forms and schedules was for the 2009 form year, in conjunction with the move to mandatory electronic filing and a DOL’s general regulatory authority in ERISA sections 109 and 505. 3 Estimates are based on 2019 Form 5500 filings. DOL notes that single employer welfare plans with under 100 participants that are unfunded or insured (generally don’t hold assets in trust) are exempt from filing a Form 5500 under 29 CFR 2520.104– 29. Therefore while DOL estimates there are 2.5 million health plans and 885,000 non-health welfare plans, respectively, only 69,000 and 91,000 of these plans filed a 2019 Form 5500. 4 Source: U.S. Department of Labor, EBSA calculations using the Auxiliary Data for the March 2019 Annual Social and Economic Supplement to the Current Population Survey. 5 EBSA based these estimates on the 2018 Form 5500 filings with the U.S. Department of Labor (DOL), reported SIMPLE assets from the Investment Company Institute (ICI) Report: The U.S. Retirement Market, First Quarter 2021, and the Federal Reserve Board’s Financial Accounts of the United States Z1 June 10, 2021. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 related update to the ERISA Filing Acceptance System (EFAST2).6 Those changes were proposed in 2006, 71 FR 41615 (Jul. 21, 2006), and finalized in 2007, effective for the 2009 form series. 72 FR 64731 (Nov. 16, 2007). Other discrete changes that have been made to the Form 5500 Annual Return/Report over those years were generally set forth annually in the ‘‘Changes to Note’’ section in the instructions, some of which have involved targeted rulemaking activity to implement reporting changes required by law.7 The Agencies most recent significant initiative with respect to the Form 5500 was the publication of a proposal to modernize the forms and instructions in July 2016. 81 FR 47534 (July 16, 2016) (Tri-Agency Notice of Proposed Forms Revisions) and 81 FR 47496 (July 16, 2016) (DOL Notice of Proposed Rulemaking) (together the 2016 Modernization Proposal). The 2016 Modernization Proposal ultimately was not adopted as final changes to the forms, instructions, and regulations, although a small number of changes that were included in the 2016 proposal have been finalized, as set forth in the ‘‘Changes to Note’’ Section in the instructions to the Form 5500 Annual Return/Report for the years in which the changes were made. B. Recent Legislative Changes Supporting Proposed Annual Reporting Improvements The SECURE Act,8 which overall was designed to expand and preserve workers’ retirement savings, is the most significant legislation impacting ERISA and Code provisions pertaining to retirement plans since the Pension Protection Act of 2006. Among other things, the SECURE Act directed the Secretary of Labor and the Secretary of 6 EFAST2 is an all-electronic system that receives and displays Forms 5500 Series Annual Returns/ Reports and Form PR Pooled Plan Provider Registrations. EFAST2 is operated by a privatesector government contractor on behalf of DOL, IRS, and PBGC. 7 See, e.g., Revisions to Annual Return/ReportMultiple-Employer Plans, Interim Final Rule, 79 FR 66617 (Nov. 10, 2014) (updating the Form 5500 instructions to require all multiple employer plans, including MEWAs, to provide a list of participating employers and certain financial information, as required by ERISA section 103(g)); Filings Required of Multiple Employer Welfare Arrangements and Certain Other Related Entities, Final Rule, 78 FR 13781 (Mar. 1, 2013) (among other things, added new questions to Form 5500 for MEWAs that are required to complete the Form 5500 to provide information on their most recent Form M–1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs) filing) (Form M–1). 8 The SECURE Act was enacted December 20, 2019, as Division O of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94). PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 51489 Treasury (together ‘‘Secretaries’’) to develop a new aggregate annual reporting option for certain groups of retirement plans and included other statutory amendments that directly impact annual reporting requirements for multiple-employer pension plans (MEPs). In relevant part, the SECURE Act’s expansion of MEPs and direction for the Secretaries to establish a consolidated reporting option for defined contribution pension plans that share certain key characteristics should help expand retirement coverage by making it easier for record keepers and other financial services providers to offer attractive retirement plan alternatives and for employers, especially small ones, to pick from among a broader array of alternatives what works best for them and their employees. Section 202 of the SECURE Act provides that the Secretaries, shall, in cooperation, modify the Form 5500 Annual Return/Report so that all members of a group of defined contribution individual account plans described in section 202 may file a single aggregated annual return/report satisfying the requirements of both section 6058 of the Code and section 104 of ERISA. The SECURE Act further provides that, in developing the consolidated return/report, the Secretaries may require any information regarding each plan in the group as such Secretaries determine is necessary or appropriate for the enforcement and administration of the Code and ERISA. The SECURE Act also mandates that the consolidated reporting by such a group must include such information as will enable participants in each of the plans to identify any aggregated return/report filed with respect to their plan. Section 202 provides that to constitute an eligible group of plans, all of the plans in the group must be either individual account plans or defined contribution plans as defined in section 3(34) of ERISA or in section 414(i) of the Code; must have the same trustee as described in section 403(a) of ERISA; the same one or more named fiduciaries as described in section 402(a) of ERISA; the same administrator as defined in section 3(16)(A) of ERISA and plan administrator as defined in section 414(g) of the Code; must have plan years beginning on the same date; and must provide the same investments or investment options to participants and beneficiaries. Section 202 further provides that a plan not subject to Title I of ERISA shall be treated as meeting these requirements for being eligible to be part of a consolidated reporting E:\FR\FM\15SEP2.SGM 15SEP2 51490 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules group of plans, if the same person that performs each of the functions described in the above requirements, as applicable, for all other plans in such group performs each of such functions for such plan.9 Section 101 of the SECURE Act amended ERISA section 3(2) and added ERISA sections 3(43) and 3(44) to allow for a new type of ERISA-covered MEP— a defined contribution pension plan called a ‘‘pooled employer plan’’ operated by a ‘‘pooled plan provider.’’ Pooled employer plans allow multiple unrelated employers to participate without the need for any common interest among the participating employers (other than having adopted the plan).10 Under section 3(2) of ERISA, a pooled employer plan is treated for purposes of ERISA as a single plan that is a multiple employer plan. A pooled employer plan is defined in section 3(43) as a plan that is an individual account plan established or maintained for the purpose of providing benefits to the employees of two or more employers; that is a qualified retirement plan or a plan funded entirely with individual retirement accounts (IRA plan); and the terms of which must meet certain requirements set forth in the statute.11 The term pooled employer plan does not include a multiemployer plan as defined in ERISA section 3(37) or a plan maintained by employers that have a common interest other than having adopted the plan.12 The term 9 SECURE Act Section 202(c). sought comments through a Request for Information published on July 31, 2019, on ‘‘open’’ MEP structures (those without the need for any commonality among the participating employers or other genuine organization relationship unrelated to participation in the plan) being treated as one multiple employer plan for purposes of compliance with ERISA. The DOL does not have any current plan to take further action regarding defined contribution open MEPs due to the SECURE Act provisions permitting pooled employer plans as a type of open MEP. 11 29 U.S.C 1002(43). 12 In establishing a pooled employer plan as a new type of multiple employer plan, the SECURE Act in section 101(c) specifically referred to plans maintained by employers that have a common interest other than having adopted the plan. For example, the DOL’s recent final association retirement plan regulation, at 29 CFR 2510.3–55, published July 31, 2019, clarified and expanded the types of arrangements that could be treated as MEPs under Title I of ERISA to include plans established and maintained by a bona fide group or association of employers or by a professional employer organization (PEO). The SECURE Act provision excluding a ‘‘plan maintained by employers that have a common interest’’ from the definition of a pooled employer plan does not preclude employers with a common interest other than participating in the plan from establishing or participating in a pooled employer plan. Rather, it means that if a group of employers with a common interest other than participating in the plan establish a MEP, e.g., an association retirement plan under the DOL’s khammond on DSKJM1Z7X2PROD with PROPOSALS2 10 DOL VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 also does not include a plan established before the date the SECURE Act was enacted unless the plan administrator elects to have the plan treated as a pooled employer plan and the plan meets the ERISA requirements applicable to a pooled employer plan established on or after such date. The existence of this new type of multiple employer plan requires some adjustments to the Form 5500 to provide for annual reporting by such plans.13 Section 101 of the SECURE Act also amended ERISA section 103(g) for MEPs. Section 103(g) of ERISA requires that the annual return/report of a MEP generally must include a list of participating employers and a good faith estimate of the percentage of total contributions made by each participating employer during the plan year. The SECURE Act amended section 103(g) to expand the participating employer information that must be reported on the Form 5500 Annual Return/Report 14 also to require the aggregate account balances attributable to each employer in the plan (determined as the sum of the account balances of the employees of each employer and the beneficiaries of such employees), and applied section 103(g) to retirement plans that currently meet the definition of a MEP under ERISA section 210(a), including any pooled employer plans, for plan years beginning on or after January 1, 2021.15 With respect to a pooled employer plan, section 103(g) further requires that the annual return/report must include the identifying information for the person regulation, the association retirement plan will not be subject to the SECURE Act requirements for a plan to be a pooled employer plan. 13 New section 3(44) of ERISA establishes requirements for pooled plan providers, including a requirement to register with the DOL before beginning operations as a pooled plan provider. A parallel requirement to file a registration statement with the Secretary of Treasury is in section 413(e)(3)(A)(ii) of the Code. On November 16, 2020, the DOL published a notice of final rulemaking establishing the registration requirement for pooled plan providers. 85 FR 72934 (Nov. 16, 2020). The Treasury Department and the IRS have advised that filing the Form PR with the DOL will satisfy the requirement to register with the Secretary of the Treasury. The instructions to the Form PR (Pooled Plan Provider Registration) (Form PR) advised registrants to use the same identifying information on the Forms 5500 Annual Return/Report filed by the pooled employer plans, particularly name; EIN for the pooled plan provider; any identified affiliates providing services; trustees; and plan name and number for each pooled employer plan. The Form PR and its instructions, as well as any Form PR that have been filed with the DOL by pooled plan providers, are available on the DOL website at www.efast.dol.gov. 14 SECURE Act Section 101(d). 15 SECURE Act Section 101(e)(1). PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 designated under the terms of the plan as the pooled plan provider. In addition to various changes to the forms and instructions to address these statutory changes and reflect the existence of pooled employer plans and defined contribution plan reporting arrangements, some of the annual reporting changes being proposed are intended to ensure appropriate transparency and financial accountability for pooled employer plans, other MEPs, and defined contribution plan reporting arrangements. The rationales for some of those changes apply more broadly to retirement plans as a class (for example, improvements to the content and format for the financial schedules that retirement plans use to report information regarding their assets, investments, income, and expenses), and, accordingly, some of the changes are being proposed for retirement plans in general. C. Overview of Proposed Changes to Forms, Schedules, and Instructions 1. General Proposed Changes The proposed revisions involve the following major categories of changes, along with other technical revisions and updates, to the current structure and content of the Form 5500 Annual Return/Report. • Update the Form 5500 and its instructions to establish requirements pursuant to section 202 of the SECURE Act for consolidated returns/reports for eligible defined contribution group (DCG) reporting arrangements as an alternative method of compliance for certain individual account or defined contribution retirement plans relying on the consolidated report to satisfy the generally applicable requirement that employee benefit plans file a Form 5500. This would include adding a new Schedule DCG (Individual Plan Information) to provide individual planlevel information for defined contribution pension plans covered by a DCG consolidated Form 5500 filing. It would also include adding a new checkbox on the Form 5500 (Part II, line 10a(4)) to indicate that Schedule DCG is attached to the Form 5500, with a space for the filer to enter the number of Schedules DCG (one per plan) attached to the Form 5500 filing. • Update the Form 5500 and its instructions to add a new Schedule MEP (Multiple Employer Pension Plan). MEPs would report information specific to MEPs, including the ERISA section 103(g) participating employer information, updated to add the new aggregate account information that is E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 relevant only for pension plans, on the Schedule MEP. Questions intended to satisfy the SECURE Act’s reporting requirements for pooled employer plans and questions to link the Form PR (Pooled Employer Registration) and the Form 5500 for each plan operated by a pooled plan provider would also be on the Schedule MEP. A new checkbox would be added to the Form 5500 (Part II, line 10a(5) to indicate that Schedule MEP is attached to the Form 5500. • Transfer the participating employer information from the Form 5500 Annual Return/Report to the Form M–1 for all multiple employer welfare arrangements (MEWAs)) (plan and non-plan MEWAs)) that offer or provide coverage for medical benefits, and continue to require reporting of participating employer information on the Form 5500 Annual Return/Report for plan MEWAs that provide other benefits.16 • Update Schedule H and instructions to standardize the schedules of investment assets required to be included in the annual return/ report (Schedule H, line 4i Schedules), so that the information can be entered or imported for improved electronic use and transparency. • Update the Form 5500 and 5500–SF and their instructions on counting participants to change the current threshold for determining when a defined contribution plan may file as a small plan, including eligibility for the waiver of the requirement for small plans to have an audit and include the report of an independent qualified public accountant (IQPA) with their annual report. Specifically, instead of using all those eligible to participate, filers generally would look at the number of participants/beneficiaries with account balances as of the beginning of the plan year (the first plan year would use an end of year measure). This proposed change would be reflected in a new line item on the Form 5500 and Form 5500–SF.17 16 The Agencies may choose as part of a final rule to have those plan MEWAs that are not required to file the Form M–1 complete the relevant participating employer information on the Schedule MEP rather than continuing to complete as an attachment to the Form 5500. The agencies invite comment on any preference from a disclosure, forms preparation, or data usage perspective as to how the information is collected. 17 This change was proposed partly in light of section 112 of the SECURE Act, which provides that long-term, part-time workers that have reached specified minimum age requirements and worked at least 500 hours in each of three consecutive 12month periods must be permitted to make elective contributions to a Code section 401(k) qualified cash or deferred arrangement for plan years beginning on or after January 1, 2024. This could add to the number of participants who are eligible to, but who elect not to participate in a plan, which VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 • Add trust questions to the Form 5500, the Form 5500–SF, and the IRS Form 5500–EZ, regarding the name of the plan’s trust, the trust’s EIN, the name of the trustee or custodian, and the trustee’s or custodian’s telephone number. This information will enable the Agencies to more efficiently focus on compliance concerns for retirement plan trusts, including those for pooled employer plans and DCG reporting arrangements. • Revise the 2021 5500 Annual Return/Report instructions to provide an interim method of reporting participating employer information for MEPs and pooled plan provider identification information for pooled employer plans pending the Schedule MEP implementation for 2022 plan year filings. Section 101 of the SECURE Act also amended ERISA section 104(a)(2)(A) to permit the Secretary of Labor to prescribe by regulation simplified reporting for MEPs subject to ERISA section 210(a) with fewer than 1,000 participants in total, as long as each participating employer has fewer than 100 participants. The DOL is not, however, currently proposing to amend the current reporting rules to establish a ‘‘simplified report’’ for such plans. The DOL is interested in stakeholder comments on why MEPs subject to ERISA section 210(a) should be subject to different reporting requirements than single employer plans that cover fewer than 1,000 participants, and on appropriate conditions and limitations for such a simplified report that would ensure transparency and financial accountability comparable to that for other large retirement plans. 2. Internal Revenue Code-Based Questions for the 2022 Form 5500s To better identify non-compliant plans, the IRS is proposing the following changes to the 2022 forms, schedules, and instructions, including adding the proposed Schedule DCG, so that certain questions are answered at the individual plan level (not the DCG level) in order for a plan’s annual reporting obligation to be satisfied by a DCG Form 5500 filing: • Add a nondiscrimination and coverage test question to Form 5500, Form 5500–SF, and proposed Schedule could impact whether a plan needs to file as a large plan. The DOL expects that excluding from the participant count those participants who are eligible to participate but did not have an account balance will reduce expenses for small employers to establish and maintain a small retirement plan, and as a consequence, encourage more employers to offer workplace-based retirement savings plans to their employees. PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 51491 DCG that was on the Schedule T before it was eliminated. The question asks if the employer aggregated plans in testing whether the plan satisfied the nondiscrimination and coverage tests of Code sections 401(a)(4) and 410(b). • Add a question to Form 5500, Form 5500–SF, and proposed Schedule DCG, for section 401(k) plans, asking whether, if applicable, the plan sponsor used the design-based safe harbor rules or the ‘‘prior year’’ or ‘‘current year’’ ADP test. • Add a question to Form 5500, Form 5500–SF,18 and proposed Schedule DCG asking whether the employer is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, the date of the favorable Opinion Letter, and the Opinion Letter serial number. 3. Defined Benefit Plan/Title IV Questions for the 2022 Form 5500s The proposal includes certain changes designed to improve reporting by defined benefit plans subject to Title IV of ERISA. The proposed changes would: • Modify Schedule MB, line 3 instructions to require an attachment that breaks down the total withdrawal liability amounts by date, separately specifying the periodic withdrawal liability amounts and lump sum withdrawal liability amounts. • Modify Schedule MB by adding a new requirement for plans that assess withdrawal liability to an employer during the plan year, to report the interest rate used to determine the present value of vested benefits for withdrawal liability determinations. This information would be reported in a renumbered new line, 6f. • Modify Schedule MB for the questions related to the line 6 ‘‘expense load’’ to better align with the various ways multiemployer plans incorporate expense loads into their calculations. • Modify Schedule MB, line 8 by requiring additional information about demographics, benefits and contributions for plans with 500 or more total participants on the valuation date. Certain PBGC-insured single-employer plans would be required to report the some additional information as well. • Modify Schedule MB by changing the ‘‘age/service’’ scatter attachment which is currently required for PBGCinsured multiemployer plans with active participants, regardless of the number of participants. • Modify Schedule MB by clarifying the line 4f instructions and Schedule language concerning when or if plans in critical status or critical and declining 18 IRS will separately make a parallel update to the Form 5500–EZ, which is solely in the jurisdiction of the IRS. E:\FR\FM\15SEP2.SGM 15SEP2 51492 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules status are projected to emerge or become insolvent. • Make the Schedule SB, line 26 reporting requirements about demographics and benefits similar to the requirements for PBGC-insured multiemployer plans. • Modify Schedule SB’s Part IX, line 41 because the previously required information related to elective funding relief under the Pension Relief Act of 2010 is no longer relevant, and in its place, require information about the elective funding relief under the American Rescue Plan Act of 2021. • Modify Schedule R’s Part V, line 13 requirement that multiemployer defined benefit pension plans subject to minimum funding standards report identifying information about any participating employer whose contributions to the plan account for more than five (5) percent of the total contributions for the year to require that the ten employers who contributed the largest amounts be reported, even if that employer’s contribution accounted for less than five (5) percent of the total. • Modify the instructions to permit (but not require) certain attachments to Schedule MB and SB to be provided in a tabular format (spreadsheet) rather than PDF or TXT formats. khammond on DSKJM1Z7X2PROD with PROPOSALS2 D. Appendices The Agencies have included the following appendices to provide more detailed illustrations and explanations of the proposed changes: (1) Appendix A—a facsimile of proposed Schedule MEP (Multiple Employer Pension Plan) and its instructions; (2) Appendix B—a facsimile of proposed Schedule DCG (Individual Plan Information) and its instructions; (3) Appendix C—a detailed description of proposed changes to the 2021 Form 5500, the Form 5500–SF, and their instructions; (4) Appendix D— a detailed description of proposed changes to the 2022 Form M–1 and its instructions; (5) Appendix E—a detailed description of proposed changes to the 2022 Form 5500, Form 5500–SF, applicable schedules, and their instructions.19 Certain amendments to the annual reporting regulations are necessary to 19 The appendices include mock-ups of certain forms or parts of forms that are intended to be illustrative and facilitate stakeholders’ ability to comment on the proposed changes. This approach of showing proposed changes will reduce costs associated with publication of the proposed form changes in the Federal Register and provide greater flexibility for the related EFAST2 development processes. The Agencies intend to publish mockups of the forms on the DOL’s website as part of the EFAST third party software developer certification process and in furtherance of public education efforts about the changes to be implemented. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 accommodate some of the proposed revisions to the forms. The DOL is publishing separately today in the Federal Register proposed amendments to the DOL’s annual reporting regulations. That document includes a discussion of the findings required under sections 104 and 110 of ERISA that are necessary for the DOL to adopt the Form 5500 Annual Return/Report, including the Form 5500–SF, if revised as proposed herein, as an alternative method of compliance, limited exemption, and/or simplified report under the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA. II. Request for Comments The Agencies invite comments from interested persons on all facets of the proposed forms and instruction changes. Comments should be submitted in accordance with the instructions at the beginning of this document. Commenters are asked to take into account the costs and burdens to plans, participants and beneficiaries, plan fiduciaries, plan service providers, and other affected parties, in commenting on the proposed annual reporting changes, including any suggested alternatives. As noted above, the DOL also is publishing elsewhere in today’s Federal Register a Notice of Proposed Rulemaking with proposed amendments to the reporting and disclosure regulations at Part 2520 of Chapter XXV of Title 29 of the Code of Federal Regulations to implement certain proposed Form 5500 Annual Return/ Report changes under Title I of ERISA. To avoid unnecessary duplication of effort, public comments submitted in response to this Notice of Proposed Forms Revisions will be treated as public comments on the Notice of Proposed Rulemaking to the extent they include information relevant to the proposed regulatory amendments. The DOL components of this proposal are generally focused on implementing annual reporting changes related to the SECURE Act and MEPs and a limited number of other supporting proposed changes intended to ensure the Form 5500 serves as an appropriate transparency and financial accountability tool for retirement plans, including pooled employer plans and MEPs. The DOL has added a separate project to its semi-annual regulatory agenda that would focus on a broader range of improvements to the Form 5500 annual reporting requirements. The regulatory action is part of a strategic project with the IRS and PBGC to improve the Form 5500 Annual Return/ PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 Report. Modernizing the financial and other annual reporting requirements on the Form 5500, continuing to make the investment and other information on the Form 5500 more data mineable, and potential changes to group health plan annual reporting requirements are part of that evaluation. The project is also focused on enhancing the agencies’ ability to collect employee benefit plan data that best meets the needs of changing compliance projects, programs, and activities. See www.reginfo.gov for more information. Public comments on such broader improvements to the Title I components of the Form 5500 are beyond the intended scope of this rulemaking. III. Discussion of Proposed Changes A. SECURE Act Section 202 Defined Contribution Group (DCG) Reporting Arrangements Section 202 of the SECURE Act directs the Secretaries to modify the Form 5500 to allow certain groups of defined contribution pension plans to file a single consolidated annual return/ report. For a group of plans to be able to file a consolidated return/report, the SECURE Act provides that all of the plans must be either individual account plans or defined contribution pension plans that have the same trustee; the same one or more named fiduciaries; the same plan administrator under ERISA and the Code; the same plan year; and provide the same investments or investment options for participants and beneficiaries. The SECURE Act also provides that in developing the consolidated return or report for such arrangements, the Secretaries shall require such information as will enable a participant in a plan to identify any consolidated return or report filed with respect to the plan, and may require such return or report to include any information regarding each plan in the group as each Secretary determines is necessary or appropriate for the enforcement and administration of the provisions of ERISA and the Code. Pursuant to Section 202 of the SECURE Act directing the Secretaries to modify the Form 5500 to allow certain groups of defined contribution pension plans to file a single consolidated annual return/report, the DOL and the IRS (the ‘‘Departments’’) have determined that an efficient and effective approach to establishing such a consolidated return/report option would be to amend the Form 5500 and its related instructions to provide that the filing requirements for large pension plans and direct filing entities (DFEs) E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 would generally apply to this new type of DFE—a defined contribution group (DCG) reporting arrangement, except that an additional schedule to report individual plan level information—the proposed Schedule DCG, would have to be attached for each plan included in the DCG filing.20 Consistent with section 202(b) of the SECURE Act, as discussed in more detail below, the Departments are proposing to obtain for each plan in the DCG the additional information requested on a new proposed Schedule DCG, and are proposing certain other key conditions for DCG reporting arrangements that are intended to ensure appropriate transparency and financial accountability. Specifically, under the proposal: (1) The DCG would file a Form 5500 under rules and conditions that apply generally to large defined contribution pension plans; (2) each of the plans participating in the DCG would need to meet certain conditions as discussed in more detail below, including that the participating plan must not hold any employer securities, be 100% invested in certain secure, easy to value assets that meet the definition of ‘‘eligible plan assets’’ and be audited by an IQPA or be eligible for the waiver of the annual examination and report of an IQPA under 29 CFR 2520.104–46, but not by reason of enhanced bonding; (3) the DCG’s Form 5500 would have to provide the plan level information reported on the proposed Schedule DCG regarding the covered plans, including an IQPA audit report for each 20 The proposed new regulation that would be at 29 CFR 2520.104a–9 published in the parallel NPRM provides that, as would be the case for all of the participating plans in the DCG reporting arrangement if they were filing individually, the aggregated Form 5500 for the DCG is due no later than the end of the 7th month after the end of the common plan year that all the plans must have in order to participate in a DCG reporting arrangement pursuant to the requirement in section 202 of the SECURE Act and the proposed regulation that would be at 29 CFR 2520.104–51. Because the DCG filing is an alternative to each participating plan filing its own Form 5500, that would mean that each plan would have to submit its own IRS Form 5558 to extend the plan’s due date, and, as a consequence, extend the due date for the DCG filing. A plan that did not submit a timely Form 5558 and that participated in a DCG filing that was submitted after the 7th month normal due date would be treated as having filed late. Public comments are specifically solicited on how the filing extension process should be structured for DCGs, including whether DCG reporting arrangements should be able to file a single Form 5558 to obtain an extension for filing the DCG consolidated report on behalf of the participating plans as an alternative to having each individual plan file a Form 5558 for there to be an extension for the reporting group as a whole. The Departments note that under the somewhat similar consolidated reporting provisions applicable to GIAs, the GIA is permitted to use the Form 5558 to apply for an extension of time the GIA consolidated report on behalf of the plans participating in the GIA. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 participating large plan; and (4) the investment assets of the plans participating in the DCG would have to be held in a single trust of the DCG reporting arrangement and the consolidated Form 5500 filed by the DCG would include an audit of the DCG’s trust financial statements. An important aspect of the audit of the DCG trust would be that, in the DOL’s view, the versions of the separate schedules referenced in ERISA section 103(a)(3)(A) and 29 CFR 2520.103–10(b) and proposed 2520.103–14(b) that would be filed as part of the DCG consolidated Form 5500 would be treated as ERISA section 103(b)(3) supplemental schedules for purposes of the required IQPA’s opinion on whether those schedules are presented in conformity with DOL rules and regulations, including the delinquent participant contributions schedule filed by the DCG in connection with line 4a of its Form 5500, Schedule H. The DOL views these conditions as providing important financial accountability and oversight protections while also allowing DCGs to offer annual reporting cost-efficiencies, particularly for the small plans that we believe SECURE Act section 202 was intended to benefit, that are comparable to those that can be offered by MEPs, including pooled employer plans. The DOL is also publishing a separate Notice of Proposed Rulemaking that includes a proposal to add new regulations at 29 CFR 2520.103–14 and 2520.104–51 pursuant to section 110 of ERISA that would set forth this DCG option as an alternative method of compliance for eligible plans with the generally applicable requirement to file their own separate Form 5500. 1. General Section 202 Conditions Applicable to Covered Plans The Departments’ review of the conditions in section 202 of the SECURE Act suggests that it was primarily aimed at plans of unrelated small businesses that adopt a plan that has received approval from the IRS as to its form through the IRS Pre-Approved Program (pre-approved plan) offered by the same provider, and that section 202 was intended to provide this type of business structure with annual reporting cost efficiencies similar to those that MEPs and pooled employer plans can offer to their participating employers. Accordingly the conditions and reporting requirements in this proposal focus on such arrangements. The Departments solicit public comments on whether the final rule should include other or different conditions for DCG reporting arrangements. PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 51493 Under the proposed Form 5500 form changes and the DOL’s related proposed regulation, and pursuant to the terms of section 202 of the SECURE Act, all of the plans relying on the DCG consolidated return/report must be individual account plans or defined contribution pension plans that have the same trustee and trust(s); the same one or more named fiduciaries; the same plan administrator under ERISA and the Code; the same plan year; and provide the same investments or investment options for participants and beneficiaries. The Departments are providing the following explanations of some aspects of and limitations related to those conditions that are part of the proposal. With respect to the same trustee requirement, section 403(a) of ERISA provides that, except as provided in ERISA section 403(b), all assets of an employee benefit plan shall be held in trust by one or more trustees. The criteria set forth in ERISA section 403(b) apply to the DCG trustee under the proposal, except, pursuant to the SECURE Act provision there must be only one trustee for all the plans participating in a DCG reporting arrangement. The common trustee must be either named in the trust instrument or in the plan instrument or appointed by a person who is a named fiduciary of the participating plan, and upon acceptance of being named or appointed, the trustee shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that the plan expressly provides that the trustee is subject to the direction of a named fiduciary who is not a trustee (in which case the trustees shall be subject to proper directions of such fiduciary which are made in accordance with the terms of the plan and which are not contrary to ERISA), or authority to manage, acquire, or dispose of assets of the plan is delegated to one or more investment managers pursuant to section 402(c)(3) of ERISA. The Departments note that, historically, the IRS conditions applicable to many pre-approved plans required that employers who used what was known as a ‘‘master’’ plan were required to use the same trust or custodial account, whereas each employer had a separate trust or custodial account in a ‘‘prototype plan.’’ 21 Under the proposal, the ‘‘same trust’’ requirement for the consolidated report would be satisfied by the same trust structure historically used by 21 See www.irs.gov/retirement-plans/types-of-preapproved-retirement-plans. E:\FR\FM\15SEP2.SGM 15SEP2 khammond on DSKJM1Z7X2PROD with PROPOSALS2 51494 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules employers using ‘‘master’’ plans. Use of sub-trusts of the DCG trust would be permitted, but the proposal would not cover arrangements that allow separate plans to have a separate trust for investments. As discussed in more detail below, part of the reason for this provision stems from considerations related to the establishment of audit requirements for DCG reporting arrangements and the otherwise generally applicable requirement under Title I of ERISA for plans that cover 100 or more participants file with their Form 5500 an audit report of an independent qualified public accountant (IQPA) and the application of Generally Accepted Auditing Standards or GAAS (which ERISA section 103 applies to employee benefit plan audits). Although, as described above, section 202 of the SECURE Act includes a requirement that the eligible plans must have the same ‘‘trustee’’ as described in section 403(a) of ERISA, the Departments note that it is commonplace for ERISA covered plans to use insurance (e.g., individual account plans using variable annuity structures and Code section 403(b)(1) plans) and custodial accounts (e.g., Code section 403(b)(7) plans) as funding vehicles. ERISA section 403(b) includes explicit exceptions to the trust requirement for such plan designs. There is no legislative history for SECURE Act section 202 discussing why the provision was limited to plans with ‘‘trustees,’’ and the Departments do not believe that the SECURE Act section 202 requirement for a ‘‘trustee’’ can be read to include plans without trustees funded by insurance or custodial accounts pursuant to the trust exceptions in ERISA section 403(b). Nonetheless, the Departments specifically solicit comments on whether they should, pursuant to their general regulatory authority, provide a consolidated reporting option for plans that use the same custodial account or insurance policy as the funding vehicle for their plans, and if so, whether special conditions should apply in light of the absence of a trustee or trustees. With respect to the ‘‘same one or more named fiduciaries requirement,’’ ERISA section 402 provides that every employee benefit plan shall be established and maintained pursuant to a written instrument. Such instrument shall provide for one or more named fiduciaries who jointly or severally have authority to control and manage the operation and administration of the plan. Section 402 of ERISA further provides that the term ‘‘named fiduciary’’ means a fiduciary who is named in the plan instrument, or who, VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 pursuant to a procedure specified in the plan, is identified as a fiduciary (A) by a person who is an employer or employee organization with respect to the plan or (B) by such an employer and such an employee organization acting jointly. The Departments understand that it is customary for the employer/ plan sponsor to be a named fiduciary of the employer’s plan. The Departments do not believe the SECURE Act intended that each employer in a group of plans be a named fiduciary of every plan in the group. Accordingly, the proposal would allow for the employer/ plan sponsor to be a named fiduciary of each employer’s own plan, provided that the other named fiduciaries under the plans are the same and common to all plans. The SECURE Act further requires that all the plans have the same administrator as defined in section 3(16)(A) of ERISA and plan administrator as defined in section 414(g) of the Code. Under the proposal, the plans must designate the same person (which could be an entity or organization) as the administrator. In general, under ERISA and the Code the ‘‘plan administrator’’ or ‘‘administrator’’ is the person specifically so designated by the terms of the instrument under which the plan is operated. If an administrator is not so designated, the plan administrator is the plan sponsor, as defined in section 3(16)(B) of ERISA. The Departments do not believe that the default ‘‘plan sponsor’’ provision is workable in this context, and, accordingly, the proposal requires that there be a designated common plan administrator and that the administrator be the same for all the plans relying on the DCG consolidated Form 5500. The proposal also requires that all the plans provide the same investments or investment options to participants and beneficiaries to be able to rely on the DCG consolidated Form 5500 as satisfying their annual reporting obligation. In the Departments’ view, this requirement in part was intended to allow for appropriate transparency in the consolidated financial information that would be filed by the DCG. To the extent the covered plans had different investments or investment options, much more detailed financial reporting would be needed to provide appropriate oversight and accountability. The Departments also believe that, even absent the proposed ‘‘eligible plan assets condition for DCGs,’’ the SECURE Act’s ‘‘same investments or investment options’’ requirement effectively precludes plans that hold employer securities from participating in a DCG reporting arrangement as well as PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 precluding treatment of brokerage windows as an ‘‘investment option’’ because such investments and investment alternatives would conflict with the investment uniformity objectives of the SECURE Act requirement. The Departments, however, specifically solicit comments on whether the final rule should allow employer securities as an exception to the ‘‘same investments or investment options’’ requirement. The Departments also solicit comments on whether the final rule should allow brokerage windows, self-directed brokerage accounts, and similar features in plans participating in DCG arrangements, and, if so, what reporting requirements should be applied, e.g., what information should be collected regarding the brokerage windows/ accounts, the participants using the brokerage windows/accounts, and the individual assets held by the plans as a result of investments made through brokerage windows/accounts. Section 202 further provides that a plan not subject to Title I of ERISA can be part of a DCG reporting arrangement if the non-Title I plan and all other plans in the reporting group have the same persons acting as the trustee as defined in ERISA section 403(a), the named fiduciaries as described in ERISA section 402(a), the administrator as defined in ERISA section 3(16)(A), and the plan administrator as defined in Code section 414(g), as applicable. In the Departments’ view, this provision was directed at so-called ‘‘oneparticipant’’ plans required to file the IRS Form 5500–EZ. IRS views the current Form 5500–EZ as providing plan sponsors with a simple and streamlined means to satisfy the annual reporting requirement under section 6058 of the Code. The information being requested on the Schedule DCG for a DCG is almost identical to the information already provided on the Form 5500–EZ, so that the group filing arrangement would not effectively reduce the information a Form 5500–EZ filer would need to provide to IRS in a separate filing. Additionally, the plan administrator will need to file a consolidated Form 5500 (with any required schedules) for the DCG that provides aggregate information for all Form 5500–EZ filers. Presumably, the DCG will require a Form 5500–EZ filer to provide at least as much information as would be required to file an individual Form 5500–EZ. Finally, IRS might incur significant costs and use significant resources if it were to develop a separate group filing arrangement for Form 5500–EZ filers. E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 Before incurring these costs and using these resources, IRS requests comments from interested parties on whether Form 5500–EZ filers are expected to be interested in participating in a DCG structure, including a separate DCG structure only for Form 5500–EZ filers, in light of the lack of burden reduction that a Form 5500–EZ filer would experience by participating in a DCG structure. With respect to the latter, the Departments request comments on the feasibility of including both ERISA and non-ERISA filers in a single DCG filing, including with respect to the application of the audit requirements under Title I. 2. Conditions for Plans To Participate in a DCG Reporting Arrangement To be eligible to rely on the proposed alternative method of compliance, the employee benefit plan (1) must have all of its investment assets held in a single trust of the DCG reporting arrangement; (2) the plan must not hold any employer securities at any time during the plan year; (3) at all times during the plan year, the plan must be 100% invested in certain secure, easy to value assets that meet the definition of ‘‘eligible plan assets’’ (see the instructions for line 6a of the Form 5500–SF), such as mutual fund shares, investment contracts with insurance companies and banks valued at least annually, publicly traded securities held by a registered broker dealer, cash and cash equivalents, and plan loans to participants; (4) the plan must be audited by an IQPA or be eligible for the waiver of the annual examination and report of an IQPA under 29 CFR 2520.104–46, but not by reason of enhanced bonding (see instructions for line 6b of the Form 5500–SF); and (5) multiemployer plans and MEPs (including pooled employer plans and professional employer organizations (PEOs)) cannot participate in DCG reporting arrangements. An important aspect of the audit of the DCG trust would be that, in the DOL’s view, the versions of the separate schedules referenced in ERISA section 103(a)(3)(A) and 29 CFR 2520.103–10(b) and 2520.103–2(b) that would be filed as part of the DCG consolidated Form 5500 would be treated as ERISA section 103(b)(3) supplemental schedules for purposes of the required IQPA’s opinion on whether those schedules are presented in conformity with DOL rules and regulations, including the delinquent participant contributions schedule filed by the DCG in connection with line 4a of its Form 5500, Schedule H. The DOL views these conditions as providing important financial accountability and oversight protections VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 while also allowing DCGs to offer annual reporting cost-efficiencies, particularly for the small plans that we believe SECURE Act section 202 was intended to benefit, that are comparable to those that can be offered by MEPs, including pooled employer plans. With respect to the audit requirement for large plans participating in a DCG, the DOL understands that under GAAS, it would not be possible to have a consolidated audit of all the participating plans in the DCG reporting arrangement. Rather, under GAAS, each large plan in the DCG reporting arrangement would have to be subject to its own separate audit. By comparison it would be possible, under GAAS, for a DCG reporting arrangement to be subjected to a single audit if it used a single trust for all of the plans covered by the DCG report. Such a ‘‘single trust’’ audit, however, would cover only the trust’s financial statements and would not cover aspects of plan operations and finances that would be covered by a GAAS audit at the plan level. The DOL views an IQPA audit as an important financial transparency and accountability condition for DCG reporting arrangements. Generally, pension plans and funded welfare plans with 100 or more participants are required to have an audit of the plan’s financial statements performed by an IQPA. Under Statement on Auditing Standards No. 136 (SAS 136), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, independent qualified public accountants are required to consider relevant plan provisions that affect the risk of material misstatement for various transactions, account balances, and related disclosures. Areas such as participant eligibility, plan contributions, benefit payments and participant loans are all covered as part of a plan level audit. Additionally, auditors are required to communicate reportable findings to the plan that are identified during the audit of the plan. For example, it has been the DOL’s experience that plan audits lead to increased reporting of prohibited transactions, such as identifying and disclosing delinquent participant contributions. An audit of a trust, such as a DCG trust, does not have similar requirements. In a trust audit, the line items on the trust’s financial statement are audited, but because the underlying participating plans themselves are not audited, compliance with the provisions of the plans that are invested in and funded by the trust are not audited. Therefore, in a trust audit, the amount of contributions received by the trust PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 51495 might be tested against the contributions remitted by participating plans, but, whether those contributions amounts remitted are in accordance with the individual plan provisions would not be tested, as they would be tested in an audit of the plan. There could be undisclosed, material errors in the amount of contributions remitted to the trust versus what should have been remitted. Similarly, in a trust audit, the benefit payments to participants might be tested in terms of amounts paid and whether they were authorized, but whether those were in compliance with plan provisions, such as vesting provisions, would not be tested as they would be tested in a plan’s audit. In a plan audit, participant data is tested. Participant data testing involves determining whether employees are properly included or excluded from participating and whether the census data upon which eligibility for certain contributions and distributions are made is accurate. The audit of a trust would not test this at all. Finally, the materiality threshold for a trust audit could be significantly higher than that which would apply in the case of an individual participating plan because the trust threshold would be based on total assets in the trust rather than assets in each individual plan. After carefully considering these issues, the Departments decided to propose that a large plan that elects to participate in a DCG must continue to be subject to an IQPA audit and that the audit report for the plan would have to be filed with the consolidated Form 5500 of the DCG reporting arrangement. The DOL acknowledges that at least some of these considerations could be applied to small plans participating in the DGC arrangement. While the DOL did not believe it would be appropriate to relieve from the IQPA audit requirement those large plans currently subject to the audit, it also did not believe that it would be appropriate to require small plans that are not currently required to have an IQPA audit to have such an audit as a condition of participating in a DCG reporting arrangement. Rather, in light of the fact that DCG reporting arrangements would be consolidating the assets of many unaffiliated small plans under the control of a single trustee in a single trust, and the DOL’s understanding that such a trust could be subject to a single GAAS audit, the DOL is proposing that the DCG trust be audited by an IQPA as a way of adding protections for funds aggregated in the DCG trust. The DOL notes that this structure has some parallels to the E:\FR\FM\15SEP2.SGM 15SEP2 khammond on DSKJM1Z7X2PROD with PROPOSALS2 51496 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules current reporting alternative for group insurance arrangements (GIAs) under 29 CFR 2520.103–2, another type of DFE that files the Form 5500 Annual Return/ Report on behalf of participating welfare benefit plans. The need for more information for DCGs than for GIAs is due to the difference between retirement and welfare plans, including the respective requirements under the Code, and also due to the fact that GIAs must provide welfare benefits fully through insurance. DOL further acknowledges that, under the proposal, for plans to be able to satisfy their annual reporting obligation by relying on the Form 5500 filing by a DCG reporting arrangement, the plans would have to be 100% invested in eligible plan assets as defined in the Form 5500–SF instructions. Accordingly, plan assets in the DCG trust would, by definition, be held by regulated financial institutions, including banks or similar financial institutions and insurance companies, and may qualify for limited scope audit treatment in accordance with ERISA section 103(a)(3)(C). Thus, even for large plans, the investment assets certified by those financial institutions/insurance companies would not be audited, and the auditor would not be performing valuation work on the assets covered by the bank or insurance company certifications. Although that may diminish some aspects of the IQPA requirement for large plans in DCG reporting arrangements, the DOL did not believe that it would be appropriate to propose that large plans be precluded from participating in a DCG unless the plan disclaimed reliance on the limited scope audit provisions in ERISA section 103(a)(3)(C) and had a full scope audit performed. The DOL further expects that, because all of the investments held in the DCG’s single trust would be the subject of the DCG audit, it is likely that to reduce expenses the DCG reporting arrangement and the participating large plans would engage the same auditor to perform the audits of the DCG trust and any individual large plans participating in the DCG reporting arrangement. Alternatively, to the extent the individual plans engage different auditors, the DOL expects that the use of reports issued under Statement on Standards for Attestation Engagements No. 16 (SSAE 16) may permit the individual plan auditors to use those reports for the DCG trust to reduce their own audit work on the trust as part of the individual plan audit. The same rules for determining whether an individual plan is required to file as a large plan would apply to the plans VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 within a DCG, including the ‘‘80 to 120’’ transition rule at 29 CFR 2520.103–1(d). Similarly, if finalized, the proposed change on using participants with account balances, rather than all eligible participants, to determine small plan status for general annual reporting purposes also would apply. With respect to the condition prohibiting multiemployer plans and MEPs from being part of DCG reporting arrangements, the Departments do not believe that section 202 of the SECURE Act was focused on allowing groups of multiemployer plans or MEPs, which already file a single Form 5500 that covers all of the employers that participate in the plan, to file a single consolidated Form 5500 covering the group of multiemployer plans or MEPs. The Departments are also concerned that allowing a single consolidated Form 5500 in the case of such plans, for example, a group of multiemployer section 401(k) plans, could result in an undesirable reduction in transparency and financial accountability. Further, creating a consolidated report for such groups of plans would likely be much more complicated and costly than what is being proposed in this document. Nonetheless, the Departments acknowledge that such a limitation is not expressly set forth in section 202 of the SECURE Act, and, accordingly, solicits public comments on whether the final rule should include multiemployer plans and MEPs, and if so, what conditions should apply to DCG reporting arrangements that would include such plans. 3. Content Requirements for DCG Form 5500 The proposal also sets forth the content requirements for the consolidated Form 5500 return/report filed by the DCG reporting arrangement. Under the proposal, DCGs would not be permitted to file a Form 5500–SF. Rather, DCG reporting arrangements would be required to file a Form 5500 Annual Return/Report that includes largely the same information that large pension plans and other DFEs are generally required to file, except that a DCG reporting arrangement would also be required to include in its annual report a proposed Schedule DCG (described below) to report individual participating plan information for each plan that is a part of the DCG reporting arrangement. Specifically, the content of the DCG annual return/report would include a Form 5500 Annual Return/ Report of Employee Benefit Plan and any statements or schedules required to be attached to the form for such entity, completed in accordance with the PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 instructions for the form, including Schedule A (Insurance Information), Schedule C (Service Provider Information), Schedule D (DFE/ Participating Plan Information), Schedule G (Financial Transaction Schedules), Schedule H (Financial Information), Schedule R (Retirement Plan Information), Schedule DCG (Individual Plan Information), schedules described in § 2520.103–10(b)(1) and (b)(2), an IQPA audit report and the related financial statements covering the DCG trust, and, for DCG consolidated Form 5500 filings that are intended to cover large plans (generally those with 100 or more participants), an IQPA audit report and the related financial statements attached to the Schedule DCG for each such individual large plan. Financial statements include the financial statements of the trust, the notes to the financial statements and the schedules described in paragraph (b)(1) of § 2520.103–10. Information reported on the various schedules to the Form 5500, other than the proposed Schedule DCG, would be reported in the aggregate. Thus, a Schedule A would be required for all insurance contracts that constitute one of the investments or investment alternatives available to all of the participants in a plan, regardless of whether certificates were to be issued to individual plans or participants upon selection of that option by a participant. The fees and commissions paid with respect to any insurance contracts available for investment by any of the plans/participants would be reported on the Schedule A. Similarly, a service provider to the trust and to each of the plans would be reported on Schedule C, even if the service provider did not actually provide services or charge fees to a particular plan because, for example, the service provider provided investment management services with respect to a particular investment option that was not selected by any of the participants in a particular plan. The $5,000 threshold would be based on the total amount received by the service provider. Reporting on Schedule C would still be required if the total amount was $5,000 or more, even if the amount paid by or charged against the assets of each the participating plans was less than $5,000 per plan. Reportable transactions on Schedule G would include any involving the assets of the trust and any parties in interest with respect to the trust. For reporting delinquent participant contributions on Schedule H, Line 4a, the Agencies would expect the DCG filing the annual report to identify the delinquent E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules participating employer in the attachment already required in the instructions. The Departments expect that cost savings for plans relying on a DCG filing compared to plans filing separately would generally only begin to emerge when the DCG collectively exceeds an aggregate participant count of 100 participants. In other words, the Departments do not expect a DCG filing to provide meaningful cost savings for plans, as compared to filing their own annual report, in the case of DCG arrangements with an aggregate participant count of under 100 participants. Rather, the Departments expect in such cases that the individual plans would likely qualify for filing the Form 5500–SF and that they would likely find it more cost effective to file their own separate Form 5500–SF.22 Accordingly, this proposal does not include an option under which such a ‘‘small’’ DCG could file as a small plan filer. The Departments solicit comments on whether stakeholders expect there to be ‘‘small’’ DGCs, whether a ‘‘small’’ DCG alternative should be made available, and what the content requirements for such an alternative should be, e.g., whether the content of the ‘‘small’’ DCG annual return/report should include Schedule I instead of Schedule H, whether it should include the IQPA audit report and/or the schedules of assets, and whether it should include the Schedule C.23 khammond on DSKJM1Z7X2PROD with PROPOSALS2 4. Proposed Schedule DCG (Individual Plan Information) Section 202(b) of the SECURE Act specifically provides that IRS and DOL may require the consolidated Form 5500 return/report filed by the DCG reporting arrangement to include any information regarding each plan in the group as IRS and DOL may determine necessary or appropriate for the enforcement and administration of the Code and ERISA. The proposed Schedule DCG would contain the plan level information needed by the IRS for administrating and enforcing tax laws passed by Congress and by the DOL for important Title I oversight functions, particularly with respect to large plans. A separate Schedule DCG would be required to be completed for each individual plan, 22 Section III.A.1 of this preamble discusses the Departments’ view that creating a consolidated group filing for employers required to file a Form 5500–EZ is similarly unlikely to generate administrative efficiencies for those employers, as compared to continuing to file separately. 23 Since the aggregate participant count of the entire DCG would be less than 100, there could be no ‘‘large plans’’ participating in such a ‘‘small’’ DCG so the issue of an individual audit for a participating large plan would not arise. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 similar to the requirement to complete a separate Schedule A for each insurance contract held by a plan or DFE filing the Form 5500. IRS examines individual plans, not groups of plans, to ensure that plan sponsors and/or employers comply with the tax laws governing retirement plans, and to help protect the retirement benefits of participants and beneficiaries. Thus, IRS requires information with respect to a plan’s qualification, financial condition, and operation on a separate basis for each plan filing as part of a DCG. Individual plan financial information already reported on the Form 5500–SF is important for the DOL to continue to ensure that participants and beneficiaries of the individual plans participating in a DCG receive their promised benefits. The proposed Schedule DCG includes: • Part I—DCG name and EIN/PN modeled on the similar plan-level information on other schedules to the Form 5500. Information in Part I must match the DCG information reported on Part II of the consolidated Form 5500. • Part II—confirmation that the plan for which the Schedule DCG is being filed is a single employer plan (as noted above, MEPs and multiemployer plans may not participate in a DCG under the proposal) and, if applicable, identification of the plan as a collectively bargained plan. • Part III—basic individual plan information, including the plan name, plan number, plan effective date, plan sponsor’s name and address, plan sponsor’s EIN, plan sponsor’s telephone number, plan sponsor’s business code, total number of participants, total number of active participants, number of participants with account balances, and number of participants who terminated employment during the plan year with accrued benefits that were less than 100% vested. • Part IV—plan financial information, including total plan assets (including participant loans), total plan liabilities, net plan assets, contributions received or receivable in cash from the employer, participants, and others; noncash contributions and, total contributions; benefit payments, corrective distributions, and certain deemed distributions of participant loans, direct expense information, net income, and assets transferred to (from) plans. • Part V—two-digit boxes for entry of all applicable codes in the List of Plan Characteristics Codes in the instructions to the Form 5500. • Part VI—compliance questions relating to delinquent participant contributions, plan assets/liabilities transferred from the plan, indication of PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 51497 whether the plan is a defined contribution plan subject to section 412 of the Code, plan coverage and nondiscrimination information, and whether a plan is a pre-approved plan that received a favorable IRS Opinion Letter. • Part VII—questions for large plans (generally plans covering 100 or more participants as of the beginning of the plan year) regarding the required individual IQPA report and financial statements that must be filed with the Schedule DCG filed for the participating large plan. B. SECURE Act Section 101 Amendment to ERISA Section 103(g) Participating Employer Information 1. Participating Employer Reporting Under ERISA Section 103(g) As discussed above, section 103(g) of ERISA, which was added to ERISA by the Cooperative and Small Employer Charity Pension Flexibility Act (CSEC Act) in 2014,24 requires multiple employer plans to include with their annual reports ‘‘a list of participating employers’’ and, with respect to each participating employer, ‘‘a good faith estimate of the percentage of total contributions made by such participating employers during the plan year.’’ The DOL issued an interim final rule on November 10, 2014, which implemented the section 103(g) reporting requirements by requiring filers that check the ‘‘multiple employer plan’’ box on the face of the Form 5500 or the Form 5500–SF, and to attach a list of participating employers and a good faith estimate of the percentage of total contributions made by each participating employer during the plan year. 25 The 2014 interim final rule and the corresponding instructions further provided that unfunded or insured multiple employer welfare plans that are exempt under 29 CFR 2520.104–44 from filing financial statements with their annual report must attach a list of participating employers, but do not have to include an estimated amount of contributions from each employer.26 Pursuant to the interim final rule, the section 103(g) reporting change became effective with the 2014 Form 5500 Annual Return/Report forms. The 2016 proposal on modernization of the Form 5500 included a proposal to finalize these changes.27 The DOL received four comments on the interim final rule and six additional 24 Public Law 113–97 (Apr. 7, 2014). FR 66617 (Nov. 10, 2014). 26 See, e.g., 2020 Form 5500 instructions at 14; see also 2020 Form 5500–SF instructions at 8–9. 27 81 FR 47534, 47564–47565. 25 79 E:\FR\FM\15SEP2.SGM 15SEP2 51498 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 comments in connection with the Paperwork Reduction Act (PRA) notice associated with the publication of the interim final rule.28 In addition, two comments on the 2016 proposal related to the proposal to finalize the 2014 interim final rule.29 The central concerns of most of the commenters was that filing the participating employer list imposes material costs and burdens on multiple employer plans and that making the employer list public was not in the best interests of plan participants and beneficiaries. One commenter suggested that the DOL should not apply the section 103(g) reporting changes to defined contribution or welfare plans because ERISA section 103(g) was added as part of the CSEC Act, which generally focused on ERISA minimum funding requirements that are not applicable for the majority of defined contribution pension plans or to any group health and welfare plans. In the 2016 proposed rule as well as in the Field Assistance Bulletin No. 2019– 01,30 DOL stated its position that it believes the section 103(g) reporting requirements adopted by the 2014 interim final rule, which apply the new requirements to all multiple employer plans (defined benefit pension plans, defined contribution plans, and welfare plans), are a reasonable and appropriate way to implement Congress’ directive in the CSEC Act. The information has proven useful to the DOL for its oversight functions for both MEPs and those MEWAs that file the Form 5500, regardless of the types of benefits provided by the MEWA. Before the DOL finalized the section 103(g) reporting requirements, the SECURE Act was enacted, which amended the original language in ERISA section 103(g), reaffirming that MEPs, including association retirement plans, PEOs, and the newly created pooled employer plans would have to report not just the existing identifying information, but also new financial information. Specifically, section 101 of the SECURE Act amended ERISA section 103(g) by providing that annual reports for ‘‘any plan to which [ERISA] section 210(a) applies (including a pooled employer plan)’’ must include (1) a list of participating employers in the plan, a good faith estimate of the percentage 28 See Proposed Extension of Information Collection Request Submitted for Public Comment; Revisions to Annual Return/Report—Multiple Employer Plans, 79 FR 66741 (Nov. 10, 2014). 29 Comments are available on the DOL’s website. 30 In 2019, the DOL issued Field Assistance Bulletin No. 2019–01, which provided transition relief for MEPs that failed to file a complete and accurate participating employer information with their Form 5500 Annual Return/Report for the 2017 and prior plan years. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 of total contributions made by such participating employers during the plan year, and the aggregate account balances attributable to each employer in the plan (determined as the sum of the account balances of the employees of such employer (and the beneficiaries of such employees)); and (2) with respect to a pooled employer plan, identifying information for the person designated under the terms of the plan as the pooled plan provider. Although the SECURE Act added a specific reference to ERISA section 210(a), DOL believes that this reference was meant to emphasize that defined contribution multiple employer pension plans and different types of MEPs that became more accessible in recent years, such as association retirement plans, professional employer organization plans (PEOs), and the newly created pooled employer plan are required to comply with the participating employers reporting requirements, and not just defined benefit pension plans. The SECURE Act reporting changes are effective for plan years beginning on or after January 1, 2021. In order to implement the SECURE Act reporting requirements on a timely basis, the Agencies are proposing that, for the 2021 plan year, MEPs (including pooled employer plans, association retirement plans, and PEOs) would be required to provide the participating employer information as a nonstandard attachment to the 2021 Form 5500 Annual Return/Report in a similar manner as currently required, and the content of the attachment would be updated to add the aggregate account balances attributable to each participating employer in the plan to the current requirement to provide identifying information and the percent of contributions by each participating employer. In addition, a MEP that is a pooled employer plan would be required to indicate on the nonstandard attachment for 2021 that it is a pooled employer plan and provide information similar to information required to be reported on a proposed Schedule MEP, as discussed below, for the 2022 and following plan years, including confirming that the entity identified as the plan sponsor and administrator in Part I of the Form 5500 is the pooled plan provider, and providing the ACK ID for the pooled plan provider’s most recent Form PR. For the 2022 and following plan years, MEPs would be required to report the participating employer information in a standard format on a proposed new Schedule MEP, as discussed below. PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 2. Participating Employer Reporting for MEWAs As discussed above, the SECURE Act amended ERISA section 103(g) by directing the reporting requirements specifically to multiple employer plans subject to ERISA section 210(a). The DOL continues to believe that receiving participating employer information from multiple employer welfare plans is important for oversight of such arrangements and should be continued. Even though the DOL originally relied on ERISA section 103(g) when it added the requirement for all multiple employer plans to provide the participating employer information, there are other rulemaking and reporting authorities that support continuing the reporting requirement for multiple employer welfare plans and extending it to non-plan MEWAs that file the Form M–1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Other Entities Claiming Exception (ECEs) (Form M–1). Based on the authority in ERISA sections 101(g), 505, and 734, the DOL in 2003 promulgated a regulation at 29 CFR 2520.101–2 that required the administrators of both multiple employer welfare plans and non-plan MEWAs that offer or provide coverage for medical benefits to file the Form M–1 on an annual basis (Form M–1 annual report) as well as upon occurrence of certain registration events (Form M–1 registration filing). Effective for plan years beginning on or after January 1, 2022, DOL is proposing to require MEWAs (plan and non-plan MEWAs) that offer or provide coverage for medical benefits to provide the participating employer information on the Form M–1 and not as an attachment to the Form 5500 Annual Return/Report. Specifically, new questions would be added to Form M–1 requiring MEWAs (plan and non-plan MEWAs) that offer or provide coverage for medical benefits to identify each participating employer in the MEWA by name and EIN and provide a good faith estimate of each participating employer’s percentage of the total contributions made by all participating employer during the plan year. However, similar to the 2014 interim final rule issued under ERISA section 103(g), the Form M–1 proposal does not require contribution information from unfunded or insured MEWAs. Furthermore, the Form M–1 proposal would require contribution information on the Form M–1 annual report filing but not the Form M–1 registration filing. The DOL specifically solicits comments on whether the final rule should require participating E:\FR\FM\15SEP2.SGM 15SEP2 khammond on DSKJM1Z7X2PROD with PROPOSALS2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules employer information on only the annual Form M–1 filing, and not on other M–1 required filings, in light of the fact that only annual information is required for plans reporting participating employer information on the Form 5500. With respect to multiple employer welfare plans that do not offer or provide coverage for medical benefits, and thus are not required to file a Form M–1 (for example, life or disability benefits), section 103 of ERISA provides the DOL with the authority to require the plan administrator to furnish, as part of the Form 5500 annual report, the ‘‘name and address of each fiduciary.’’ See ERISA section 103(c)(2). In the DOL’s view, the employer is acting as a fiduciary with respect to its decision to provide ERISA-covered benefits through a MEWA rather than through a single employer plan and also is a fiduciary for purposes of continuing to monitor the plan that it adopted.31 Accordingly, the DOL is relying on ERISA section 103(c)(2) as its authority for requiring multiple employer welfare plans (other than those that file the Form M–1) to continue reporting the participating employer identifying information, and unless unfunded or insured, a good faith estimate of each participating employer’s percentage of the total contributions made by all participating employer during the plan year.32 As is currently required for such plans, the information would continue to be filed as an attachment to the Form 5500 Annual Return/Report. MEWAs, however, whether those reporting on the Form 5500/Form 5500–SF or the Form M–1, would not be required to provide the new aggregate account balances information that was added by the SECURE Act to section 103(g). For the 2021 plan year, pending the implementation of the Form M–1 changes, all plan MEWAs would continue to provide participating employer information as a nonstandard attachment to the 2021 Form 5500 Annual Return/Report in a similar manner as currently required. The proposal, by transferring the participating employer information from the Form 5500 Annual Return/Report to the Form M–1 for MEWAs that offer or provide coverage for medical benefits and continuing to require reporting of participating employer information on the Form 5500 Annual Return/Report for plan MEWAs that provide other benefits, would enable the DOL to receive such information from both plan and non-plan MEWAs, regardless of how they are funded or structured. The DOL and other users of the Form M–1 data (e.g., state insurance regulators) would have access to updated and current lists of participating employers because the Form M–1 must be filed annually as well as upon the occurrence of certain registration events (30 days prior to MEWAs operating in any state or expanding their operations into an additional state; and within 30 days of a merger, material change, or a participant increase of 50% or more). 31 See Advisory Opinion Letter 2007–06A (Aug. 16, 2007) (‘‘decisions regarding the method through which benefits are to be paid under an employee welfare benefit plan, including the selection of an insurer and the negotiation of the terms of any contractual arrangement obligating the plan, are matters that generally are subject to the fiduciary responsibility provisions of Title I of ERISA’’.); Information Letter to Diana Ceresi (Feb. 2, 1998) (‘‘when the selection of a health care provider involves the disposition of employee benefit plan assets, such selection is an exercise of authority or control with respect to the management and disposition of the plan’s assets within the meaning of section 3(21) of ERISA, and thus constitutes a fiduciary act . . .’’); See also Advisory Opinion Letter 2018–01A (Nov. 5, 2018) (In the context of a pension plan rollover service provider, not covered by Title 1 of ERISA, ‘‘When plan sponsors or other responsible fiduciaries choose to have a plan participate in the RCH Program, they are acting in a fiduciary capacity, and would be subject to the general fiduciary standards and prohibited transaction provisions of ERISA in selecting and monitoring the RCH Program.’’) 32 Similar to the 2014 interim final rule issued under ERISA section 103(g), such multiple employer welfare plans that are unfunded or insured and exempt under 29 CFR 2520.104–44 from filing financial statements with their annual report will continue to be required to attach a list of participating employers, but do not have to include the contribution information. See, e.g., 2020 Form 5500 instructions at 14; see also 2020 Form 5500–SF instructions at 8–9. C. Proposed Form 5500-Schedule MEP (Multiple Employer Pension Plan Information) and Requirement That MEPs (Including Pooled Employer Plans) File the Form 5500 and not the Form 5500–SF The proposal would add a new Schedule MEP (Multiple Employer Pension Plan Information) to the Form 5500 Annual Return/Report that would be completed by MEPs. The proposal also would add a limited number of additional data items elsewhere on the Form 5500 relevant to MEPs. The proposed Schedule MEP would provide a unified vehicle to report information related to new SECURE Act provisions, including information unique to MEPs. The first section, Part I, like the other schedules to the Form 5500, would require filers to enter identifying information (which must match the information entered on the Form 5500) and to indicate the plan type by checkbox. The instructions would provide general definitions for purposes of annual reporting for the various categories of pension plans that must VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 51499 complete the Schedule MEP. This would include different types of MEPs (group or association retirement plans within the meaning of 29 CFR 2510.3– 55(b) (association retirement plans), professional employer organization plans within the meaning of 29 CFR 2510.3–55(c) (PEO plans), pooled employer plans within the meaning of ERISA section 3(43), and other MEPs covering the employees of two or more employers that are not single or multiemployer plans for annual reporting purposes). Multiemployer plans, as defined under section 3(37) of ERISA, would not be required to complete the Schedule MEP.33 Part II of the proposed Schedule MEP would be a repeating line item on which all MEPs would report information under ERISA section 103(g) regarding participating employers, including employer/plan sponsor name, EIN, and the percentage of total contributions to the plan or arrangement by each participating employer, and the aggregate account balances information the SECURE Act added to ERISA section 103(g).34 That information is currently collected for MEPs as a non-standard attachment to the Form 5500 and Form 5500–SF.35 Pursuant to the SECURE Act, a new data element would be added to require reporting of the aggregate account balances for each participating employer in the MEP. Part III would be completed by pooled employer plans. A pooled employer plan would be required to indicate whether the pooled plan provider operating the plan (identified on the Form 5500 for each of the pooled employer plans it operates as both the plan sponsor and the plan administrator) has complied with the registration requirements for pooled plan providers under section 3(43) and 3(44) of ERISA by filing a Form PR, in accordance with that form’s instructions.36 The pooled employer plan would be required to provide the ‘‘ACK ID’’—the acknowledgement code generated by the system in response to a completed filing—for the most recent 33 Multiemployer defined pension benefit plans are required to provide, on Form 5500, Schedule R (Retirement Plan Information), identifying information and the percentage of contributions for those plans that are five percent or more contributors for the plan year being reported. 34 As discussed above, MEWAs would report the participating employer information either as an attachment to the Form 5500 or on the Form M–1. 35 The total contributions are the amount reported on Form 5500, Schedule H, line 2(a)(3) or the total of lines 8a(1), 8a(2), and 8a(3) on the Form 5500– SF. 36 See Form PR and its instructions, available at www.efast.dol.gov. E:\FR\FM\15SEP2.SGM 15SEP2 51500 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 Form PR submitted.37 Pooled employer plans would also be required to indicate whether certain services were provided by an affiliate, and, if relying on a prohibited transaction exemption for the use of an affiliate, to identify the prohibited transaction (whether a class or individual) exemption. The DOL, through rules and other initiatives, has pursued and required improvements in fee transparency to ensure that ERISA plan fiduciaries and plan participants are effectively informed about service provider fees and expenses, including cost and performance information of designated investment alternatives under the plan. These considerations are particularly important in the case of pooled employer plans and MEPs given their structure and the roles that traditional service providers end up playing as plan sponsors and plan administrators. Accordingly, comments are specifically solicited on whether more specifically tailored questions should be added, in addition to those already on the Schedules C and H, to report fee and expense information on pooled employer plans and other MEPs, including information on how fees and expenses are allocated among participating employers and among covered participants and beneficiaries. Further, the proposal would require all MEPs, similar to the current rule for multiemployer plans and the proposed rule for DCGs, to file the Form 5500 regardless of whether they would otherwise be eligible to file the Form 5500–SF. Making the filings across plan types more uniform would enable more consistent and informed oversight of collective retirement arrangements. Small MEPs would have the same simplified Form 5500 reporting as small pension plans, including MEPs, that currently file the Form 5500. They would be able to file the Schedule I instead of the Schedule H and its financial attachments, would not be required to complete the Schedule C or Schedule G, and would be able to file without having an IQPA audit and attaching an IQPA report. D. Improving Usability of Data Collection for Schedule H, Line 4i Schedules of Assets By their nature, MEPs have the potential to build up a substantial amount of assets quickly and the effect of any abusive schemes on future retirement distributions may be hidden 37 The instructions to the Form PR advise the pooled plan provider that it must keep, under section 107, the electronic receipt for the Form PR filing as part of the records of the pooled employer plans operated by the pooled plan provider. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 or difficult to detect for a long period. The DOL is aware that MEPs could be the target of fraud or abuse for this reason. Although DOL is not aware of direct information indicating that the risk for fraud and abuse is greater for MEPs than for other defined contribution pension plans, a key component of the proposal is to make the financial information reported on the Form 5500 Annual Return/Report more data mineable and accessible for enforcement and analysis purposes. The DOL does not believe it would be sensible to limit this aspect of the proposal to just pooled employer plans and other MEPs because, although an important data improvement for MEPs, the need for more relevant and comparable financial information extends to defined contribution and defined benefit pension plans generally. Reports from GAO, the DOL—Office of Inspector General, the ERISA Advisory Council, and the Treasury Inspector General for Tax Administration (‘‘TIGTA’’) have focused on the need for increased transparency and accountability generally in connection with employee benefit plan investments in hard-to-value and alternative assets and those held through pooled investment vehicles. It also would be confusing and inefficient to try to adopt these kinds of financial reporting improvement just for MEPs or for certain types of MEPs. Mandatory e-filing, which was implemented for the 2009 form filing year, changed both the regulated community’s and the government’s ability to use the Form 5500 Annual Return/Report data. The data sets developed from e-filing information have been helping researchers, businesses, and other plan professionals.38 The Form 5500 Annual Return/Report data sets can be one of the major building blocks for a private organization to use in developing information for employees and employers on plan administration. 38 EBSA is responsible for collecting the Form 5500 Annual Return/Report, in part, to fulfill the statutory requirements under Sections 104 and 106 of ERISA, which require that DOL make annual reports filed under Title I of ERISA available to the public. EBSA also makes the Form 5500 filings and data available to the public under the Freedom of Information Act (FOIA), 5 U.S.C. 552. EBSA fulfills its responsibilities by making the Form 5500 Annual Return/Report data available for downloading in bulk. See http://www.dol.gov/ebsa/ foia/foia.html. These bulk data files, which EBSA updates at the end of each month with the Form 5500 Annual Return/Report data collected during that month, are downloaded by private-sector organizations that, in some cases, also make the data available on the internet. Thus, most returns/ reports are currently open to public inspection, and the contents are public information subject to publication on the internet. PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 Currently, however, the line 4i attachments to Schedule H (Schedule of Assets Held at End of Year, Schedule of Assets Acquired and Disposed of Within Year and the Schedule of Reportable Transactions) are difficult to search, filter, aggregate, and analyze because they are not filed in a standardized electronic format. As a result, the Agencies, policymakers, employers, labor organizations, participants and beneficiaries, and the public have difficulty accessing key information about plan investments. This proposal to establish a standardized electronic filing format for the Schedule H, line 4i Schedules of Investments is also intended to be responsive to the OIG’s recommendation that the Agencies create a searchable reporting format for the Schedule H, line 4i Schedules of Assets and otherwise increase the accessibility of Form 5500 Annual Return/Report information, particularly information on hard-to-value assets and multiple-employer plans. See DOL–OIG EBSA Needs to Provide Additional Guidance and Oversight to ERISA Plans Holding Hard-To-Value Alternative Investments, at 17. See also Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 37; see also U.S. Gov’t Accountability Office, GAO–12–665, Federal Agencies Should Collect Data and Coordinate Oversight of Multiple Employer Plans (2012), at 30. Schedule H, line 4i would be separated into two elements—line 4i(1) would ask whether the plan held assets for investment at the end of the year; line 4i(2) would ask about assets acquired and disposed of during the plan year. The information to be collected as part of the schedules would be largely unchanged, but some adjustments are being proposed to improve the consistency and quality of the data. The proposal clarifies conventions for identifying filers by name and identifying number(s).39 The proposal would require plans to use legal entity and other industry and regulatory identifiers for investment assets whenever possible. Check boxes are also being added for participant directed individual account plans to identify investments that are designated investment alternatives and qualified default investment alternatives and to require entry of the total annual 39 These changes are also intended to address concerns raised by the GAO in recommending that ‘‘the Agencies develop a central repository for EIN and Plan Numbers (PNs) for filers and service providers to improve the comparability of form data across filings.’’ GAO Private Pensions: Targeted Revisions Could Improve Usefulness of Form 5500 Information, at 37. E:\FR\FM\15SEP2.SGM 15SEP2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules operating expenses for the investments expressed as a percentage of assets that was furnished to participants and beneficiaries in their most recent ‘‘404a– 5 statement.’’ 40 With the expected increase in employers choosing to offer retirement benefits through MEPs and DCGs, instead of stand-alone plans that file their own annual return/report, and the requirement for DCGs to provide the same investments and investment alternatives, these changes are intended to help the Agencies, employers, and other interested stakeholders compare plan participation, investment options, and investment performance from yearto-year. khammond on DSKJM1Z7X2PROD with PROPOSALS2 E. Schedules MB, SB and R—Proposed Modifications and Additions to Information Reported As described more fully below, the Agencies propose adding new questions to the Form 5500 Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information), Schedule SB (Single-Employer Defined Benefit Plan Actuarial Information), and Schedule R (Retirement Plan Information), and modifying the demographic and benefit attachment requirements to enable the Agencies to project more precisely defined benefit pension plans’ and insurance programs’ liabilities. Also for multiemployer defined benefit pension plans, among other changes, the Agencies propose identifying a larger number of contributing employers. For both single-employer and multiemployer defined benefit pension plans, the Agencies propose the option to provide certain required attachments in a spreadsheet file to make it easier for the Agencies to access the information. 40 See 29 CFR 2550.404a–5. The DOL published a final rule in 2012 that was designed to help America’s workers manage and invest the money they contribute to their 401(k)-type pension plans. The rule requires that workers in this type of plan are given, or have access to, the information they need to make informed decisions, including information about fees and expenses; the delivery of investment-related information in a format that enables workers to meaningfully compare the investment options under their pension plans; that plan fiduciaries use standard methodologies when calculating and disclosing expense and return information so as to achieve uniformity across the spectrum of investments that exist among and within plans, thus facilitating ‘‘apples-to-apples’’ comparisons among their plan’s investment options; and a new level of fee and expense transparency. Requiring the total annual operating expenses from those statements to be included on the plan’s Form 5500 is intended to help further that objective by allowing third-party data aggregators to build tools that will help employers, participants and beneficiaries, the Agencies, and other interested members of the public evaluate and monitor investment alternatives being made available for America’s workers to save to their retirement. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 1. Schedule MB Modifications Currently, Schedule MB requires that if any of the employer contributions reported in line 3 include amounts owed for withdrawal liability, an attachment must be provided listing the total withdrawal liability amounts and the dates such amounts were contributed. The Agencies propose modifying the line 3 instructions to require an attachment that breaks down the total withdrawal liability amounts by date, separately specifying the periodic withdrawal liability amounts and lump sum withdrawal liability amounts. Currently, line 6 of Schedule MB requires filers to provide information about the actuarial assumptions used to determine plan liabilities. The Agencies propose adding a new requirement for plans that assess withdrawal liability to an employer during the plan year to report the interest rate used to determine the present value of vested benefits for withdrawal liability determinations. This information would be reported in a new line, which would become line 6f. In addition, the Agencies propose modifying the questions related to the line 6 ‘‘expense load’’ to better align with the various ways multiemployer plans incorporate expense loads into their calculations. Filers would be required to indicate if an expense load is included in normal cost and, if so, whether it is determined as a percentage of normal cost, a dollar amount that varies from year to year, or something else. As part of the modification, the Agencies propose moving the expense load from line 6e to a new line 6i and to revise the instructions accordingly. In addition, the Agencies propose modifying line 8 of Schedule MB by requiring additional information about demographics, benefits, and contributions as described below. As is the case currently with respect to line 8, these requirements would apply only to PBGC-insured multiemployer plans with 500 or more total participants as of the beginning of the plan year. • Benefit Projections—Currently, such plans are required to attach a projection of benefits expected to be paid in each of the next ten years (see line 8b(1)).41 The Agencies propose 41 The current instructions provide that the line 8b(1) attachment is required for plans with 500 or more participants as of the valuation date, not as of the beginning of the plan year. The Agencies are proposing to change that to ‘‘the beginning of the plan year’’ because the only participant count reported on Schedule MB is the count at the beginning of the plan year (i.e., line 2b(3)(c), column 1) and because doing so is consistent with another Schedule MB requirement, See instructions for line 8b(2). PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 51501 modifying the format of the attachment to show the benefit projection broken down into three categories based on the participant’s or beneficiary’s status on the valuation date (i.e., active, terminated vested, in pay status). In addition, the projection period would be extended from 10 to 50 years. It is the Agencies’ understanding that almost all valuation software automatically generates these numbers and that it takes the same amount of effort to project 50 years as it does to project 10 years. • Contribution Projections—The Agencies propose adding a new requirement that such plans provide, as an attachment, a 10-year projection of employer contributions and withdrawal liability payments. A new line, line 8b(3), would be added to Schedule MB where the filer would report whether the projection is required. As is the case with the benefit projection attachments, the instructions would provide the required format for the attachment. • Average age/benefit—The Agencies propose requiring such plans to report the average age and average monthly benefit separately for terminated vested participants and retired participants and beneficiaries receiving payments. This information would be provided directly on Schedule MB, in new line 8b(4). The Agencies also propose a change to the ‘‘age/service’’ scatter attachment which is currently required for PBGCinsured multiemployer plans with active participants, regardless of the number of participants. Currently, the scatter shows, for each ‘‘attained age’’ and ‘‘years of credited service’’ grouping of active participants, the number of active participants, and if the total number of active participants at the beginning of the plan year is 1,000 or more, (1) for plans that use compensation to determine benefits, the average compensation, and (2) for cash balance plans, the average cash balance account (see line 8b(2)). The Agencies propose modifying the age/service scatter by deleting the required information related to cash balance plans and adding a requirement to report average accrued monthly benefits as of the valuation date for each grouping (for plans with 1,000 or more active participants at the beginning of the year). As is the case with respect to average compensation, the accrued benefit information would not be required for any age/service combination that contains fewer than 20 participants. The Agencies also propose clarifying the line 4f instructions and Schedule language concerning when (or if) plans in critical status or critical and E:\FR\FM\15SEP2.SGM 15SEP2 51502 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules declining status are projected to emerge or become insolvent, as filers’ previous responses indicate they may have been confused as to how to fill out line 4f correctly. 2. Modifications to Schedule SB The Agencies propose making the Schedule SB (actuarial schedule), line 26 reporting requirements about demographics and benefits similar to the requirements for PBGC-insured multiemployer plans. Consistent with the requirements for PBGC-insured multiemployer plans, the new singleemployer plan requirements would apply only to plans with 500 or more total participants. However, because the only participant count information reported on Schedule SB is as of the valuation date, for single-employer plans, participants are counted as of the valuation date for this purpose instead of as of the beginning of the plan year. Such plans would be required to attach a projection of benefits expected to be paid in each of the next 50 years broken down into three categories based on the participant’s or beneficiary’s status on the valuation date (i.e., active, terminated vested, in pay status). The instructions would provide the requirements for the attachment’s format. The Agencies are also proposing that these plans report the average age and average monthly benefit separately for terminated vested participants and retired participants and beneficiaries receiving payments. As discussed above, the Agencies do not believe the benefit projection requirement would be burdensome for such single-employer plans, as almost all valuation software automatically generates these numbers. To facilitate these changes, the Agencies propose rearranging Schedule SB line 26. Currently, line 26 relates only to the ‘‘age/service’’ scatter of active participant data required to be attached to Schedule SB for PBGCinsured single-employer plans with active participants. The Agencies propose changing line 26 into a threepart question (26a, 26b, and 26c). Line 26a would be the current line 26. New line 26b would require PBGC-insured single-employer plans with 500 or more total participants as of the valuation date to attach a projection of expected benefit payments. New line 26c would be the line for plans to report average age and average monthly benefit information. The Agencies propose modifying Part IX of the Schedule SB, and its instructions, so that it relates to elective funding relief provided under the American Rescue Plan (ARP) Act of 2021 instead of elective funding relief provided under the Pension Relief Act of 2010 (PRA 2010). The PRA 2010 information is no longer needed because the ARP Act reduces to zero all shortfall amortization bases, including amortization bases established pursuant to the PRA 2010 elective funding relief. As modified, plan sponsors of singleemployer defined benefit plans that elect to have the ARP Act extended amortization rule apply before the 2022 plan year would be required to report the first plan year to which the extended amortization rule applies. 3. Modification to Schedule R Reporting Requirement The Agencies propose modifying Schedule R’s Part V, line 13 requirement Attachment khammond on DSKJM1Z7X2PROD with PROPOSALS2 F. Internal Revenue Code-Based Questions for the 2022 Form 5500s Prior to 2009, Schedule E, ESOP Annual Information, Schedule P, Annual Return of Fiduciary of Employee Benefit Trust, and Schedule T, Qualified Pension Plan Coverage Information, were required as part of the annual return under section 6058(a) of the Code and associated regulations, but VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 4. Change in Format for Certain Schedule MB and SB Attachments EFAST filers currently file Form 5500 attachments as PDF and plain text (TXT) files. A PDF file is required only if the attachment is supposed to be signed. TXT attachments are rarely provided. Many attachments include a lot of numbers (e.g., benefit projections, age/ service scatters) that are reported in tables. These numbers have to be extracted out of PDF tables and entered into databases or spreadsheets before the Agencies can use the information for various projects, studies, etc. This is costly and inefficient. It would be more efficient for the Agencies if this information was instead provided by filers in a tabular format (spreadsheet). Therefore, the Agencies propose modifying the instructions to allow and suggest (but not require) that certain attachments be provided in a tabular format (spreadsheet) such as CSV or XLS rather than PDF or TXT formats. The attachments affected by this change are: Schedule MB Schedule of Projection of Expected Benefit Payments ......................................... Schedule of Active Participant Data (i.e., Age/service scatter) ............................. Withdrawal Liability Amounts ................................................................................. Schedule of Projection of Employer Contributions and Withdrawal Liability ......... Because much of this information is automatically generated by valuation software, the Agencies expect that this option may simplify the process for preparing attachments as well. that multiemployer defined benefit pension plans subject to minimum funding standards report identifying information about any participating employer whose contributions to the plan account for more than five (5) percent of the total contributions for the year. The proposed change would require that plans report identifying information about any participating employer who either (1) contributed more than five percent of the plan’s total contributions or (2) was one of the top ten highest contributors. This will ensure that reported data represents a reasonable sampling of contributors. Line Line Line Line 8b(1) .............................................. 8b(2) .............................................. 3 .................................................... 8b(3) .............................................. they were not information collections of the DOL or the PBGC. Beginning in 2009, DOL mandated electronic filing of Form 5500, Annual Return/Report of Employee Benefit Plan, and Form 5500– SF, Short Form Annual Return/Report of Small Employee Benefit Plan. Limitations on the IRS’ authority to require electronic filing of annual returns resulted in the removal of the ‘‘IRS-only’’ schedules from the Form 5500 filing requirements. See Code section 6011(e). The 2011 report from the TIGTA entitled ‘‘The Employee Plans Function PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 Schedule SB Line 26b. Line 26a. N/A. N/A. Should Continue Its Efforts to Obtain Needed Retirement Plan Information’’ notes that the lack of information contained on Schedules E, P, and T can negatively impact the IRS’s ability to effectively focus on specific factors of noncompliance when selecting retirement plans for examination. This lack of information may result in the IRS selecting relatively compliant plans, which increases the burden on these plans and affects the IRS’s ability to identify and focus on potentially noncompliant plans. Additionally, the Employee Plans (EP) function has E:\FR\FM\15SEP2.SGM 15SEP2 khammond on DSKJM1Z7X2PROD with PROPOSALS2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules focused its examination strategy on identifying plans with non-compliance by using compliance strategies and data analysis. Compliance strategies use agents’ experience to identify certain types of plans where EP sees numerous qualification failures. EP uses data analysis by identifying certain responses to questions on the Form 5500 that indicate that a plan may be noncompliant. Rather than reinstating the Schedules E, P, and T, the IRS is proposing to add new questions to the 2022 Form 5500 that are designed to assist the IRS in identifying plans that are non-compliant relating to Code section 410(b) coverage, Code section 401(a)(4) nondiscrimination, and Code section 401(k) non-discrimination testing. Additionally, the IRS is proposing to add a question that will help it identify whether adopters of pre-approved plans have been updated timely for changes in the law. DCGs would report this information at the plan level as part of the Schedule DCG. Specifically, the proposal would add a nondiscrimination and coverage test question to Form 5500 and Form 5500– SF that was on the Schedule T before it was eliminated. The question asks if the employer aggregated plans in testing whether the plan satisfied the nondiscrimination and coverage tests of Code sections 401(a)(4) and 410(b). A plan that is aggregated with another plan to pass either nondiscrimination or coverage testing generally has more issues that are technically complicated and raise the possibility of noncompliance. Adding this question will allow EP to identify these plans for examination over plans that are likely more compliant with the law. This question is also helpful when performing pre-examination analysis and allows the IRS to narrow any inquiries for information that is requested from the plan sponsor. The restoration of this question also reflects the elimination of optional coverage and nondiscrimination demonstrations in the IRS determination letter process. See Rev. Proc. 2012–6, 2012–1 I.R.B. 235, and Announcement 2011–82, 2011–52 I.R.B. 1052. The proposal would add a question to Form 5500 and Form 5500–SF, for section 401(k) plans, asking whether the plan sponsor used the design-based safe harbor rules or, if applicable, the ‘‘prior year’’ or ‘‘current year’’ ADP test. ADP testing and nondiscrimination are significant compliance issues for section 401(k) plans. For example, a plan that performs prior year or current year ADP testing is more likely to have compliance issues than a plan with a VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 51503 G. Change to Participant-Count Methodology for Determining Independent Qualified Public Accountant Audit Requirement for Individual Account Plans The Agencies are proposing to change the rules for determining when a defined contribution pension plan is exempt from the requirement to include an IQPA report with its annual return/ report filing. Currently, the plan size measure for the IQPA audit requirement is based on the total number of participants at the beginning of the plan year, including those eligible to elect to have contributions made under a section 401(k) qualified cash or deferred arrangement even if they have not elected to participate and do not have an account balance in a section 401(k) or 403(b) plan. Some stakeholders have pointed out that the use of this definition for the audit threshold may result in two plans with the same number of active participants, e.g., 85 account holders, with one subject to an audit and the other not based on the number of non-participating but eligible employees of the plan sponsor. They questioned the policy basis for such a difference in application of the audit requirement. Further, under this definition, some stakeholders have suggested that section 112 of the SECURE Act could make it even more likely that a plan with a small number of active participants may be required to bear the cost of an audit based on eligible but not participating employees being counted toward the audit threshold. Specifically, because section 112 provides that long-term, part time workers that have reached the plan’s minimum age requirement and worked at least 500 hours in each of three consecutive 12-months period must be permitted to make elective contributions to a section 401(k) qualified cash or deferred arrangement for plan years beginning on or after January 1, 2024, there could be more employees eligible to participate that elect not to do so. These eligible employees who are not active participants would still be impacting the threshold for determining whether the plan would have to file as a large plan.43 To address these issues, the Agencies are proposing to add to the Form 5500 and Form 5500–SF a new question for defined contribution pension plans only, asking for the number of participants with account balances at the ‘‘beginning of the year,’’ in addition to the current end-of-year count for defined contribution pension plan participants with account balances. Defined contribution pension plans would determine whether they have to file as a large plan and whether they have to attach an IQPA report and audited financial statements based on the number of participants with account balances as of the beginning of the plan year, as reported on the face of the Form 5500 or Form 5500–SF. To avoid circumstances in which a beginning-ofyear count would result in an inappropriate exclusion of large plans 42 IRS will separately make a parallel update to the Form 5500–EZ, which is solely in the jurisdiction of the IRS. 43 The Agencies proposed a similar change in 2016 and received few comments on that aspect of the proposal. 81 FR 47534 (Jul. 16, 2016). designed-based safe harbor. Adding this question will allow EP to identify for examination section 401(k) plans that use ADP testing over plans that have designed-based safe harbors. This question will also help the IRS perform pre-examination analysis and, for design-based safe harbor plans, verify whether (1) allocations of required safe harbor contributions comply with the terms of the plan, and (2) proper notice requirements are satisfied on an annual basis. The proposal would add a question to Form 5500 and Form 5500–SF,42 asking whether the employer is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, the date of the favorable Opinion Letter, and the Opinion Letter serial number. This question will help the IRS identify whether a plan sponsor has adopted a pre-approved plan and to determine whether the plan was adopted timely in accordance with the Code section 401(b) remedial amendment period. This question will also assist the IRS in determining whether to select a plan for examination as a late amender for changes in the law. Finally, the proposal would add a new checkbox F to Form 5500–EZ, Part I, asking whether a filer is required to file Form 5500–EZ electronically pursuant to Treas. Reg § 301.6058–2. A filer who has to file at least the applicable number of returns with the IRS during a calendar year generally must file Form 5500–EZ electronically under EFAST2. The applicable number is 10 for returns required to be filed during calendar years after 2022. If a filer is required to file Form 5500–EZ electronically, but fails to do so, the filer is deemed to have failed to file Form 5500–EZ. This question will assist IRS in determining if a filer is in compliance with IRS mandatory electronic filing rules, in the event a paper Form 5500– EZ is filed. PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\15SEP2.SGM 15SEP2 51504 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS2 from the audit requirement, for first plan year filings, the participant count for this purpose would exclude only plans that have fewer than 100 participants with account balances both at the beginning of the first plan year and the end of the first plan year.44 Thus, under the proposal, the determination would be based on the number of participants with account balances as of the beginning of the plan year (as reported on proposed line 6g(1) of the Form 5500 or line 5c(1) of the Form 5500–SF), except that the determination for first plan year filings would be based on the number of participants with account balances both at the beginning of the plan year and at the end of the plan year (as reported on proposed line 6g(2) of the Form 5500 and line 5c(2) of the Form 5500–SF). H. Miscellaneous and Conforming Changes for Forms and Instructions Various other technical, formatting, and conforming changes to the forms, schedules, and instructions are being proposed as part of the substantial restructuring of the Form 5500 Annual Return/Report described in this notice. For example, to implement the proposed Schedule MEP and Schedule DCG, the proposal includes conforming changes to other parts of the forms, schedules, and instructions. The instructions for what constitutes a multiple employer plan for purposes of the Form 5500 would generally be left unchanged, but conforming changes would be made throughout the instructions as necessary to reference the Schedule MEP and pooled employer plans for pension plans. The instructions would also be amended to reflect the transferring of the participating employer information from the Form 5500 Annual Return/Report to the Form M–1 for MEWAs that offer or provide coverage for medical benefits, and continued reporting of participating employer information on the Form 5500 Annual Return/Report as an attachment for plan MEWAs that provide other benefits. The instructions for Part I, DFE box, would be updated to add a code for DCGs, which would be instructed to check the DFE box, enter the correct code, and attach the proposed Schedule DCG. The proposed Schedule MEP and Schedule DCG would be added to the list of pension schedules. DCG filers would have to check that they are adding the Schedule DCG and enter the number of Schedules DCG attached. Other conforming changes would also 44 This would not otherwise change how participants are counted for Form 5500 reporting purposes. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 be made throughout the instructions as necessary to reference DCGs and Schedule DCG. The DOL’s reporting regulation at 29 CFR 2520.103–1(c)(2)(ii) and the Form 5500–SF instructions would be amended to add MEPs and DCGs to those types of filers that are not permitted to file a Form 5500–SF, but must instead file the Form 5500, with all required schedules and attachments. The instructions would be revised to state that pooled employer plans and DCGs would not report investment assets aggregated into master trust investment accounts (MTIAs) because the purpose of the MTIA reporting structure is to provide a financial reporting structure for groups of affiliated plans (e.g., separate plans of controlled group members) that utilize master trusts for the collective investment of the assets of the affiliated plans. The Departments do not believe that separate pooled employer plans and DCGs are ‘‘affiliated’’ in the way that was envisioned for master trust reporting by plans and may in fact create an overly complex and undesirable lack of transparency if used in the case of pooled employer plans and DCGs. The proposal would also add new breakout categories to the ‘‘Administrative Expenses’’ category of the Income and Expenses section of the Schedule H balance sheet. The Agencies have determined that to get a better picture of plan expenses, particularly those related to service providers, more detail in this category is warranted. Accordingly, data elements would be added for ‘‘Salaries and allowances,’’ ‘‘Independent Qualified Public Accountant (IQPA) Audit fees,’’ ‘‘Recordkeeping and Other Accounting Fees,’’ ‘‘Bank or Trust Company Trustee/Custodial Fees,’’ ‘‘Actuarial fees,’’ ‘‘Legal fees,’’ ‘‘Valuation/ appraisal fees,’’ and ‘‘Trustee fees/ expenses (including travel, seminars, meetings.’’ Other than IQPA Audit Fees and Bank or Trust Company Trustee/ Custodial Fees, these questions were on the Form 5500 prior to 1999.45 As noted above in connection with pooled employer plans and MEPs, transparency and improved reporting of fees and expenses is an ongoing objective for the DOL and an important goal for continuing to improve the Form 5500 as a tool for financial transparency and accountability among employee benefit plans. Accordingly, the agencies specifically request comments on whether the final rule should require more detailed reporting regarding fee and expense information on the Form 45 See PO 00000 1998 Form 5500, line 32(g). Frm 00018 Fmt 4701 Sfmt 4702 5500. Useful comments would include, for example, suggestions on how to improve reporting of direct and indirect service provider compensation, generally and in particular with respect to pooled employer plans, other MEPs, and DCG reporting arrangements (including information about how the fees and expenses are allocated among participating plans, employers, and plan participants and beneficiaries, as applicable). Another example of an area of interest on fee information is whether the Form 5500 would be an appropriate vehicle for collecting information on fees charged to participants or alternate payees by a retirement plan—including plan service provider fees the plan passes on to participants—for review and qualification of domestic relations orders.46 The proposal would also amend the Form 5500 instructions to make explicit that the pooled plan provider operating the pooled employer plan must report the same identifying information—i.e., name and EIN for itself, identified affiliates and other service providers, and trustees—on the Form PR for the pooled plan provider and on the Forms 5500 for every pooled employer plan the pooled plan provider operates. The instructions to the new Form PR have parallel instructions. The proposal would also amend the Form 5500 and Form 5500–SF instructions and make conforming changes to the other parts of the forms, schedules, and instructions to implement the proposed changes described above to the participant count methodology for individual account plans for determining whether such plans have to file as a large plan and whether they have to attach an IQPA report. IV. Paperwork Reduction Act Statement As part of continuing efforts to reduce paperwork and respondent burden, the general public and Federal agencies are invited to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data will be provided in the 46 See Government Accountability Office (GAO) Report GAO 20–541, ‘‘Retirement Security: DOL Could Better Inform Divorcing Parties About Dividing Savings,’’ which recommended that ‘‘EBSA should explore ways to collect information on fees charged to participants or alternate payees by a retirement plan—including plan service provider fees the plan passes on to participants— for review and qualification of domestic relations orders and evaluate the burden of doing so. For example, DOL could consider collecting fee information as part of existing reporting requirements in the Form 5500.’’ E:\FR\FM\15SEP2.SGM 15SEP2 khammond on DSKJM1Z7X2PROD with PROPOSALS2 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules desired format, reporting burden (time and financial resources) will be minimized, collection instruments will be clearly understood, and the impact of collection requirements on respondents is properly assessed. Currently, the DOL is soliciting comments concerning the proposed revisions of the Form 5500 Annual Return/Report, Form M–1 and Summary Annual Report, which are information collection requests subject to the PRA. A copy of the ICRs may be obtained by contacting the person listed in the PRA Addressee section below. The DOL has submitted a copy of the proposed revisions to the Office of Management and Budget (OMB) in accordance with 44 U.S.C. 3507(d) for its review of the DOL’s information collection. The IRS and the PBGC intend to submit separate requests for OMB review and approval based upon the final forms revisions. The DOL and OMB are particularly interested in comments that: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agencies, including whether the information will have practical utility; • Evaluate the accuracy of the estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503 and marked ‘‘Attention: Desk Officer for the Employee Benefits Security Administration.’’ Comments can also be submitted by Fax: 202–395–5806 (this is not a toll-free number), or by email: OIRA_submission@omb.eop.gov. OMB requests that comments be received by October 15, 2021, which is 30 days from publication of the proposed rule to ensure their consideration. PRA Addressee: Address requests for copies of the ICR to James Butikofer, Office of Regulations and Interpretations, U.S. Department of Labor, Employee Benefits Security Administration, 200 Constitution VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 Avenue NW, Room N–5655, Washington, DC 20210. Email: ebsa.opr@dol.gov. ICRs submitted to OMB also are available at http:// www.RegInfo.gov. Form 5500 ICR: As described below, DOL is requesting a new OMB Control Number for this collection. The request for a new control number is for administrative reasons only. The DOL is currently in the process of requesting an extension for OMB Control Number 1210–0110, Annual Information Return/ Report of Employee Benefit Plan. Once all of the outstanding actions are complete, the DOL intends to submit a nonmaterial change request to transfer the burden from the new ICR to the existing OMB control number for the Annual Information Return/Report of Employee Benefit Plan (1210–0110) and proceed to discontinue the use of the new control number. The Agencies’ burden estimation methodology excludes certain activities from the calculation of ‘‘burden.’’ If the activity is performed for any reason other than compliance with the applicable federal tax administration system or the Title I annual reporting requirements, it was not counted as part of the paperwork burden. For example, most businesses or financial entities maintain, in the ordinary course of business, detailed accounts of assets and liabilities, and income and expenses for the purposes of operating the business or entity. These recordkeeping activities were not included in the calculation of burden because prudent business or financial entities normally have that information available for reasons other than federal tax or Title I annual reporting. Only time for gathering and processing information associated with the tax return/annual reporting systems, and learning about the law, was included. In addition, an activity is counted as a burden only once if performed for both tax and Title I purposes. The Agencies also have designed the instruction package for the Form 5500 Annual Return/Report so that filers generally will be able to complete the Form 5500 Annual Return/ Report by reading the instructions without needing to refer to the statutes or regulations. The Agencies, therefore, have included in their PRA calculations a burden for reading the instructions and find there is no recordkeeping burden attributable to the Form 5500 Annual Return/Report. The DOL solicits comments regarding whether or not any recordkeeping beyond that which is usual and customary is necessary to complete the Form 5500 Annual Return/ Report. Comments are also solicited on whether the Form 5500 Annual Return/ PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 51505 Report instructions are generally sufficient to enable filers to complete the Form 5500 Annual Return/Report without needing to refer to the statutes or regulations. Summary Annual Report ICR: Section 2520.104b–10 sets forth the requirements for the Summary Annual Report (SAR) appendix and prescribes formats for such reports. The DOL is proposing to revise the currently approved information collection (1210– 0040) to include required additions to the SAR formats that reflect the addition of the new Schedule MEP and Schedule DCG to the 5500 Annual Report/Return. Form M–1 ICR: Effective for plan years beginning on or after January 1, 2022, DOL is proposing to amend the Form M–1 information collection (1210–0116) by adding new questions requiring MEWAs (plan and non-plan MEWAs) that offer or provide coverage for medical care to identify each participating employer in the MEWA by name and EIN. MEWAs that are not unfunded or insured must also provide participating employer’s percentage of the total contributions (employer and employee) made by all employer participating in a MEP. This information is currently reported as a non-standard attachment as part of the Form 5500 filing. The reporting of this burden is being moved from OMB control number 1210–0110. For the 2021 plan year, pending the implementation of the Form M–1 changes, plan MEWAs that offer or provide coverage for medical care would be required provide participating employer information as a nonstandard attachment to the 2021 Form 5500 Annual Return/Report in a similar manner as currently required. A summary of paperwork burden estimates follows: Agency: DOL–EBSA. Type of Review: New information collection. Title: Annual Information Return/ Report of Employee Benefit Plan. Affected Public: Individuals or households; Private Sector—Business or other for-profit; Not-for-profit institutions. Forms: Form 5500 and Schedules. Total Respondents: 804,000. Total Responses: 804,000. Frequency of Response: Annually. Estimated Total Burden Hours: 588,000. Total Annualized Costs: $275 million. Agency: Department of Treasury— IRS. Type of Revision: Revision of existing collection. Title of Collection: Annual Return/ Report of Employee Benefit Plan. E:\FR\FM\15SEP2.SGM 15SEP2 51506 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules OMB Control Number: 1545–1610. Affected Public: Individuals or households; Private Sector—Business or other for-profit; Not-for-profit institutions. Forms: Form 5500 and Schedules. Total Respondents: 804,000. Total Responses: 804,000. Frequency of Response: Annually. Estimated Total Burden Hours: 354,000. Total Annualized Costs: $142 million. Agency: PBGC. Type of Revision: Revision of existing collection. Title of Collection: Annual Information Return/Report. OMB Control Number: 1212–0057. Affected Public: Individuals or households; Private Sector—Business or other for-profit; Not-for-profit institutions. Forms: Form 5500 and Schedules. Total Respondents: 24,744. Total Responses: 24,744. Frequency of Response: Annually. Estimated Total Burden Hours: 1,242. Total Annualized Costs: $2 million. Agency: DOL–EBSA. Type of Revision: Revision of existing collection. Title of Collection: Annual Report for Multiple Employer Welfare Arrangements. OMB Control Number: 1210–0116. Affected Public: Not-for-profit institutions, Businesses or other forprofits. Forms: Form M–1. Total Respondents: 687. Total Responses: 687. Frequency of Response: Annually. Estimated Total Burden Hours: 141. Total Annualized Costs: $126,556. Agency: DOL–EBSA. Type of Revision: Revision of existing collection. Title of Collection: Summary Annual Report Requirement. OMB Control Number: 1210–0040. Affected Public: Not-for-profit institutions, Businesses or other forprofits. Total Respondents: 761,170. Total Responses: 177,793,034. Frequency of Response: Annually. Estimated Total Burden Hours: 1,110,692. Total Annualized Costs: $20,320,505. The DOL solicits comments regarding whether or not any recordkeeping beyond that which is usual and customary is necessary to complete the Form 5500 Annual Return/Report. Comments are also solicited on whether the Form 5500 Annual Return/Report instructions are generally sufficient to enable filers to complete the Form 5500 Annual Return/Report without needing to refer to the statutes or regulations. Paperwork and Respondent Burden: Estimated time needed to complete the forms listed below reflects the combined requirements of the IRS, the DOL, and the PBGC. The times will vary depending on individual circumstances. The estimated average times are: Pension plans Large Form 5500 ..................................... Sch A ............................................. Sch MB .......................................... Sch SB ........................................... Sch C ............................................. Sch D ............................................. Sch G ............................................. Sch H ............................................. Sch I ............................................... Sch R ............................................. Form 5500–SF ............................... Sch MEP ........................................ Small, filing Form 5500 1 hr, 51 min .................................. 2 hr, 52 min .................................. 8 hr, 49 min .................................. 6 hr, 38 min .................................. 2 hr, 52 min. 1 hr, 39 min .................................. 14 hr, 22 min. 11 hr, 51 min. 2 hr, 6 min .................................... 1 hr, 45 min .................................. ....................................................... 10 min. 1 2 8 6 hr, hr, hr, hr, Small, filing 5500–SF 19 min. 52 min. 6 min .................................... 49 min .................................. 8 hr, 6 min. 6 hr, 49 min. 20 min. 2 hr, 6 min. 1 hr, 7 min. ....................................................... 2 hr, 35 min. Welfare plans that include health benefits Small, unfunded, combination unfunded/fully insured, or funded with a trust 5500–SF Large Form 5500 ............................................... Sch A ...................................................... Sch C ...................................................... Sch D ...................................................... Sch G ...................................................... Sch H ...................................................... Sch I ........................................................ Form 5500–SF ........................................ 1 hr, 45 min ........................................... 3 hr, 40 min ........................................... 3 hr, 38 min. 1 hr, 52 min ........................................... 11 hr, 0 min. 12 hr, 46 min. ................................................................ ................................................................ 1 hr, 14 min. 2 hr, 43 min. 20 min. 1 hr, 56 min. 2 hr, 35 min. Welfare plans that do not include health benefits khammond on DSKJM1Z7X2PROD with PROPOSALS2 Large Form 5500 ..................................... Sch A ............................................. Sch C ............................................. Sch D ............................................. Sch G ............................................. Sch H ............................................. Sch I ............................................... Form 5500–SF ............................... Sch M1 ........................................... VerDate Sep<11>2014 17:43 Sep 14, 2021 Small, filing Form 5500 1 hr, 45 min .................................. 3 hr, 40 min .................................. 3 hr, 38 min. 1 hr, 52 min .................................. 11 hr, 0 min. 12 hr, 46 min. ....................................................... ....................................................... 15 min. Jkt 253001 PO 00000 Frm 00020 Fmt 4701 Small, filing Form 5500–SF 1 hr, 14 min. 2 hr, 43 min. 20 min. 1 hr, 56 min. ....................................................... Sfmt 4702 E:\FR\FM\15SEP2.SGM 2 hr, 35 min. 15SEP2 51507 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Direct filing entities Form 5500 ............. Sch A ..................... Sch C ..................... Sch D ..................... Sch G ..................... Sch H ..................... Sch DCG ................ Master trusts CCTs PSAs 103–12 IEs GIAs 1 hr, 50 min ......... 2 hr, 54 min ......... 3 hr, 2 min ........... 1 hr, 30 min ......... 12 hr, 34 min ....... 12 hr, 19 min ....... ............................. 1 hr, 30 min ......... 2 hr, 48 min ......... 1 hr, 2 min ........... 48 min ................. ............................. 11 hr, 47 min ....... ............................. 1 hr, 23 min ......... 2 hr, 46 min ......... 29 min ................. 34 min ................. ............................. 11 hr, 43 min ....... ............................. 1 hr, 38 min ......... 2 hr, 51 min ......... 1 hr, 56 min ......... 1 hr, 1 min ........... 8 hr, 3 min ........... 12 hr, 16 min ....... ............................. 1 hr, 26 min ......... 3 hr, 1 min ........... 1 hr, 22 min ......... 54 min ................. ............................. 12 hr, 1 min ......... ............................. The aggregate hour burden for the Form 5500 Annual Return/Report (including schedules and short form) is estimated to be 0.9 million hours annually. The hour burden reflects filing activities carried out directly by filers. The cost burden is estimated to be $419 million annually. The cost burden reflects filing services purchased by filers. Presented below is a chart showing the total hour and cost burden of the revised Form 5500 Annual DCGs 1 hr, 50 2 hr, 52 2 hr, 42 1 hr, 39 11 hr, 6 8 hr, 36 1 hr, 33 Return/Report separately allocated across the DOL and the IRS. There is no separate PBGC entry on the chart because, as explained below, its share of the paperwork burden is very small relative to that of the IRS and the DOL. DOL Hours Pension: Large Plans .................................................................................................................... Small Plans .................................................................................................................... Welfare: Large Plans .................................................................................................................... Small Plans .................................................................................................................... Total: Large Plans .................................................................................................................... Small Plans .................................................................................................................... DFEs .............................................................................................................................. Total Plans .............................................................................................................. khammond on DSKJM1Z7X2PROD with PROPOSALS2 The paperwork burden allocated to the PBGC includes a portion of the general instructions, basic plan identification information, a portion of VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 Frm 00021 Fmt 4701 Sfmt 4702 IRS Costs Hours Costs 261,464 174,999 $62,431,639.11 87,694,622.39 142,897 176,481 $31,568,313.36 103,113,327.32 108,142 6,137 111,593,190.83 5,407,649.86 9,953 2,507 1,811,627.38 1,252,295.71 369,607 181,136 37,642 174,024,829.94 93,102,272.24 8,014,192.20 152,850 178,988 21,908 33,379,940.74 104,365,623.03 4,543,173.65 588,385 275,141,294.38 353,746 142,288,737.43 Schedule MB, a portion of Schedule SB, a portion of Schedule H, and a portion of Schedule R. The PBGC’s Estimated Share of Total Form 5500 Annual PO 00000 min. min. min. min. min. min. min. Return/Report Burden is: 1,242 Hours and $1.6 million per year. BILLING CODE 4510–29–P E:\FR\FM\15SEP2.SGM 15SEP2 51508 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules APPENDIX A - PROPOSED SCHEDULE MEP (MULTIPLE-EMPLOYER RETIREMENT PLAN INFORMATION) AND INSTRUCTIONS SCHEDULE MEP (Form 5500) Department of the Treasury Internal Revenue Service Department of Labor Employee Benefits Security Administration MULTIPLE-EMPLOYER RETIREMENT PLAN INFORMATION 0MB Nos. 1210-XXXX This schedule is required to be filed under section 104 of the Employee Retirement Income Security Act of 1974 (ERISA) and 2022 1210-XXXX Section 6058(a) of the Internal Revenue Code (the Code) This Form is Open to Public Inspection File as an attachment to Form 6600. ► For calendar plan year 202X or fiscal plan year beginning and ending A Name of plan EIN C Plan administrator's name as shown on line 2a of Form 5500 Type of Multiple-Employer Pension Plan. All multiple-employer pension plans must complete. Line 1 Check the appropriate box to indicate type of multiple-employer pension plan. (See Instructions) a[] association retirement plan (See 29 CFR 2510.3-55) (Complete Part II) b [] professional employer organization (PEO) plan (See 29 CFR 29 CFR 2510.3-55) (Complete Part II) c [] pooled employer plan (PEP) (See 29 CFR 2510.3-44) (Complete Parts II and Ill) d [] other multiple-employer pension plan (Describe)._ _ _ _ _ _ _ _ _ _ _ _ _ (Complete Part II) ~~;1.,~fi~ Participating Employer Information. All multiple-employer pension plans that are subject to section 210(a) of ERISA (see instructions for filing the Form 5500) must complete Part II, in addition to Part I, in accordance with the instructions, to report the information for each employer participating in the MEP. Line 2 Participating Employer Information. Complete as many entries as needed to list the required information for each participating employer that is not an individual person (See instructions). 2a. Name of Participating 2b. EIN 2c. Percentage of Total Contributions for the Plan Year 2d. Aggregate Account Balances Attributable to Participating Employer 2b. EIN 2c. Percentage of Total Contributions for the Plan Year 2d. Aggregate Account Balances Attributable to Participating Employer Employer 2a. Name of Participating Employer 2e. Does the plan include any individuals not participating through an employer or who are individual working owners? [] Yes [] No 2f. If you answer "Yes" in line 2e, enter a good faith estimate of percentage of total contributions made by all such individuals that are not listed on line 2a during the plan year. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.008</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 CAUTION Do not individually list information for working owners (see instructions and 29 CFR 2510.3-55( d)(2)) or other individuals who are participants or beneficiaries in the plan or arrangement that are no longer associated with a particular participating employer or participating employer plan. (See instructions). Providing identifying information for individuals may result in rejection of this filing. If there are any such individuals in the plan, answer "Yes" to line 2e and provide the total information for all such individuals, without providing names or other identifying information. 51509 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 2g. If you answer "Yes" in Line 2e, enter the aggregate account balances for all such individuals that are not listed on line 2a. laifjt,;~] Pooled Employer Plan Information. Pooled employer plans must answer all of the questions in Part 111, in addition to completing all of Parts I and II. Line 3. Has the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) acknowledged in writing that it is the named fiduciary and plan administrator? [] Yes [] No Line 4. Has the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) acknowledged in writing its administrative responsibilities for the plan? [] Yes [] No Line 5. Is the pooled plan provider currently in compliance with the Form PR (Pooled Plan Provider Registration Statement) requirements? (See instructions and 29 CFR 2510.3-44)[] Yes [] No 5a If "Yes" is checked, enter the ACK ID for the most recent Form PR that was required to be filed under the Form PR filing requirements. (Failure to enter a valid ACK ID will subject the Form 5500 filing for any PEP operated by the pooled plan provider to be rejected as incomplete.) ACK ID _ _ _ _ _ _ _ _ _ _ _ __ Line 6. Have services been provided to the plan through affiliates or other related parties to the pooled plan provider? [] Yes [] No 6a If "Yes," are you relying on a prohibited transaction exemption? If you answer yes, enter the PTE(s) on which you are relying. [] Yes (enter PTE _ __,[]No DRAFT Schedule MEP (Form 5500) khammond on DSKJM1Z7X2PROD with PROPOSALS2 2021 v. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 xx EP15SE21.009</GPH> For Paperwork Reduction Act Notice, see the Instructions for Form 5500. 51510 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules PROPOSED INSTRUCTIONS FOR SCHEDULE MEP 2022 Instructions for Schedule MEP (Form 5500) (Multiple-Employer Retirement Plan Information) General Instructions The Schedule MEP provides information about multiple-employer pension plans (MEPs). It consists of three parts. All MEPs must complete Parts I and II to indicate the specific type of plan or arrangement, to complete a list of participating employers, and to provide certain required information. Part III only needs to be completed by pooled employer plans to answer questions specific to pooled employer plans and the pooled plan provider that sponsors and administers the pooled employer plan. Who Must File Schedule MEP (Form 5500) must be attached to a Form 5500 filed for a pension plan that checks the "multiple employer plan" box on Part I of Form 5500, to provide information specific to such plan, including a list of participating employers and related information. Remember to check the Schedule MEP box on the Form 5500 (Part II, line 10a(5)) to indicate that Schedule MEP is attached to the Form 5500. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.010</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Welfare plans are not required to file the Schedule MEP. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51511 Specific Instructions Part I Type of Multiple-Employer Pension Plan Line 1. For purposes of completing the Schedule MEP, check the element that best describes the type of plan. Element (a) Association Retirement (Defined Contribution) Plan. Check this box if the Schedule MEP is being filed for a defined contribution MEP that is an Association Retirement Plan and complete Part II. A defined contribution pension plan sponsored by a bona fide group or association of employers is a MEP that is an Association Retirement Plan if: (1) the group or association has at least one substantial business purpose unrelated to offering and providing employee benefits to its employer members and their employees; (2) each employer member directly acts as an employer of at least one employee participating in the MEP; (3) group or association has a formal organizational structure, (4) the group or association is controlled by its employer members; (5) employer members of the group or association have a commonality of interest; (6) plan participation is limited to employees and former employees of its employer members, and their beneficiaries; (7) the group or association must not be a bank or trust company, insurance issuer, broker-dealer, or other similar financial services firm (including a pension record keeper or third-party administrator) or owned or controlled by such an entity or any subsidiary or affiliate of such an entity, other than to the extent such an entity, subsidiary or affiliate participates in the group or association in its capacity as an employer member; and (8) the group or association CAUTION. Do not check this box for a defined benefit plan sponsored by a bona fide group or association of employers. See instructions for element (d) Other Multiple Employer Pension Plan. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.011</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 meets any other applicable conditions under 29 CFR 2510.3-SS(b). 51512 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Element (b) Professional Employer Organization (Defined Contribution) Plan (PEO Plan). Check this box if the Schedule MEP is being filed for a defined contribution MEP that is a Professional Employer Organization Plan (PEO Plan) and complete Part II. For this purpose, a professional employer organization (PEO) is a human-resource company that contractually assumes certain employer responsibilities of its client employers. A defined contribution pension plan sponsored by a PEO is a MEP that is a PEO Plan if the PEO (1) performs substantial employment functions on behalf of its client employers, and maintains adequate records relating to such functions; (2) have substantial control over the functions and activities of the MEP as the plan sponsor, the plan administrator, and a named fiduciary and continues to have plan obligations to MEP participants after the client employer no longer contracts with the organization; (3) ensures that each client employer that adopts the MEP acts directly as an employer of at least one employee who is a participant covered under the MEP; (4) ensures that participation in the MEP is available only to employees and former employees of the PEO and client employers, employees and former employees of former client employers who became participants during the contract period between the PEO and former client employers, and their beneficiaries; and (5) meets any other applicable conditions under 29 CFR 29 CFR 2510.3-55(c). CAUTION. Do not check this box for a defined benefit plan sponsored by a PEO. See instructions for element (d) Other Multiple Employer Pension Plan. Element (c) Pooled Employer Plan (PEP). Check this box if the Schedule MEP is being filed for a MEP that is a PEP plan and complete Parts II and III. A pooled employer plan operated maintained for the purpose of providing benefits to the employees of two or more employers; (2) the plan is a qualified retirement plan or a plan funded entirely with individual retirement accounts VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.012</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 by a "pooled plan provider" is a MEP if: (1) the plan is an individual account plan established or Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51513 (IRA-based plan); and (3) the terms of the plan meets certain requirements set forth in BRISA section 3(43). A "pooled plan provider" with respect to a pooled employer plan is defined in BRISA section 3(44) and Code section 413(e) to mean a person that: 1. is designated by the terms of the plan as a named fiduciary under BRISA, as the plan administrator, and as the person responsible to perform all administrative duties that are reasonably necessary to ensure that the plan meets the Code requirements for tax-favored treatment and the requirements of BRISA and to ensure that each employer in the plan takes actions as the Secretary of Labor or the pooled plan provider determines necessary for the plan to meet Code and BRISA requirements, including providing to the pooled plan provider any disclosures or other information that the Secretary may require or that the pooled plan provider otherwise determines are necessary to administer the plan or to allow the plan to meet Code and BRISA requirements; 2. acknowledges in writing its status as a named fiduciary under BRISA and as the plan administrator; 3. is responsible for ensuring that all persons who handle plan assets or are plan fiduciaries are bonded in accordance with BRISA requirements; and 4. registers as a pooled plan provider by filing a Form PR in accordance with 29 CPR 2510.3-44. Note. The term "pooled employer plan" does not include a multiemployer plan or plan maintained does not include a plan established before January 1, 2021, which is the effective date of the SECURE Act provisions allowing pooled employer plans to begin operating, unless the plan VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.013</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 by employers that have a commonality of interest other than having adopted the plan. The term also 51514 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules administrator elects to have the plan treated as a pooled employer plan and the plan meets the Code and ERISA requirements applicable to a pooled employer plan established on or after such date, including the requirement that the pooled plan provider file a Form PR with the Department of Labor before beginning to operate any pooled employer plan(s). CAUTION. The pooled plan provider must be the same as the person identified as the plan sponsor and administrator in Part II of the Form 5500. All information for the pooled employer plan and the pooled plan provider operating the plan reported on the Form 5500, including Schedule MEP, must match the information reported on the Form PR Failure to use consistent identifying information could result in correspondence from the Department of Labor or the Internal Revenue Service. Element (d) Other Multiple-Employer Pension Plan. Check this box, describe the type of MEP (e.g., defined benefit multiple-employer pension plan or collectively bargained multipleemployer pension plan that did not elect to be treated as a multiemployer plan) and complete Part II of the Schedule MEP if the Schedule MEP is being filed for a plan that is maintained by more than one employer and is not one of the plans already described. Note. A multiple employer pension plan can be collectively bargained and collectively funded, but if covered by PBGC termination insurance, must have properly elected before September 27, 1981, not to be treated as a multiemployer plan under Code section 414(f)(5) or ERISA sections 3(37)(E) and 4001(a)(3) and have not revoked that election or made an election to be treated as a VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.014</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 multiemployer plan under Code section 414(f)(6) or ERISA section 3(37)(G). Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51515 Part II Multiple-Employer Plan Participating Employer Information. All MEPs (including association retirement plans, PEO plans, pooled employer plans (PEPs), and other multiple-employer pension plans) must complete Part II to report the information for each participating employer in the MEP filing the Form 5500. Complete as many entries as needed to list the required information for each participating employer that is not an individual person. Note. The amounts listed in line 2c and line 2f must equal 100 percent (with a permitted variance ofless than 1 percent due to rounding). Line 2a. Enter the name of each participating employer in line 2a. Note. If there are any working owners without employees participating in the plan, answer "Yes" to line 2e and provide the total contribution and account balance information for all such individuals on lines 2f and 2g, without providing names or other identifying information. For purposes of completing this schedule, a "working owner'' has the same meaning as in 29 CFR 2510.3-55(d)(2). Line 2b. Enter the EIN of the participating employer. CAUTION. Do not enter SSNs in lieu of an EIN. The Schedule MEP is open to public inspection, and the contents are public information and are subject to publication on the Internet. Because of privacy concerns, the inclusion of a SSN or any portion thereof on this Schedule MEP may result in Line 2c. Enter a good faith estimate of the participating employer's percentage of the total contributions made by all participating employer (including the total contribution amount for VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.015</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 the rejection of the filing. 51516 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules individuals reported on line 2f) during the plan year. If a participating employer made no contributions for the plan year (including participant contributions), enter "-0-" on line 2c. Line 2d. Enter the aggregate account balances for the participating employer, determined as the sum of the account balances of the employees of such employer (and the beneficiaries of such employees). Line 2e. If the plan includes any individuals not participating through an employer or who are individual working owners, answer "Yes" to line 2e and complete lines 2f and 2g. Do not identify such individuals on line 2a. Line 2f. If the answer to line 2e is "Yes," enter a good faith estimate of the percentage of total contributions made by such individuals that are not listed on line 2a. Line 2g. If the answer to line 2e is "Yes," enter the aggregate account balances for all individuals that are not listed on line 2a. Part III. Pooled Employer Plan Information. If this filing is for a pooled employer plan (PEP), you must answer lines 3, 4, 5, and 6. Line 3. You must indicate whether the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) acknowledged in writing to all the participating employers that it is the named fiduciary and plan administrator. Note: You must also identify the pooled plan provider as the named fiduciary on Schedule C and Line 4. You must indicate whether the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) has acknowledged in writing its administrative VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.016</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 report all required service provider information. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51517 responsibilities for the plan. These administrative duties include conducting proper testing with respect to the plan and the employees of each employer in the plan that are necessary to comply with all applicable qualification and other tax requirements, and ensuring that all plan fiduciaries and persons who handle plan funds are bonded in accordance with section 412 ofERISA. Line 5. To be able to operate one or more pooled employer plans, pooled plan providers must satisfy a number of conditions, including compliance with the Form PR (Pooled Plan Provider Registration) requirements. See 29 CFR 2510.3-44. Pooled employer plans must answer whether the pooled plan provider that is the plan sponsor and administrator for the pooled employer plan has complied with the Form PR registration requirements. If you check "Yes" in line 5 to indicate that the pooled plan provider has complied with the registration requirements, enter in line Sa the Receipt Confirmation Code (ACK ID) for the most recent Form PR that was required to be filed under the Form PR filing requirements. Failure to enter a valid Receipt Confirmation Code (ACK ID) for the pooled plan provider's most recent Form PR will subject the Form 5500 filing to rejection as incomplete. Line 6. If services have been provided to the plan through affiliates or other related parties to the pooled plan administrator, you must answer "Yes" to line 6 and complete line 6a. If you are relying on a prohibited transaction exemption (PTE), enter the PTE number. If you answer "No," you must complete Schedule G to report nonexempt transactions. For these purposes, the term affiliate includes all persons who are treated as a single (o) of the Internal Revenue Code and are expected to provide services to pooled employer plans sponsored by the pooled plan provider, and any officer, director, partner, employee, or relative (as VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.017</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 employer with the person intending to be a pooled plan provider under section 414(b ), ( c), (m), or 51518 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules defined in section 3(15) of the Act) of such person; and any corporation or partnership of which VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.018</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 such person is an officer, director, or partner. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51519 APPENDIX B-PROPOSED SCHEDULE DCG (INDIVIDUAL PLAN INFORMATION) AND INSTRUCTIONS Individual Plan Information Schedule DCG Department of Labor Department of the Treasury Internal Revenue Service 0MB Nos. 1210XXXX 1210-XXXX This schedule is required to be filed under Section 103 of the Employee Retirement Income Security Act (ERISA) and Section 6058(a) of the Internal Revenue Code (Code) 2022 This Fonn is Open to Public lnsped:ion. ► FIie as an attachment to Form 5500 A Name of DCG B C Three-di it Ian number for DCG PN EIN for DCG ► AA Individual Plan Identification Information Complete a separate Schedule DCG for each individual plan whose reporting obligations are intended to be satisfied by the DCG's Form 5500 filing This Schedule is for Oa single-employer plan Oa collectively-bargained plan 1a Name of plan 1b Three-digit plan number PN ► 1c Effective date of plan 2b Employer Identification Number (EIN) 2c Plan sponsor's telephone number 2d Business code 2a Plan sponsor's name (employer, if for a single-employer plan) Mailing address (include room, apt., suite no. and street, or P.O. Box) City or town, state or province, country, and ZIP or foreign postal code (if foreign, see instructions) 3 If the name and/or EIN of the plan sponsor or the plan name has changed since the last return/report filed for this plan, enter the plan sponsor's name, EIN, the plan name and the plan number from the last return/report: 3a Sponsor's name 3c Plan Name 4a Total number of participants at the beginning of the plan year. .............................................. . b Total number of participants as of the end of the plan year ................................................ . c(1) Total number of active participants at the beginning of the plan year ................................................. . 3b EIN 3d PN 4a c(2) Total number of active participants at the end of the plan year .......................................................... . d Number of participants with account balances as of the beginning of the plan year ................................... . e Number of participants with account balances as of the end of the plan year. ................................ . f Number of participants who terminated employment during the plan year with accrued benefits that were less than 100% vested ............................................................................................................................ 4d 4e 4f (a) Beginning of Year Sa Total plan assets .......................................................... . (1) Participant loans .................................................... . b Total plan liabilities VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00033 (bl End of Year 5a 5a(1) 5b Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.019</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 1:tffiL♦j Financial Information 51520 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Net assets (subtract line 5b from line 5a) C 5c Contributions received or receivable in cash from 6a Amount Sa(1) (1) Employers. (2) Participants Others (including rollovers) Sa(2) (3) Sa(3) ..................... b. Noncash contributions Sb c. Total contributions (add lines 6a(1 )-(3) and line 6(b)) ....... Sc 6d Benefit payment and payments to provide benefits: Sd(1) e Corrective distributions (see instructions) ...................................................... Se f Certain deemed distributions of participant loans (see instructions) .............. Sf g Administrative service provider's expense (salaries, fees, commissions) .................... Sg h Other expenses .......................................................................................... i Net income (loss) ..................................................................................................................... j Transfers of assets Sh (1) (2) Si Sj(1) To this plan ............................................................................................... From this plan ........................................................................................... Sj(2) •Rtffl♦j Plan Characteristics 7 Enter the applicable two-character feature codes from the List of Plan Characteristics Codes in the instructions. [I] [I] [I] [I] [I] [I] [I] [I] [I] [I] Sa Was there a failure to transmit to the plan any participant contributions within the time period described in 29 CFR 2510.3-102? Continue to answer "Yes" for any prior year failures until fully corrected. (See instructions and DOL's Voluntary Fiduciary Correction Program.) ................... Ba b Were there any nonexempt transactions with any party-in-interest?............................................ Sb c Has the plan failed to provide any benefit when due under the plan? ... ... ... .. . .. . .. . .. . ... ... ... .. . .. ~B_c_~-~-~------~ 9a If, during this plan year, any assets or liabilities were transferred from this plan to another plan(s), identify the plan(s) to which assets or liabilities were transferred. (See instructions.) 9b(2) EIN(s) 9b(3) PN(s) khammond on DSKJM1Z7X2PROD with PROPOSALS2 10 Is this a defined contribution plan subject to the minimum funding requirements of section 412 of the Code? D YesD No 11 a Does the plan satisfy the coverage and nondiscrimination tests of Code sections 41 0(b) and 401 (a)( 4) by combining this [] Yes [] No plan with any other plans under the permissive aggregation rules? 11 b If this is a Code section 401 (k) plan, check the correct box to indicate how the plan is intended to satisfy the nondiscrimination requirements for employee deferrals and employer matching contributions (as applicable) under Code sections 401 (k)(3) and 401 (m)(2)? D Design-based safe harbor method VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 □ "Prior year" ADP test Frm 00034 Fmt 4701 Sfmt 4725 □ "Current year" ADP test E:\FR\FM\15SEP2.SGM 15SEP2 □ N/A EP15SE21.020</GPH> 9b(1) Name of plan(s) Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 12 51521 If the plan sponsor is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, enter the date of the Opinion Letter / / (MM)DYYYYY) and the Opinion Letter serial number_ _ _ __ 1:ffija,jjl Accountant Opinion Information for Large Participating Plans 13 Complete lines 13a through 13c if the report of an independent qualified public accountant is attached to this Schedule DCG. a The opinion reflected in the attached report of an independent qualified public accountant for this plan is (see instructions): (1) DUnmodified (2) DQualified (3) DDisclaimer (4) D Adverse b Check the appropriate box(es) to indicate whether the IQPA performed an ERISA section 103(a)(3)(C) audit. Check boxes (1) and (2) if the audit was performed pursuant to both 29 CFR 2520.103-8 and 29 CFR 2520.103-12(d). Check box (3) if pursuant to neither. (1) DDOL Regulation 2520.103-8 (2)0 DOL Regulation 2520.103-12(d) (3)0neither DOL Regulation 2520.103-8 nor DOL Regulation 2520.103-12 d. c Enter the name and EIN of the accountant (or accounting firm) below: VerDate Sep<11>2014 Name: 17:43 Sep 14, 2021 (2) EIN: Jkt 253001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.021</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 (1) 51522 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules PROPOSED INSTRUCTIONS FOR SCHEDULE DCG 2022 Instructions for Schedule DCG (Form 5500) Individual Plan Information General Instructions Purpose of Schedule This schedule is used for a plan administrator to report information regarding each individual plan participating in a Defined Contribution Group (DCG) Reporting Arrangement, as permitted by SECURE Act section 202. Who Must File Schedule DCG must be attached to a Form 5500 filed for a DCG reporting arrangement. Each plan participating in the DCG reporting arrangement must individually complete a Schedule DCG as an attachment to the Form 5500. Remember to check Schedule DCG box on the Form 5500 (Part II, Line 10(a)(4) to indicate Schedule DCG is attached to the Form 5500. Specific Instructions Part I - DCG Information Lines A, B, and C. The information must be the same as reported in Part II of the Form 5500 to which this schedule is attached. Do not use a SSN in line C in lieu of an EIN. The Schedule DCG and its attachments are the inclusion of a SSN or any portion thereof on this Schedule DCG or any of its attachments may result in the rejection of the filing. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.022</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 open to public inspection, and the contents are public information. Because of privacy concerns, Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51523 You can apply for an EIN from the IRS online, by fax, or by mail depending on how soon you need to use the EIN. For more information, see Section 3: Electronic Filing Requirement under General Instructions to Form 5500. Part II - Individual Plan Identification Information A separate Schedule DCG must be filed for each individual plan participating in the DC Group Reporting Arrangement. Box for Single-Employer Plan. Check this box if the Schedule DCG is filed for a singleemployer plan. A single-employer plan for this reporting purpose is an employee benefit plan maintained by one employer or one employee organization (determined on a controlled group basis) in which the funds attributable to each employer are available to pay benefits only for that employer's employees. Box for Collectively-Bargained, Single-Employer Plan. Check this box if the contributions to the plan and/or the benefits paid by the plan are subject to the collective bargaining process. The contributions and/or benefits do not have to be identical for all employees under the plan. Part III - Basic Individual Plan Information Complete separately for each individual plan that participates in the DCG Reporting Arrangement. Line la. Enter the formal name of the plan or enough information to identify the plan. Abbreviate if necessary. If an annual return/report or a schedule has previously been filed on behalf of the plan, used on the prior filings. Once you use an abbreviation, continue to use it for that plan on all future annual return/report or schedule filings with the IRS, DOL, and PBGC. Do not use the same name VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.023</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 regardless of the type of form or schedule that was filed, use the same name or abbreviation as was 51524 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules or abbreviation for any other plan, even if the first plan is terminated. If the plan has changed its name from the prior year filing(s), complete line 3 to indicate that the plan was previously identified by a different name. Line lb. Enter the three-digit plan or entity number (PN) of the employer or plan administrator assigned to the plan. This three-digit number, in conjunction with the EIN entered on line 2b, is used by the IRS, DOL, and PBGC as a unique 12-digit number to identify the plan. Line le. Enter the date the plan first became effective. Line 2a. Enter the name of the plan sponsor. If the plan covers only the employees of one employer, enter the employer's name. Enter the current street address, the name of the city, the twocharacter abbreviation of the U.S. state or possession and zip code. A post office box number may be entered if the Post Office does not deliver mail to the sponsor's street address. Note. Use the IRS Form 8822-B, Change ofAddress or Responsible Party-Business, to notify the IRS if the address provided here is a change in your business mailing address or your business location. Line 2b. Enter the nine-digit EIN assigned to the plan sponsor/employer. Do not use a SSN in lieu of an EIN. Because of privacy concerns, the inclusion of a SSN or any portion thereof on this line may result in the rejection of the filing. from the IRS: • VerDate Sep<11>2014 Mail or fax Form SS-4, Application for EIN, obtained at www.irs.gov/orderforms. 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.024</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Employers without an EIN must apply for one as soon as possible. To apply for an EIN Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules • 51525 See https:/lwww.IRS.gov/Businesses and click on "Employer ID Numbers" for additional information. The EIN is issued immediately once the application information is validated. (The online application process is not yet available for corporations with addresses in foreign countries or Puerto Rico.) Line 2c. Enter the plan sponsor's telephone number, including the area code. Line 2d. Enter the six-digit business code from the list of business codes (on pages xx) that best describes the primary nature of the plan sponsor's business. Do not enter code 525100 (Insurance & Employee Benefit Funds) or 813930 (Labor Unions and Similar Labor Organizations) unless the predominant industry in which the active participants are employed is the industry of insurance and employee benefit funds, or the industry of labor unions and similar labor organizations. Line 3. If the plan sponsor's name and/or EIN have changed or the plan name has changed since the last return/report or schedule was filed for this plan, enter the plan sponsor's name, EIN, the plan name, and the plan number as it appeared on the last return/report or schedule filed. mThe failure to indicate on line 3 that a plan sponsor was previously identified by a different name or a different EIN or that the plan name has been changed could result in correspondence from the DOL and/or the IRS. Line 4a. Enter the total number of participants at the beginning of the plan year. Line 4c(l). Enter the total number of active participants at the beginning of the plan year. Line 4c(2). Enter the total number of active participants at the end of the plan year. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.025</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Line 4b. Enter the total number of participants at the end of the plan year. 51526 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules "Participant" for purpose of lines 4a(l )-4c(2) means any individual who is included in one of the categories below. 1. Active participants (for example, any individuals who are currently in employment covered by the plan and who are earning or retaining credited service under the plan) including: • Any individuals who are eligible to elect to have the employer make payments under a section 401(k) qualified cash or deferred arrangement, and • Any nonvested individuals who are earning or retaining credited service under the plan. This category does not include (a) nonvested former employees who have incurred the break in service period specified in the plan or (b) former employees who have received a "cash-out" distribution or deemed distribution of their entire nonforfeitable accrued benefit. 2. Retired or separated participants receiving benefits (for example, individuals who are retired or separated from employment covered by the plan and who are receiving benefits under the plan). This category does not include any individual to whom an insurance company has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan. 3. Other retired or separated participants entitled to future benefits (for example, any individuals who are retired or separated from employment covered by the plan and who are entitled to begin receiving benefits under the plan in the future). This category does not include any individual to whom an insurance company has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan. 4. Deceased individuals who had one or more beneficiaries who are receiving or are entitled to insurance company has made an irrevocable commitment to pay all the benefits to which the beneficiaries of that individual are entitled under the plan. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.026</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 receive benefits under the plan. This category does not include any individual to whom an Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51527 Line 4d. Enter the number of participants included on line 4a (total number of participants at the beginning of the plan year) who have account balances. For example, for a section 40l(k) plan the number entered on line 4d should be the number of participants counted on line 4a who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Line 4e. Enter the number of participants included on line 4b (total number of participants at the end of the plan year) who have account balances. For example, for a section 40l(k) plan the number entered on line 4e should be the number of participants counted on line 4b who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Line 4f. Include any individual who terminated employment during this plan year, whether or not he or she (a) incurred a break in service, (b) received an irrevocable commitment from an insurance company to pay all the benefits to which he or she is entitled under the plan, and/or (c) received a cash distribution or deemed cash distribution of his or her nonforfeitable accrued benefit. Part IV - Financial Information Note. The cash, modified cash, or accrual basis accounting methods may be used for recognition of transactions in Part IV, as long as you use one method consistently. If Form 5500 or Form 5500-SF was filed for the previous year, amounts reported on lines 5a, 5b, and 5c for the beginning of the the return/report for the preceding plan year. However, if Schedule DCG was filed in the previous year, the amount reported on lines 5a, 5b, and 5c for the beginning of the plan year must be the VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.027</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 plan year must be the same as reported for the end of the plan year for the corresponding lines on 51528 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules same as reported for the end of the plan year on the Schedule DCG filed for the previous year. Use whole dollars only. Current value means fair market value where available. Otherwise, it means the fair value as determined in good faith under the terms of the plan by a trustee or a named fiduciary, assuming an orderly liquidation at time of the determination. See ERISA section 3(26). Line 5a. Enter the total amount of plan assets at the beginning of the plan year in column (a). Do not include contributions designated for the 2022 plan year in column (a). Enter the total amount of plan assets at the end of the plan year in column (b). Line 5a(t ). Enter the current value of all loans to participants including residential mortgage loans that are subject to Code section 72(p). Include the sum of the value of the unpaid principal balances, plus accrued but unpaid interest, if any, for participant loans made under an individual account plan with investment experience segregated for each account, which are made in accordance with 29 CFR 2550.408b-1 and secured solely by a portion of the participant's vested accrued benefit. When applicable, combine this amount with the current value of any other participant loans. Do not include in column (b) a participant loan that has been deemed distributed during the plan year under the provisions of Code section 72(p) and Treasury Regulations section 1.72(p)-1, if both of the following circumstances apply: 1. Under the plan, the participant loan is treated as a directed investment solely of the participant's individual account; and If both of these circumstances apply, report the loan as a deemed distribution on line 6f. However, if either of these circumstances does not apply, the current value of the participant loan VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.028</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 2. As of the end of the plan year, the participant is not continuing repayment under the loan. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51529 (including interest accruing thereon after the deemed distribution) must be included in column (b) without regard to the occurrence of a deemed distribution. Note. After a participant loan that has been deemed distributed is included in the amount reported on line 6f, it is no longer to be reported as an asset on line 5a unless, in a later year, the participant resumes repayment under the loan. However, such a loan (including interest accruing thereon after the deemed distribution) that has not been repaid is still considered outstanding for purposes of applying Code section 72(p)(2)(A) to determine the maximum amount of subsequent loans. Also, the deemed distribution is not treated as an actual distribution for other purposes, such as the qualification requirements of Code section 401, including, for example, the determination oftopheavy status under Code section 416 and the vesting requirements of Treasury Regulations section l.41 l(a)-7(d)(5). See Q&As 12 and 19 of Treasury Regulations section 1.72(p)-1. The entry on line 5a, column (b) (plan assets at end of year) must include the current value of any participant loan included as a deemed distribution in the amount reported for any earlier year if, during the plan year, the participant resumes repayment under the loan. In addition, the amount to be entered on line 6f must be reduced by the amount of the participant loan reported as a deemed distribution for the earlier year. Line 5b. Enter the total liabilities at the beginning and end of the plan year. Liabilities to be entered here do not include the value of future pension payments to participants. The amount to be entered in line 5b for accrual basis filers includes, among other things: 1. Benefit claims that have been processed and approved for payment by the plan but have 2. Accounts payable obligations owed by the plan that were incurred in the normal operations of the plan but have not been paid; and VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.029</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 not been paid (including all incurred but not reported (IBNR) welfare benefit claims); 51530 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 3. Other liabilities such as acquisition indebtedness and any other amount owed by the plan. Line Sc. Enter the net assets as of the beginning and end of the plan year. (Subtract line Sb from Sa). Line Sc, column (b), must equal the sum of line Sc, column (a), plus lines 6g (net income (loss)) and 6h (transfers to (from) the plan). Lines 6a(l) and (2). Enter the total cash contributions received and/or receivable by the plan from employers and participants during the plan year. Plans using the accrual basis of accounting must not include contributions designated for years before the 2022 plan year on line 6a(l). Line 6a(3). Enter the amount of all other contributions including transfers or rollovers received from other plans valued on the date of contribution. Line 6b. Enter the current value, at date contributed, of securities or other noncash property. Line 6c. Enter the total cash, noncash, and other contributions received and/or receivable by the plan from employers and participants during the plan year. Line 6d. Enter the total amount of benefits paid directly to participants or beneficiaries, including payments made (and for accrual basis filers payments due) to or on behalf of participants or beneficiaries in cash, securities, or other property (including rollovers of an individual's accrued benefit or account balance); all eligible rollover distributions as defined in Code section 401(a)(3 l)(D) paid at the participant's election to an eligible retirement plan (including an IRA within the meaning of Code section 401(a)(3 l)(E)). Line 6e. Enter total amount of corrective distributions, including all distributions paid during section 401(k)(8), excess aggregate contributions under Code section 401(m)(6), and allocable income distributed. Also include on this line any elective deferrals and employee VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.030</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 the plan year of excess deferrals under section 402(g)(2)(A)(ii), excess contributions under Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51531 contributions distributed or returned to employees during the plan year as well as any attributable income that was also distributed. Line 6f. Enter the total amount of certain deemed distributions of participant loans, including a participant loan that has been deemed distributed during the plan year under the provisions of Code section 72(p) and Treasury Regulations section 1.72(p)-l only if both of the following circumstances apply: 1. Under the plan, the participant loan is treated as a directed investment solely of the participant's individual account; and 2. As of the end of the plan year, the participant is not continuing repayment under the loan. If either of these circumstances does not apply, a deemed distribution of a participant loan should not be reported on line 6d. Instead, the current value of the participant loan (including interest accruing thereon after the deemed distribution) must be included on line Sa(l )), column (b) (participant loans - end of year), without regard to the occurrence of a deemed distribution. Line 6g. The amount to be reported for expenses involving administrative service providers (salaries, fees, and commissions) during the plan year includes the total fees paid (or in the case of accrual basis plans, costs incurred during the plan year but not paid as of the end of the plan year) by the plan for, among others: 1. Salaries to employees of the plan; advice, and securities brokerage services; 3. Contract administrator fees; and VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.031</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 2. Fees and expenses for accounting, actuarial, legal, investment management, investment 51532 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 4. Fees and expenses for individual plan trustees, including reimbursement for travel, seminars, and meeting expenses. Line 6h. Other expenses (paid and/or payable) include other administrative and miscellaneous expenses paid by or charged to the plan during the plan year, including among others office supplies and equipment, telephone, and postage. Part V - Plan Characteristics Line 7. Enter all applicable plan characteristics codes that applied during the reporting year from the List of Plan Characteristics Codes shown in the instructions for Form 5500. Part VI - Compliance Questions Line 8a. Plans that check "Yes," must enter the aggregate amount of all late contributions for the year. The total amount of the delinquent contributions must be included on line 8a for the year in which the contributions were delinquent and must be carried over and reported again on line 8a for each subsequent year ( or on line 4a of Schedule H or I of the Form 5 500 if not eligible to file the Form 5500-SF or not eligible or choosing not to rely on a DCG Form 5500 filing to satisfy the plan's reporting requirement in the subsequent year) until the year after the violation has been fully corrected by payment of the late contributions and reimbursement of the plan for lost earnings or profits. If no participant contributions were received or withheld by the employer during the plan year, answer "No." An employer holding participant contributions commingled with its general assets after general assets will have engaged in a prohibited use of plan assets (see ERISA section 406). If such a nonexempt prohibited transaction occurred with respect to a disqualified person (see VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.032</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 the earliest date on which such contributions can reasonably be segregated from the employer's Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51533 Code section 4975(e)(2)), file IRS Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, with the IRS to pay any applicable excise tax on the transaction. Line Sb. Check "Yes" if any nonexempt transaction with a party-in-interest occurred. Do not check "Yes" with respect to transactions that are: (1) statutorily exempt under Part 4 of Title I of ERISA; (2) administratively exempt under ERISA section 408(a); (3) exempt under Code sections 4975(c) or 4975(d); (4) the holding of participant contributions in the employer's general assets for a welfare plan that meets the conditions ofERISA Technical Release 92-01; or (5) delinquent participant contributions or delinquent loan repayments reported on line 8a. You may indicate that an application for an administrative exemption is pending. If you are unsure whether a transaction is exempt or not, you should consult either with a qualified public accountant, legal counsel, or both. If the plan is a qualified pension plan and a nonexempt prohibited transaction occurred with respect to a disqualified person, an IRS Form 5330 is required to be filed with the IRS to pay the excise tax on the transaction. Plans that check "Yes" must enter the amount. Nonexempt transactions. Nonexempt transactions with a party-in-interest include any direct or indirect: A. Sale or exchange, or lease, of any property between the plan and a party-in-interest. B. Lending of money or other extension of credit between the plan and a party-in-interest. D. Transfer to, or use by or for the benefit of, a party in-interest, of any income or assets of the plan. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.033</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 C. Furnishing of goods, services, or facilities between the plan and a party-in-interest. 51534 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules E. Acquisition, on behalf of the plan, of any employer security or employer real property in violation ofERISA section 407(a). F. Dealing with the assets of the plan for a fiduciary's own interest or own account. G. Acting in a fiduciary's individual or any other capacity in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries. H. Receipt of any consideration for his or her own personal account by a party-in-interest who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan. Party-in-Interest. For purposes of this form, party-in interest is deemed to include a disqualified person. See Code section 4975(e)(2). The term "party-in-interest" means, as to an employee benefit plan: A. Any fiduciary (including, but not limited to, any administrator, officer, trustee, or custodian), counsel, or employee of the plan; B. A person providing services to the plan; C. An employer, any of whose employees are covered by the plan; D. An employee organization, any of whose members are covered by the plan; 1. the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation; VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.034</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 E. An owner, direct or indirect, of 50% or more of: Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51535 2. the capital interest or the profits interest of a partnership; or 3. the beneficial interest of a trust or unincorporated enterprise which is an employer or an employee organization described in C or D; F. A relative of any individual described in A, B, C, or E; G. A corporation, partnership, or trust or estate of which (or in which) 50% or more of: 1. the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation, 2. the capital interest or profits interest of such partnership, or 3. the beneficial interest of such trust or estate, is owned directly or indirectly, or held by persons described in A, B, C, D, or E; H. An employee, officer, director ( or an individual having powers or responsibilities similar to those of officers or directors), or a 10% or more shareholder directly or indirectly, of a person described in B, C, D, E, or G, or of the employee benefit plan; or I. A 10% or more (directly or indirectly in capital or profits) partner or joint venture of a person described in B, C, D, E, or G. Line 8c. You must check "Yes" if any benefits due under the plan were not timely paid or not paid in full. This would include required minimum distributions to 5% owners who have attained 72 whether or not retired and/or non-5% owners who have attained 72 and have retired outstanding amounts that were not paid when due in previous years that have continued to remain unpaid. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.035</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 or separated from service; see Code section 401(a)(9). Include in this amount the total of any 51536 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Note: In the absence of other guidance, filers do not need to report on this line unpaid required minimum distribution (RMD) amounts for participants who have retired or separated from service, or their beneficiaries, who cannot be located after reasonable efforts or where the plan is in the process of engaging in such reasonable efforts at the end of the plan year reporting period. Plan administrators and employers should review their plan documents for written procedures on locating missing participants. Although the Department of Labor's Field Assistance Bulletin 201401 is specifically applicable to terminated defined contribution plans, employers and plan administrators of ongoing plans may want to consider periodically using one or more of the search methods described in the Field Assistance Bulletin in connection with making reasonable efforts to locate RMD-eligible missing participants. Line 9a. Check "Yes" if all of the plan assets (including insurance/annuity contracts) were distributed to the participants and beneficiaries, legally transferred to the control of another plan, or brought under the control of the PBGC. Line 9b. Enter infonnation concerning assets and/or liabilities transferred from this plan to another plan(s) (including spinoffs) during the plan year. A transfer of assets or liabilities occurs when there is a reduction of assets or liabilities with respect to one plan and the receipt of these assets or the assumption of these liabilities by another plan. Enter the name, plan sponsor EIN, and PN of the transferee plan(s) involved on lines 9b(l), (2), and (3), respectively. Do not use a SNN in place of an EIN or include an attachment that contains visible SSN. Note. A distribution of all or part of an individual participant's account balance that is IRS Form 5 310-A, Notice of P Ian Merger or Consolidation, Spino.ff, or Transfer ofP Ian Assets or Liabilities; Notice of Qualified Separate Lines of Business, must be filed at VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.036</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 reportable on Form 1099-R should not be included on line 9c. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51537 least 30 days before any plan merger or consolidation or any transfer ofplan assets or liabilities to another plan. There is a penalty for not filing IRS Form 5310-A on time. Line 10. Check "Yes" if this is a defined contribution plan subject to the minimum funding requirements of Code section 412. Line lla. Check "Yes" if this plan was permissively aggregated with another plan to satisfy the requirements of Code sections 410(b) and 401(a)(4). Generally, each single plan must separately satisfy the coverage and nondiscrimination requirements. However, generally, an employer may designate two or more separate plans as a single plan for purposes of applying the ratio percentage test of Treasury Regulations section 1.41 0(b )-2(b )(2) or the nondiscriminatory classification test of Treasury Regulations section 1.410(b)-4. Two or more plans that are permissively aggregated and treated as a single plan for purposes of the minimum coverage test of Code section 4 IO(b) must also be treated as a single plan for purpose of the nondiscrimination test under Code section 401(a)(4). See Treasury Regulations sections 1.410(b)-7(d) and 1.401(a)(4)-(9)(a) for more information. Line 11 b. Check the applicable method used to satisfy the nondiscrimination requirements of Code section 401(k). A safe harbor 401(k) plan is similar to a traditional 401(k) plan but, among other things, it must provide for employer contributions. These contributions may be employer matching contributions, limited to employees who defer, or employer contributions made on behalf of all eligible employees, regardless of whether they make elective deferrals. The safe harbor 401(k) plan is not subject to the complex annual nondiscrimination tests that apply to traditional 401 (k) plans. Check "Design-based safe harbor method" if this is a safe harbor 401(k) plan, that is, a SIMPLE 401(k) plan under Code section 40l(k)(l 1), a safe harbor 401(k) plan under Code section plan, by its terms, does not satisfy the safe harbor method, it generally must satisfy the regular nondiscrimination test, known as the actual deferral percentage (ADP) test. Check the appropriate VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.037</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 401(k)(12), or a qualified automatic contribution arrangement under Code section 401(k)(13). If the 51538 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules box to indicate if the plan uses the "current year" ADP test or the "prior year" ADP test. Check "current year" ADP test if the plan uses the current year testing method under which the ADP test is performed by comparing the current plan year's ADP for highly compensated employees (HCEs) with the current plan year's (rather than the prior plan year's) ADP for nonhighly compensated employees (NHCEs). Check all boxes that apply for a plan that tests different groups of employees on a disaggregated basis. Check "NIA" if the plan is not required to test for nondiscrimination under Code section 401(k)(3), such as a plan in which no HCE is benefiting. Line 12. If a plan sponsor or an employer adopted a pre-approved plan that relied on a favorable Opinion Letter of a pre-approved plan, enter the date of the most recent favorable Opinion Letter issued by the IRS and the Opinion Letter serial number listed on the letter. Part VII-Accountant's Opinion for Individual Participating Plan Line 13. If any plans participating in the arrangement have 100 participants or more, using the same rules for counting participants as for individual plan filings, including the "80 to 120" rule at 29 CFR 2520.103-l(d), each such plan must be audited and an IQPA report and audited financial statements for such plan must be attached to the Schedule DCG for that participating plan. The audit and its report must follow the same rules as required for a plan that is filing its own Form 5500 Annual Return/Report and not having any of its reporting obligations satisfied by the filing of a Form 5500 by a DCG. See Instructions to Schedule H, Line 3. Line 13a. These boxes identify the type of opinion offered by the IQP A The plan administrator should confirm with their IQPA whether the opinion was an unmodified, qualified, disclaimer of, or issued pursuant to SAS 136. Generally, an unmodified opinion is issued when the IQPA concludes that the plan's financial statements are presented fairly, in all material respects, in accordance with VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.038</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 adverse opinion before answering Line 13a. Line 13a(l ). Check if an unmodified opinion was Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51539 the applicable financial reporting framework (generally accepted accounting principles (GAAP) or another basis such as modified cash or cash basis). This also includes the form of opinion that SAS 136 permits an IQPA to issue when the IQPA has performed an ERISA section 103(a)(3)(C) audit pursuant to 29 CFR 2520.103-8 or 29 CFR 2520.103-12, or both, and had no modifications. Under 29 CFR 2520.103-8, the examination and report of an IQPA does not need to extend to statements or infonnation regarding assets held by a bank, similar institution, or insurance carrier that is regulated and supervised and subject to periodic examination by a state or federal agency provided that the statements or information are prepared by and certified to by the bank or similar institution or the insurance carrier. The term ''similar institution'' as used here does not extend to securities brokerage firms (see DOL Advisory Opinion 93-2 lA). Under 29 CFR 2520.103-12, an audit of an employee benefit plan does not need extend to the investments in a pooled investment fund that files a separate audited Form 5500 as a 103-12 IE. For more information on filing requirements for 103-12 TEs, See Section 4: What to File. Neither of these regulations exempt the plan administrator from engaging an IQPA nor from attaching the IQPA' s report to the Schedule DCG. Line 13a(2). Check if a qualified opinion was issued. Generally, a qualified opinion is issued by an IQPA when (a) the IQPA, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material but not pervasive to the financial statements or (b) the lQPA is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive. Line 13a(3). Check if a disclaimer of opinion was issued. A disclaimer of opinion is issued when the IQP A concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.039</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 the IQP A is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and 51540 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Line 13a(4). Check if the plan received an adverse accountant's opinion. Generally, an adverse opinion is issued by an IQPA Instructions for Schedule H (Form 5500) -37- when the IQPA having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements. Line 13b. Check "DOL Regulation 2520.103-8" or "DOL Regulation 2520.103-12(d)" (or both boxes, if applicable) if the IQPA performed an ERISA Section 103(a)(3)(C) audit of the plan's financial statements pursuant to DOL regulations 29 CFR 2520.103-8, 29 CFR 2520.103-12(d), or under both. If it was not performed pursuant to 29 CFR 2520.103-8 or 29 CFR 2520 103-12(d), check box (3). Note. These regulations do not exempt the plan administrator from engaging an IQPA or from attaching the IQPA's report to the Form 5500. If you check box 103-8 or 103-12(d) or both, you must also check the appropriate box on line 13a to identify the type of opinion offered by the IQPA. Line 13c. Enter the name and EIN of the accountant (or accounting firm) in the space provided on line 13c. Do not use a SSN or any portion thereof in lieu of an EIN. The Schedule DCG is open to public inspection, and the contents are public information and are subject to publication on the Internet. Because of privacy concerns, the inclusion of a SSN or any portion thereof on this VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.040</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Schedule DCG may result in the rejection of the filing. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51541 APPENDIX C-PROPOSED CHANGES TO PARTICIPATING EMPLOYER INFORMATION UNDER ERISA 103(g) TO 2021 FORM 5500/FORM 5500-SF INSTRUCTIONS To implement the SECURE Act's amendment of section 103(g) ofERISA, the instructions for the multiple-employer plan check box on Part I, line A of the 2021 Form 5500 and Form 5500SF would be modified as follows: • The participating employer information updated to add reporting of"aggregated account balance" information. • Pooled employer plans would be required to include in the Section 103(g) attachment new "Pooled Employer Plan Information," using the format provided in the instructions. • The current graphic in the Form 5500 and Form 5500-SF instructions for Part I, Line A "Box for Multiple Employer Plan" entitled "Multiple-Employer Plan Participating Employer Information," for the Section 103(g) attachment would be replaced with the following. Multiple-Employer Plan Participating Employer Information (Insert Name of Plan and EIN/PN as shown on the Form 5500) Participating Employer Information All multiple-employer pension plans must complete elements 1-4. Multiple-employer welfare plans are required to complete elements 1, 2, and 3 only. Multiple-employer welfare plans that are unfunded, fully insured, or a combination of unfunded/insured and exempt under 29 CFR 2520.104-44 from the obligation to file financial statements with their annual report are required to complete elements 1 and 2 only. Complete as many entries as needed to report the required information for all participating employers in the plan. 1. Name of participating employer 2. EIN 3. Percent of Total Contributions 4. Aggregate Account Balances Attributable Participating Employer for the Plan Year 1. Name of participating employer 2. EIN 3. Percent of Total Contributions 4. Aggregate Account Balances Attributable Participating Employer for the Plan Year Only pooled employer plans complete this section. 5. Has the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) acknowledged in writing that it is the named fiduciary? [] Yes [] No 6. Has the pooled plan provider (identified as the plan sponsor and administrator in Part II of the Form 5500) acknowledged in writing that it is the named fiduciary and plan administrator under section 3(16) of ERISA? [] Yes [] No 7. Is the pooled plan provider currently in compliance with the Form PR (Pooled Plan Provider Registration Statement) reQuirements? (See instructions and 29 CFR 2510.3-44) .. nYes n No VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.041</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Pooled Employer Plan Information 51542 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.042</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 7a If "Yes" is checked, enter the AcklD for the most recent Form PR that was required to be filed under the Form PR filing requirements. (Failure to enter a valid AcklD will subject the Form 5500 filing for any PEP operated by the pooled plan provider to rejection as incomplete.) AcklD _ _ _ _ _ _ _ __ Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51543 APPENDIX D -PROPOSED CHANGES TO 2022 FORM M-1 AND INSTRUCTIONS 1. Proposed Changes To 2022 Form M-1-Report for Multiple Employer Welfare Arrangements (MEW AS) and Certain Entities Claiming Exceptions (ECES) • PART IV A new Part IV would be added to the 2022 Form M-1 to read as follows: MEWA PARTICIPATING EMPLOYER INFORMATION Only MEWAs are required to complete Part IV. If this filing is an annual report, complete boxes 22a-22f. If this filing is a registration filing, complete boxes 22a and 22b only. Important. MEWAs that are unfunded, fully insured or combination unfunded/insured complete boxes 22a and 22b only. Complete as many repeating entries as needed to identify all participating employers in the plan. 22a. Name of Participating Employer 22b. EIN 22c. Percentage of Total Contributions for the Plan Year CAUTION. Do not individually list information for self-employed individuals or other individuals participating in the MEWA that are not associated with a particular participating employer. Providing identifying information for individuals may result in rejection of this filing. If there are any such individuals in the MEWA, answer "yes" to line 22d and provide the total contribution information for all such individuals on box 22e, without providing names or other identifying information. 22d. Does the MEWA include any self-employed individuals or individuals who are participants or beneficiaries in the MEWA that are not associated with a particular participating employer? [] Yes [] No 22e. lf"Yes," enter a good faith estimate of percentage of total contributions made by all such individuals that are not listed on box 22a during the plan year. 2. Proposed changes to 2022 Form M-1 Instructions The instructions for Form M-1 would be amended to add the following accompanying instructions for Part IV. Complete boxes 22c-22f for annual report only. Part IV- MEWA Participating Employer Information Important: Only MEW As are required to complete Part IV. If this filing is an annual report, complete boxes 22a-22f. lf this filing is a registration filing, complete boxes 22a and 22b only. MEW As that are unfunded, fully insured or combination unfunded/insured as described in 29 CFR Box 22a and 22b. Enter each participating employer in the MEWA during the plan year, identified by name and BIN number. Any employer who was obligated to make contributions to the VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.043</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 2520.104-44 complete boxes 22a and 22b only. 51544 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules MEW A for the plan year, made contributions to the MEWA for the plan year, or whose employees were participants covered under the MEWA is a "participating employer" for this purpose. CAUTION. Enter the EIN of the participating employer. Do not enter a SSN in response to questions asking for an EIN. Because of privacy concerns, the inclusion of a SSN on the Form M-1 or on an attachment that is open to public inspection may result in the rejection of the filing. Box 22c. Enter a good faith estimate of the participating employer's percentage of the total contributions made by all participating employer (including the total contribution amount for individuals reported on box 22d) during the plan year. If a participating employer made no contributions for the plan year (including participant contributions), enter" -0-" on line 2c. Box 22d. If the MEWA includes any self-employed individuals or other individuals participating in the MEWA that are not associated with a particular participating employer, answer "Yes" to box 22d and complete box 22e. Do not identify such individuals on box 22a. Box 22e. If the answer to box 22d is "Yes," enter a good faith estimate of percentage of total contributions made by such individuals that are not listed on box 22a without providing names or other identifying information. NOTE. Group insurance arrangements (GIAs) that filed a Schedule D with its Form 5500 for the current plan year are not required to complete Part IV. See the "Who Must File" paragraph in Section 1 and 29 CFR 2520.104- 43 for a description of a GIA and when a GIA may file a VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.044</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 consolidated Form 5500 on behalf of participating plans in the GIA. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51545 APPENDIX E - OTHER PROPOSED CHANGES TO 2022 FORM 5500, FORM 5500-SF, FORM 5500-EZ, SCHEDULES and INSTRUCTIONS 1. Proposed Changes to Instructions to 2022 Form 5500 and Form 5500-SF for Part I, "Multiple Employer Plan Checkbox." • Instructions for 2022 Form 5500. The instructions for Part I, Line A - "Box for Multiple- Employer Plan" would be modified as follows: • Second paragraph - Delete the phrase "multiple-employer pension plans" and add the phrase "and not required to file a Form M-1 (Report for Multiple Employer Welfare Arrangements (MEW As) and Certain Entities Claiming Exception (ECEs)), for example, multiple-employer welfare plans providing life or disability benefits," after the phrase "multiple-employer welfare plans required to file a Form 5500." • Third paragraph- Delete the phrase "Multiple-Employer Plan Participating Employer Information" and replace with the phrase "Participating Employer lnfonnation for MultipleEmployer Welfare Plan Not Providing Medical Benefits." 47 Replacing the current graphic in the Form 5500 for Part I, Line A "Box for Multiple-Employer Plan" entitled "Multiple-Employer Plan Participating Employer Information," with the following: Participating Employer Information for Multiple-Employer Welfare Plan Not Providing Medical Benefits (Insert Name of Plan and EIN/PN as shown on the Form 5500) 1. Name of participating employer 2. EIN 1. Name of participating employer 2. EIN • 3. Percent of Total Contributions for the Plan Year 3. Percent of Total Contributions for the Plan Year Add the following "Note" paragraph after the graphic. Note. Do not report the participating employer information as an attachment for multiple- '17 For 2022, it would be expected that this information would be entered as structured repeating line items or in a format that would be imported into the system, rather than a nonstandard, read-only attachment. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.045</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 employer pension plans or multiple-employer welfare plans offering or providing medical benefits. 51546 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Multiple-employer pension plans report the participating employer information on Schedule MEP. Multiple-employer welfare plans that offer or provide medical benefits report the participating employer information on Form M-1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)). • The accompanying instructions for the "Box for Multiple-Employer Plan" on the 2021 Form 5500-SF at Part I, line A, Annual Report Identification Information would be revised to read the same as the instructions for the 2022 Form 5500 described above, except all references to "Form 5500" would be changed to "Form 5500-SF." 2. Proposed Changes to 2022 Schedule H and Instructions to Standardize Data Collection For Schedule H, Line 4i Schedules of Assets • Instructions for Schedule H. Instructions for Part IV, line 4i of the 2022 Schedule H would be modified to read as follows: Line 4i. Schedules of Assets. Check "Yes" in elements (1) and/or (2) and complete, as appropriate, the "line 4i(l) Schedule of Assets Held for Investment at End of Year" and the "line 4i(2) Schedule of Assets Acquired and Disposed of During the Plan Year." You may not create your own schedules of assets in the form of an attachment or otherwise. You must complete the schedule through IFile or using EF AST-approved third-party software. If the plan both disposed of assets during the plan year and held assets for investment at end of year, you must complete both the lines 4i(l) and 4i(2) schedules. Generally, plans that are ongoing must answer "Yes" to line Notes: (1) Participant loans under an individual account plan with investment experience segregated for each account, that are made in accordance with 29 CFR 2550.408b-1 and that are VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.046</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 4i(l) and complete the "line 4i(l) Schedule of Assets Held for Investment at End of Year." Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51547 secured solely by a portion of the participant's vested accrued benefit, may be aggregated for reporting purposes in line 4i. Under identity of borrower enter "Participant loans," under rate of interest enter the lowest rate and the highest rate charged during the plan year (e.g., 8%-10%), under the cost and proceeds columns enter zero, and under current value enter the total amount of these loans. (2) Column (d) cost information for the line 4i(l) Schedule of Assets Held for Investment at End of Year and the column (c) cost of acquisitions information for the line 4i(2) Schedule of Assets Disposed of During the Plan Year may be omitted when reporting investments of an individual account plan that a participant or beneficiary directed with respect to assets allocated to his or her account (including a negative election authorized under the terms of the plan). Likewise, cost information for investments in Code sections 403(b)(l) annuity contracts and Code section 403(b )(7) custodial accounts may also be omitted. (3) Investments in Code section 403(b )(1) annuity contracts and Code section 403(b )(7) custodial accounts generally may also be treated as one asset held for investment for purposes on the line 4i schedules. For Code section 403(b )(7) accounts, show the corresponding line 1b(S)(A) categories to show the types of investment accounts. Line 4i(l ). Schedule of Assets Held for Investment at End of Year. Assets held for investment purposes for purposes of the line 4i(l) Schedule of Assets Held for Investment at End of Year include all investment assets held by the plan on the last day of the plan year other than cash and cash equivalents reported on Schedule H, line la. You must complete the Schedule of Assets Held for Investment at End of Year if you answered "Yes" to line 4(i)(l). Complete as many entries in each element as needed to identify all assets held for purposes, you cannot create your own schedules of assets, but must complete the schedules through !File or using EF AST-approved third-party software. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.047</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 investment at end of year. Although a format is shown in the instructions for informational 51548 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Schedule H, Line 4i(l) Schedule of Assets Held for Investment a Check if issuer, borrower, lessor h Name of issuer, or similar party is a party-inborrower, lessor, or interest [] similar party c Check if asset f(l) Indicate Sch. H, line lb asset g Description of h Current value categoi:y. investment, including, as applicable share class, maturity date, rate of interest, par or maturity value, including whether asset/investment is subject to surrender charge. See instructions for reporting assets held through a participantdirected brokerage account. (2) [] Check here if entry in f(l) is held through a CCT or PSA that did not file a Form 5500. (3) [] Check here if the asset is a designated investment alternative in a defined contribution plan (4) [] Check here if the asset is a qualified default investment alternative in a defined contribution plan is hard-to-value asset [] d CUSIP, CIT<, LEI, NAIC Company Code, other registration number: eCost i. If a checkbox for f(3) or f(4) is checked, enter the total annual operating expenses for the designated investment alternative expressed as a percentage of assets that was furnished to participants and beneficiaries in their most recent "404a-5 statement. (5)0 Check here if the asset is held in a participant-directed brokerage account that is required to be broken out and separately reported (see instructions for reporting assets held through a participant-directed brokerage account) For each asset held directly by the plan or investing filing entity, complete elements (a)-(i). Participant-directed brokerage account assets reported in the aggregate on line lc(l5) generally may be treated as one asset held for investment for purposes here, except investments in tangible personal property, loans, partnership or joint venture interests, real property, employer securities, and investments that could result in a loss in excess of the account balance of the participant or beneficiary who directed the transaction must be reported as separate aggregations of assets on line 4i(l), with an indication of which of the line le breakouts on which that the asset was Element (a). Check the box in element a if the issuer of the investment is a person known to be a party-in-interest to the plan. This includes when the seller, issuer, lender, or similar party is VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.048</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 reported in the balance sheet. Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51549 the employer, employee organization, a service provider to the plan, or other party interest, including a subcontractor or affiliate. Element (b). Enter the name of the seller, issuer, lender, or similar party. If the person is a plan sponsor, service provider, or DFE also identified on the Form 5500, Schedule C or any other of the Schedule H line 4 schedules, or is a DFE that files its own Form 5500, use the same name in all places. Element (c). Check here if the asset is a "hard-to-value" asset. Assets that are not listed on any national exchanges or over-the-counter markets, or for which quoted market prices are not available from sources such as financial publications, the exchanges, or the National Association of Securities Dealers Automated Quotations System (NASDAQ), are required to be identified as hardto-value assets on the Schedule of Assets Held for Investment at End of Year. Bank collective investment funds or insurance company pooled separate accounts that are primarily invested in assets that are listed on national exchanges or over-the-counter markets and are valued at least annually need not be identified as hard-to-value assets. CCTs or PSAs invested primarily in hardto-value assets must also be identified as a hard-to-value asset. A non-exhaustive list of examples of assets that would be required to be identified as hard-to-value on the proposed schedules of assets is: non-publicly traded securities, real estate, private equity funds; hedge funds; and real estate investment trusts (REITs). Check this box for all assets designated as "level 3" in the accompanying IQP A report. Element ( d). If the person is a plan sponsor, service provider, or direct filing entity also schedules, or is a DFE that files its own Form 5500, use the same identification numbers in all places. If the person identified in element c, has a CUSIP, CIK number, LEI, NAIC Company VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.049</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 identified on the Form 5500, Schedule C, or Schedule D, or any other of the Schedule H line 4 51550 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Code, or other government or market exchange registration or identity number, you must include all that apply here. Element (e). Enter the acquisition cost of the asset. Element (f). Enter in element f(l) which category the asset was part of the total on line lb and check all applicable boxes. Element (g). Enter a description of the investment, including, as applicable maturity date, rate of interest, par, or maturity value, including whether asset/investment is subject to surrender charge. Include any restriction on transferability of corporate securities. (Include lending of securities permitted under Prohibited Transactions Exemption 81-6.) Element (h). Enter current value. For purposes of the Form 5500, "current value" means fair market value where available. Otherwise, it means the fair value as determined in good faith under the terms of the plan by a trustee or a named fiduciary, assuming an orderly liquidation at time of the determination. See ERISA section 3(26). Element i. If the checkbox for element f(3) or f(4) is checked, enter the total annual operating expenses for the designated investment alternative expressed as a percentage of assets that was furnished to participants and beneficiaries in their most recent 404a-5 statement. Line 4i(2) Assets Acquired and Disposed of During Plan Year. Complete as many entries in each element as needed to identify all acquired and disposed of during the year. own schedules of assets, but must complete the schedules through !File or using EF AST-approved third-party software. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.050</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Although the format is shown in the instructions for informational purposes, you cannot create your Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51551 You must identify on the line 4i(2) Schedule each investment asset sold during the plan year except: 1. Debt obligations of the U.S. or any U.S. agency. 2. Interests issued by a company registered under the Investment Company Act of 1940 (e.g., a mutual fund). 3. Bank certificates of deposit with a maturity of one year or less. 4. Commercial paper with a maturity of 9 months or less if it is valued in the highest rating category by at least two nationally recognized statistical rating services and is issued by a company required to file reports with the Securities and Exchange Commission under section 13 of the Securities Exchange Act of 1934. 5. Participations in a bank common or collective trust. 6. Participations in an insurance company pooled separate account. 7. Securities purchased from a broker-dealer registered under the Securities Exchange Act of 1934 and either: (1) listed on a national securities exchange and registered under section 6 of the Securities Exchange Act of 1934 or (2) quoted on NASDAQ. Assets acquired and disposed of during the plan year shall not include any investment that was not held by the plan on the last day of the plan year if that investment is reported in the annual 1. The schedule of loans or fixed income obligations in default required by Schedule G, Part I· ' VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.051</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 report for that plan year in any of the following: 51552 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 2. The schedule ofleases in default or classified as uncollectible required by Schedule G, Part II; 3. The schedule of nonexempt transactions required by Schedule G, Part III; or 4. The schedule of reportable transactions required by Schedule H, line 4j. You must complete the "Schedule of Assets Acquired and Disposed of During the Plan Year'' if you answered "Yes" to line 4(i)(2). a Check if issuer, borrower, lessor or similar party is party-in-interest [] b Name of issuer, borrower, lessor, or similar party c Check if asset is hard-to-value asset d EIN, CUSIP, CIK., LEI, NAIC Company Code, other registration number: e Indicate Sch. H, line 1c asset category. fCost g Sales price h Total expenses incurred with disposal of asset, including any termination or surrender charges i Net gain/loss j Description of investment, including, as applicable share class, maturity date, rate of interest, par or maturity value, including whether asset/investment is subject to surrender charge. See instructions for reporting assets held through a participantdirected brokerage account Element (a). Indicate in element (a) whether the seller, issuer, lender, or similar party is the employer, employee organization, or other party interest, including a subcontractor or affiliate. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.052</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Schedule H, Line 4i(2) Schedule of Assets Acquired and Disposed of During the Plan Year Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51553 Element (b). Enter the name of the seller, issuer, lender, or similar party. If the person is a plan sponsor, service provider, or direct filing entity also identified on the Form 5500, Schedule C, or Schedule D, or any other of the Schedule H line 4 schedules, use the same name in all places. If the asset was held through a master trust, 103-12 IE, CCT, or PSA provide the name, EIN and PN of the entity. For DFEs use the same identifying information used on the entity's own Form 5500. Element (c). Check here if the asset is a "hard-to-value" asset. Check this box for all assets designated as "level 3" in the accompanying IQPA report. Element (d). In element (d) enter the EIN of issuer, borrower, lessor, similar party. If the person is a plan sponsor, service provider, or direct filing entity also identified on the Form 5500, Schedule C, or Schedule D, or any other of the Schedule H, line 4 schedules, use the same name in all places. Also enter, separated by commas, if applicable, the CUSIP, CIK, LEI, NAIC Company Code, or other registration number. Element (e). Enter in element (e) in which category the asset was part of the total on line l(b). Element (f). Enter the acquisition cost here. Element (g). Enter the sale price. Element (h). Enter the total expenses incurred with disposal of asset, including any termination or surrender charges. Element G). Enter a description of the investment, including maturity date, rate of interest, collateral, par, or maturity value. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.053</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Element (i). Enter the net gain (loss) on the asset 51554 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 3. Proposed Changes to Form 5500, Form 5500-SF and Instructions on counting participants for determining small plan filing status for defined contribution plans • Instructions to 2022 Form 5500. Instructions to Section 4, "What to File" section of the 2022 Form 5500 would be modified to delete the paragraph above the "Exceptions" section and replace with the following paragraph: To determine whether a plan is a "small plan" or "large plan," for defined benefit pension plans and welfare plans, use the number reported on Form 5500, line 5. Defined contribution pension plans use the number reported on the Form 5500 line 6g(l), except use the number reported on the Form 5500 line 6g(2) for defined contribution pension plans that check the "first return/report box on Part I, line B. • Instructions to 2022 Form 5500. Instructions to "80-120 Participant Rule" paragraph in Section 4, "What to File," "Exceptions" section of the 2022 Form 5500 would be modified by deleting the phrase "on line 5" in the first sentence and deleting the phrase "line 5 of the" in the second sentence. • Instructions to 2022 Form 5500. Instructions to "Short Plan Year Rule" paragraph in Section 4, "What to File," "Exceptions" section of the 2022 Form 5500 would be modified by amending the last sentence to eliminate the reference at the end to Line 5: (1) Short Plan Year Rule: *** following the requirements for a large plan, including the attachment of the Schedule H and the accountant's reports, regardless of the number of participants entered in Part II. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.054</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 If such an election was made for the prior plan year, the 2022 Form 5500 must be completed Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules • 51555 2022 Form 5500. Line 6 of Part II of 2022 Form 5500 would be modified by amending line 6, renumbering 6g as line 6g(2) and adding line 6g(l), to read as follow: 6. Number of participants (welfare plans complete only Lines 6a(1), 6(a)(2), 6b, 7c, 7d, and 7e:f3ll. *** g(1) Number of participants with account balances as of the beginning of the plan year (only defined contribution plans complete this item) ....................................................... g(2) Number of participants with account balances as of the end of the plan year (only defined contribution plans complete this item) ....................................................................... • 6g(1) 6g(2) Instructions to 2022 Form 5500. Instructions to line 6g of Part II of 2022 Form 5500 would be modified to read as follows: Line 6. Number of participants (welfare plans complete only Lines 6a(l), 6(a)(2), 6b, 7c, 7d, and 7g(3)). Line 6g. Enter in Line 6g(l) the number of participants who have account balances at the beginning of the plan year. Enter in Line 6g(2) the number of participants included on line 6f (total participants at the end of the plan year) who have account balances at the end of the plan year. For example, for a Code section 401(k) plan the number entered on line 6g should be the number of participants counted on line 6fwho have made a contribution, or for whom a contribution has been made to the plan for this plan year or any prior plan year. Welfare benefit plans and defined benefit plans should leave line 6g blank. • Instructions to 2022 Form 5500-SF. Instructions to "Who May File" section of the 2022 Form 5500-SF would be modified by amending paragraph (1) to read as follows. or (b) under 29 CFR 2520.103-1(d) was eligible to and filed as a small plan for plan year 2022 and did not cover more than 120 participants at the beginning of plan year 2020. To determine whether VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.055</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 1. The plan (a) covered fewer than 100 participants at the beginning of the plan year 2022, 51556 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules a plan is eligible, for defined benefit pension plans and welfare plans, use the number reported on Form 5500-SF line 5a. Defined contribution pension plans use the number reported on the Form 5500-SF line 5c(l), except use the number reported on the Form 5500-SF line 5c(2) for defined contribution pension plans that check the "first return/report box on Part I, line B; • 2022 Form 5500-SF. Line 5c of Part II of 2022 Form 5500-SF will be renumbered as line 5c(2) and line 5c(l) would be added to read as follow: c(l) Number of participants with account balances as of the beginning of the plan year Sc(l) (only defined contribution plans complete this item) ......................................... c(2) Number of participants with account balances as of the end of the plan year (only 5c(2) defined contribution plans complete this item) ..................................................................... • Instructions to 2022 Form 5500-SF. Instruction to second sentence ofline 5 of Part II of 2022 Form 5500-SF will be deleted and replaced with the following two sentences as follows. Line 5. *** Enter in element (c)(l) the number of participants who have account balances with account balances as of the beginning of the plan year. Enter in element (c)(2) the number of participants included on line 5b (total participants at the end of the plan year) who have account balances at the end of the plan year. • Instructions to 2022 Form 5500-SF. Instruction to line 6 of Part II of 2022 Form 5500- SF would be modified by amending paragraph (1) to read as follows: 1. The plan (a) covered fewer than 100 participants at the beginning of the plan year 2022, or (b) under 29 CFR 2520 .103-1 (d) was eligible to and filed as a small plan for plan year 2019 and Who May File Form 5500-SF on counting the number of participants to determine whether a plan is eligible); VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.056</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 did not cover more than 120 participants at the beginning of plan year 2020 (see instructions for Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51557 4. Proposed Changes to 2022 Schedule MB, Schedule SB and Schedule R, and their Instructions to Improve PBGC Reporting. • Instructions to 2022 Schedule MB. Instructions for line 3 of the 2022 Schedule MB would be modified to read as follows: Line 3. Contributions Made to Plan. Show all employer and employee contributions for the plan year. Include employer contributions made not later than 2½ months ( or the later date allowed under Code section 43 l(c)(8) and ERISA section 304( c)(8)) after the end of the plan year. Show only contributions actually made to the plan by the date this Schedule MB is signed. Add the amounts in both columns (b) and (c) and enter both results on the total line. All contributions must be credited toward a particular plan year. If any of the contributions reported in line 3 include amounts owed for withdrawal liability, report in line 3(d) the total withdrawal liability amounts included. Attach a list showing the date and amount of each withdrawal liability amount included, broken down between periodic amounts and lump sum amounts. -Label this attachment "Schedule MB, Line 3(d) - Withdrawal Liability Amounts". Schedule MB Line 3(d)- Withdrawal Liability Amounts Payment Date • Periodic Amounts Lump Sum Amounts Total Amounts 2022 Schedule MB. Line 4f of the 2022 Schedule MB would be modified to read as f If the plan is in critical status or critical and declining status, and is: • VerDate Sep<11>2014 17:43 Sep 14, 2021 Projected to emerge from critical status within 30 years, enter the plan year in which it is projected to emerge; Jkt 253001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 4f EP15SE21.057</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 follows: 51558 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules • • • Projected to become insolvent within 30 years, enter the plan year in which insolvency is expected and check here .......................................... □ Neither projected to emerge from critical status nor become insolvent within 30 years, enter "9999." Instructions to 2022 Schedule MB. Instructions for line 4f of the 2022 Schedule MB would be modified to read as follows: Line 4f. If Code C (Critical Status) or Code D (Critical and Declining Status) was entered on line 4b you must complete line 4f as follows: If, based on the most recent actuarial certification for the plan year and the most recently adopted rehabilitation plan, the plan is: • Projected to emerge from critical status within 30 years, enter the plan year in which the plan is projected to emerge from critical status. • Projected to become insolvent within 30 years, check the box provided, enter the plan year in which the insolvency is expected. In addition, attach an illustration showing year-by-year cash flow projections for the period ending with the year the plan is projected to become insolvent (or the 20th year after the valuation year if earlier) and a summary of the assumptions underlying the projections. Label this attachment "Schedule MB, Line 4/- Cash Flow Projections". • Neither projected to emerge from critical status nor become insolvent within 30 years, enter "9999." In addition, attach an illustration showing year-by-year cash flow projections ending with the 20th year after the valuation year and a summary of the assumptions underlying the projections. Label this attachment "Schedule MB, Line 4/- Cash Flow Projections". 2022 Schedule MB. Lines 6e and 6f would be modified and line 6i would be added to the 2022 Schedule MB, to read as follows: 6 Checklist of actuarial assum tions a Interest rate for 'RPA 94 current liabili '.......... ... ..... .... ... .... .. .... ..... .... ... .... .. .... ..... .... ... .... .. .... ..... .. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 6a EP15SE21.058</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 • 51559 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules b Rates s ecified in insurance or annui contracts ............ . c Mortali table code for valuation oses: (1) Males.............................................................. 6c(l) (2) Females .......................................................... 6c(2) 6d 6e % % □ NIA □ NIA 6f Estimated investment return on actuarial value of assets for ear endin h Estimated investment return on market value of assets for ear endin on the valuation date ..... i Expense loading included in normal cost reported in line 9b ( 1) lf expense load is described as a percentage of normal cost, enter the assumed percentage ... % % □ NIA 6i(l) (2) lf expense load is dollar amount that varies from year to year, enter dollar amount included in line 9b ................................................................................................................................. . 6i(2) (3) lfneither (1) nor (2) describes the expense load, check the box ............................................ 6i(3) • % □ Instructions to 2022 Schedule MB. Instructions for lines 6e and 6f would be modified and for line 6i would be added to the 2022 Schedule MB, to read as follows: Line 6e. Salary Scale. If a uniform level annual rate of salary increase is used, enter that annual rate. Otherwise, enter the level annual rate of salary increase that is equivalent to the rate(s) of salary increase used. Enter the annual rate as a percentage to the nearest .01 percent, used for a participant from age 25 to assumed retirement age. If the plan's benefit formula is not related to compensation, check the "NIA" box. Line 6f. Withdrawal Liability Interest Rate. If any employer withdrew from the plan during the plan year, enter the interest rate used to determine the present value of vested benefits for withdrawal liability determinations. If multiple interest rates were used (e.g., select and ultimate single equivalent interest rate that produces the same present value of vested benefits for withdrawal liability determinations. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.059</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 rates under ERISA 4044 or blended liabilities reflecting different interest rate structures), report the 51560 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules If different interest rates were used for different employers that withdrew during the plan year, report the weighted average interest rate used for this purpose (weighted by the applicable withdrawal liability amount). If no employers withdrew from the plan during the plan year, check "NIA". Line 6i. Expense Loading Included in Normal Cost. If the normal cost reported in line 9b does not include a load for administrative or investment expenses, check the "NIA" box. Otherwise, provide information in lines 6i(l), 6i(2), or 6i(3), whichever is applicable, about the expense load included in the normal cost. If the expense load is described as a percentage of normal cost, the reported percentage in line 6i(l) should be the expense load as a percent of the unloaded normal cost. For example, if the expense load is 5% of the normal cost, the unloaded normal cost is $100,000 and the reported normal cost is $105,000, enter 5%, not 4.8% (i.e., $5,0001$105,000). Enter rates to the nearest 0.1 percent. • 2022 Schedule MB. The title for line 8b would be modified and new lines 8b(3) and 8b(4) would be added to the 2022 Schedule MB to read as follows: I 8a (1) Is the plan required to provide a projection of expected benefit payments? (See the instructions.) If "Yes," attach a schedule ....................................................................... (2) Is the plan required to provide a Schedule of Active Participant Data? (See the instructions.) .................................................................................................................... □ Yes □ No □ Yes □ No (3) Is the plan required to provide a projection of employer contributions and withdrawal liability payments? (See instructions.) If "Yes," attach a schedule .......................................................... □ Yes □ No (4) If line 8b(l) is "Yes", enter the average age and average monthly benefits, as of the valuation date separately for terminated vested participants and retired participants and beneficiaries receiving payments (a) Average age as of the valuation date ............................................ (b) Average monthly benefit as of valuation date .............................. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4725 (1) Terminated Vested Participants E:\FR\FM\15SEP2.SGM 15SEP2 (2) Retired Participants and Beneficiaries Receivine Payments EP15SE21.060</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 8 Miscellaneous Information a If a waiver of a funding deficiency has been approved for this plan year, enter the date (MM-DD-YYYY) of the ruling letter granting the approval ........................... b Demographic, benefit, and contribution information Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules • 51561 Instructions to 2022 Schedule MB. Instructions for lines 8b(l) and 8b(2) would be modified and instructions for lines 8b(3) and 8b(4) would be added to the 2022 Schedule MB, to read as follows: Line 8b(l). Schedule of Projection of Expected Benefit Payments. Check "Yes" only if this is a multi employer plan covered by Title IV of ERISA that has 500 or more total participants as of the beginning of the plan year (i.e., reported on line 2b(3)(c), column (1)). If line 8b(l) is "Yes," in an attachment, provide a projection of benefits expected to be paid separately for active participants, terminated vested participants, and retired participants and beneficiaries receiving payments, and for the entire plan (not to include expected expenses) in each of the next fifty years starting with the current plan year of this filing assuming (1) no additional accruals, (2) experience (e.g., termination, mortality, and retirement) are in line with valuation assumptions, (3) no new entrants are covered by the plan, and (4) benefits are paid in the form assumed for valuation purposes. Use the format shown below. The attachment may be provided in a spreadsheet file. Label this attachment "Schedule MB, Line 8b(l) - Schedule of Projection of Expected Benefit Payments". Total Line 8b(2). Schedule of Active Participant Data. Check "Yes" only if this is a multi employer plan covered by Title IV of ERISA that has active participants. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.061</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Schedule MB, Line 8b(l) - Schedule of Pro_iection of Expected Benefit Payments Expected Annual Benefit Payments Retired Participants and Terminated Beneficiaries Active Receiving Vested Payments Plan Year Participants Participants Current Plan Year Current Plan Year+ 1 Etc. Current olan vear + 49 51562 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules If line 8b(2) is "Yes," attach a schedule of the active plan participant data used in the valuation for this plan year. The attachment may be provided in a spreadsheet file. Use the format shown below and label the attachment "Schedule MB, Line 8b(2) - Schedule of Active Participant Data". Schedule MB, Line 8b(2) - Schedule of Active Participant Data Attained Age No YEARS OF CREDITED SERVICE Under 1 1 to4 Average Average Accrued Accrued Mon Mon Comp. Ben No Comp. Ben No 5to9 Average Accrued Mon Comp. Ben ,.: ii: ti ii: ••• • .:t• ' "' No 40&up Average Accrued Mon Comp. Ben M: :ti , Under 25 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 to 69 70&up •• •• ,.•·I 'II' Ii: '' ' ,Ji,\!;: Expand this schedule by adding columns after the "5 to 9" column and before the "40 & up" column for active participants with total years of credited service in the following ranges: 10 to 14; 15 to 19; 20 to 24; 25 to 29; 30 to 34; and 35 to 39. For each column, enter the number of active participants with the specified number of years of credited service divided according to age group. For participants with partial years of credited service, truncate the total number of years-credited. Years of credited service are the years credited under the plan's benefit formula. Plans reporting 1,000 or more active participants on line 2b(3)(c), column (1), and using grouping, enter the average compensation of the active participants in that group. For this purpose, compensation is the compensation taken into account for each participant under the plan's benefit VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.062</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 compensation to determine benefits must also provide average compensation data. For each Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51563 formula, limited to the amount defined under section 401(a)(l 7) of the Code. Do not enter the average compensation in any grouping that contains fewer than 20 participants. Plans reporting 1,000 or more active participants on line 2b(3)(c), column (1), must also provide average accrued monthly benefits, as of the valuation date, that are payable at normal retirement age. For each grouping, enter the average accrued monthly benefit that is payable at normal retirement age for the active participants in that group. Do not enter the average accrued monthly benefit in any grouping that contains fewer than 20 participants. General Rule. In general, data to be shown in each age/service bin includes: 1. the number of active participants in the age/service bin, 2. the average compensation of the active participants in the age/service bin, and 3. the average accrued monthly benefit of the active participants in the age/service bin, using $0 for anyone who has no accrued monthly benefit. In general, information should be determined as of the valuation date. Average accrued monthly benefits may be determined as of either: 1. the valuation date or 2. the day immediately preceding the valuation date. Line 8b(3). Schedule of Projection of Employer Contributions and Withdrawal Liability Payments. Check "Yes" only if this is a multiemployer plan covered by Title IV of ERISA that has 500 or more total participants as of the beginning of the plan year (i.e., reported on of employer contributions and withdrawal liability payments expected to be received for the entire plan in each of the next ten years starting with the current plan year of this filing based on the VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.063</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 line 2b(3)(c), column (1)). If line 8b(3) is "Yes," in an attachment, separately provide a projection 51564 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules assumptions used for to determine the plan's status under line 4b. Use the format shown below and label the schedule "Schedule MB, Line 8b(3) - Schedule of Projection of Employer Contributions and Withdrawal Liability Payments". Schedule MB, Line 8b(3) - Schedule of Projection of Employer Contributions and W'Ithdraw al L'13bil'dy P ayments Employer Withdrawal Liability Payments Plan Year Contributions Total Current Plan Year Current Plan Year + 1 Etc. Current olan vear + 9 Line 8b(4)(a). Average Age. If line 8b(l) is "Yes," enter the average age nearest birthday, as of the beginning of the plan year, separately for terminated vested participants and retired participants and beneficiaries receiving payments. Line 8b(4)(b). Average Monthly Benefits. If line 8b(l) is "Yes," enter the average monthly benefit, as of the beginning of the plan year payable to terminated vested participants, assuming commencement at normal retirement age and the average monthly benefit paid during the month containing the valuation date to retired participants and beneficiaries receiving payments. Enter the monthly benefits in rounded whole dollars. • 2022 Schedule SB. Line 26 would be modified in Part VI of the 2022 Schedule SB to read as follows: 26. Demographic and Benefit Tnfonnation a. Is the plan required to provide a Schedule of Active Participants? If"Yes," see instructions regarding required attachment.................................................................................................. □ Yes □ No b. Is the plan required to provide a projection of expected benefit payments? (See instructions.) □ Yes □ No c. If line 26b is "Yes," enter the average age and average monthly benefits, as of the valuation date separately for terminated vested participants and retired participants and beneficiaries receiving payments VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4725 (a) Terminated Vested Participants E:\FR\FM\15SEP2.SGM 15SEP2 (b) Retired Participants and Beneficiaries EP15SE21.064</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 If "Yes," attach a schedule? ...................................................................................................... Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51565 Receiving Payments (1) Average age as of the valuation date ................................................... (2) Average monthly benefit as of valuation date ..................................... • Instructions to 2022 Schedule SB. The first two paragraphs of the instructions for line 26 (now line 26a) would be modified to reference line 26a instead of line 26 as shown below. In addition, instructions for lines 26b and 26c would be added as follows: Line 26a. Schedule of Active Participant Data. Check "Yes" only if (a) the plan is covered by Title IV of ERISA and (b) the plan has active participants. If line 26a is "Yes," attach a schedule of the active plan participant data used in the valuation for this plan year. Use the format shown on the following page and label the schedule "Schedule SB, Line 26a - Schedule ofActive Participant Data." Line 26b. Schedule of Projection of Expected Benefit Payments. Check "Yes" only if this plan is covered by Title IV ofERISA and has 500 or more total participants as of the valuation date. If line 26b is "Yes," in an attachment, provide a projection of benefits expected to be paid separately for active participants, terminated vested participants, and retired participants and beneficiaries receiving payments, and for the entire plan (not to include expected expenses) in each of the next fifty years starting with the current plan year of this filing assuming (1) no additional accruals, (2) experience (e.g., termination, mortality, and retirement) are in line with valuation assumptions, (3) no new entrants are covered by the plan, and (4) benefits are paid in the form spreadsheet file. Label this attachment "Schedule SB, Line 26b - Schedule of Projection of Expected Benefit Payments VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.065</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 assumed for valuation purposes. Use the format shown below. The attachment may be provided in a 51566 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Schedu Ie SB L"me 26b - ScheduI eof P ro.1ection . ofE xpectedBeneflIt P ayments ' Expected Annual Benefit Payments Retired Participants and Terminated Beneficiaries Active Receiving Vested Payments Plan Year Participants Participants Current Plan Year Current Plan Year+ 1 Etc. Current plan vear + 49 Total Line 26c(l). Average Age. If 26b is "Yes," enter the average age nearest birthday, as of the valuation date, separately for terminated vested participants and retired participants and beneficiaries receiving payments. Line 26c(2). Average Monthly Benefits. If 26b is "Yes," enter the average monthly benefit, as of the valuation date payable to terminated vested participants, assuming commencement at normal retirement age and the average monthly benefit paid during the month containing the valuation date to retired participants and beneficiaries receiving payments. Enter the monthly benefits in rounded whole dollars. • 2022 Schedule SB. The title for Part IX of the 2022 Schedule SB and line 41 would be modified and replaced with the following: Pension Funding Relief under the American Rescue Plan Act of 2021 (See instructions.) 41 lf an election was made to use the extended amortization rule for a plan year beginning on or before December 31, 2021, check the box to indicate the first plan year for which the rule a lies. □ 2019 □ 2020 □ 2021 Instructions to 2022 Schedule SB. The instructions for Part IX would be modified and replaced with the following: Part IX - Pension Funding Relief under the American Rescue Plan Act of 2021 VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.066</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 • Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51567 Line 41. If an election was made under Code section 403(c)(8) or ERISA section 303(c)(8) to apply the extended amortization rule for a plan year beginning on or before December 31, 2021, check the box to indicate the first plan year for which the rule applies (i.e., the box for the 2019, 2020, or 2021 plan). • Instructions to 2022 Schedule R. Line 13 would be modified in the instructions for Part V of the 2022 Schedule R to read as follows: Line 13. This line should be completed only by multiemployer defined benefit pension plans that are subject to the minimum funding standards (see Code section 412 and Part 3 of Title I of ERIS A). Enter the information on lines 13a through 13e for any employer that, for the plan year, (1) contributed more than five percent of the plan's total contributions or (2) was one of the top ten highest contributors. List employers in descending order according to the dollar amount of their contributions to the plan. Complete as many entries as are necessary to list all employers required to be reported. 5. Proposed Changes to 2022 Schedule H, Schedule I, Form 5500-SF, Form 5500-EZ And Their Instructions To Add New Trust Questions • 2022 Schedules H and I. The following Trust Information questions, lines 6a-6d, would be added as new Part V of 2022 Schedule H and Part Ill of 2022 Schedule I: Trust Information Line 6b. Trust EIN Line 6c. Name of trustee/custodian VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.067</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Line 6a. Name of trust 51568 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules Line 6d. Trustee's or custodian's telephone number • 2022 Form 5500-SF. Trust Information questions identical to lines 6a-6d of Schedules Hand I shown above would be added to 2022 Form 5500-SF as new Part VIII, lines 14a-14d. • 2022 Form 5500-EZ. Trust Information questions identical to lines 6a-6d of Schedules Hand I shown above would be added to Part II of2022 Form 5500-EZ as new lines 4a-4d, and current lines 4-11 would be renumbered as lines 5-12. • Instructions to 2022 Schedules H and I. Instructions for new Trust Information questions, lines 6a-6d, would be added as instructions for new Part V of 2022 Schedule H and Part III of Schedule I to read as follows. Line 6a. Enter the name of the trust. If a plan uses more than one trust, enter the primary trust in which the greatest dollar amount or largest percentage of the plan assets as of the end of the plan year is held. For example, if a plan uses three different trusts, X, Y, and Z, and the percentages of the plan assets are 35%, 45%, and 20%, respectively, Trust Y with 45% of the total plan assets would be entered in line 6a. Line 6b. Enter the EIN assigned to the employee benefit trust, if one has been issued to the trust. If you do not have a trust ETN, enter the ETN you would use on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRS, Insurance Contracts, to report distributions from employee benefit plans and on Form 945, Annual Return of Withheld Federal Income Tax, to report amounts of income tax withheld from those payments. Do not enter a SSN. A trust BIN can be obtained from the IRS by applying on Form SS-4, Application for EIN. link page at www.irs.gov/businesses and click on "Employer ID Numbers" for additional information. The EIN is issued immediately once the application information is validated. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.068</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 See the instructions for Form 5500, line 2b, to apply for an EIN. Also see the IRS EIN application Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51569 Lines 6c and 6d. Enter the name of the trustee or custodian and the trustee's or custodian's telephone number. • Instructions to 2022 Form 5500-SF. Instructions to new Trust Information questions identical to instructions to lines 6a-6d of Schedules Hand I shown above would be added to instructions for new Part VIII of 2022 Form 5500-SF, except the line numbers would be lines 14a14d. • Instructions to 2022 Form 5500-EZ. Instructions to new Trust Information questions identical to instructions to lines 6a-6d of Schedules Hand I shown above would be added to instructions for 2200 Form 5500-EZ as lines 4a-4d and current instructions to lines 4-11 would be renumbered as lines 5-12. 6. Proposed Changes to Form 5500 to add new checkboxes for proposed Schedules DCG and MEP. • 2022 Form 5500 (1) Line l0(a) of Part II of 2022 Form 5500 would be modified by adding new checkboxes for new schedules: DCG and MEP to read as follow: 10. Check all applicable boxes in 10a and 10b to indicate which schedules are attached and, where indicated, enter the number attached. (See instructions) *** VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.069</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 a. Pension Schedules 51570 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules (4) □ DCG (Individual Plan Information) (5) □ MEP (Multiple-Employer Retirement Plan Information) 7. Proposed Changes to 2022 Schedule R, Form 5500-SF, Form 5500-EZ and Their Instructions to Add New IRS Required Compliance Questions • 2022 Schedule R. New Part - IRS Compliance questions, lines 21a, 21b, and 22, would be added to 2022 Schedule R as follows: IRS Compliance Questions Line 21a. Does the plan satisfy the coverage and nondiscrimination tests of Code sections 410(b) and 401(a)(4) by combining this plan with any other plans under the permissive aggregation □ rules? Yes □ No Line 21b. If this is a Code section 401(k) plan, check the correct box to indicate how the plan is intended to satisfy the nondiscrimination requirements for employee deferrals and employer matching contributions (as applicable) under Code sections 401(k)(3) and 401(m)(2)? Design-based safe harbor method □ "Prior year" ADP test □ "Current year'' ADP test □ NIA VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.070</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 □ Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51571 Line 22. If the plan sponsor is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, enter the date of the Opinion Letter _ _ (MMDD YYYY) and the Opinion Letter serial number_ _ _ __ • 2022 Form 5500-SF. New IRS Compliance questions identical to lines 21a, 21b, and 22 of Schedule R shown above would be added to 2022 Form 5500-SF as new Part IX, lines 15a, 15b and 16. • 2022 Form 5500-EZ. The following IRS Compliance question would be added to Part V of2022 Form 5500-EZ as new line 13. Line 13. If the plan sponsor is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, enter the date of the Opinion Letter_/_/_ _ (MMDD YYYY) and the Opinion Letter serial number_ _ _ __ • Instructions to 2022 Schedule R. Instructions for new Part VII-IRS Compliance questions, lines 21a-21c and 22, would be added to instructions for 2022 Schedule R to read as follows. Line 21a. Check "Yes" if this plan was permissively aggregated with another plan to satisfy the requirements of Code sections 410(b) and 401(a)(4). Generally, each single plan must separately satisfy the coverage and nondiscrimination requirements. However, generally, an employer may designate two or more separate plans as a single plan for purposes of applying the ratio percentage test of Treasury Regulations section 1.41 0(b )-2(b )(2) or the nondiscriminatory permissively aggregated and treated as a single plan for purposes of the minimum coverage test of Code section 41 0(b) must also be treated as a single plan for purpose of the nondiscrimination test VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.071</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 classification test of Treasury Regulations section 1. 41 0(b )-4. Two or more plans that are 51572 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules under Code section 401(a)(4). See Treasury Regulations sections 1.410(b)-7(d) and 1.401(a)(4)(9)(a) for more information. Line 21b. Check the applicable method used to satisfy the nondiscrimination requirements of Code section 401(k). A safe harbor 401(k) plan is similar to a traditional 401(k) plan but, among other things, it must provide for employer contributions. These contributions may be employer matching contributions, limited to employees who defer, or employer contributions made on behalf of all eligible employees, regardless of whether they make elective deferrals. The safe harbor 401(k) plan is not subject to the complex annual nondiscrimination tests that apply to traditional 401(k) plans. Check "Design-based safe harbor method" if this is a safe harbor 401(k) plan, that is, a SIMPLE 401(k) plan under Code section 401(k)(l 1), a safe harbor 401(k) plan under Code section 401(k)(12), or a qualified automatic contribution arrangement under Code section 401(k)(13). If the plan, by its terms, does not satisfy the safe harbor method, it generally must satisfy the regular nondiscrimination test, known as the actual deferral percentage (ADP) test. Check the appropriate box to indicate if the plan uses the "current year'' ADP test or the "prior year" ADP test. Check "current year" ADP test if the plan uses the current year testing method under which the ADP test is performed by comparing the current plan year's ADP for highly compensated employees (HCEs) with the current plan year's (rather than the prior plan year's) ADP for nonhighly compensated employees (NHCEs). Check all boxes that apply for a plan that tests different groups of employees on a disaggregated basis. Check "NIA" if the plan is not required to test for nondiscrimination under Code section 401(k)(3), such as a plan in which no HCE is benefiting. favorable Opinion Letter of a pre-approved plan, enter the date of the most recent favorable Opinion Letter issued by the IRS and the Opinion Letter serial number listed on the letter. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.072</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 Line 22. If a plan sponsor or an employer adopted a pre-approved plan that relied on a Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules • 51573 Instructions to 2022 Form 5500-SF. Instructions for new IRS Compliance questions identical to instructions to lines 2la-2lc and 22 of 2022 Schedule R shown above would be added as instructions for new Part IX of 2022 Form 5500-SF, except the instruction line numbers would be lines 15a, 15b and 16. • Instructions to 2022 Form 5500-EZ. Instructions for new IRS Compliance question, line 13 would be added to instructions for Part V of 2022 Form 5500-EZ to read as follows. Line 13. If a plan sponsor or an employer adopted a pre-approved plan that relied on a favorable Opinion Letter of a pre-approved plan, enter the date of the most recent favorable Opinion Letter issued by the IRS and the Opinion Letter serial number listed on the letter. 8. Proposed change to Participant-Count Methodology for Determining Independent Qualified Public Accountant Audit Requirement for Individual Account Plans • 2022 Form 5500. Current line 6g, Number of participants with account balances as of the end of the plan year (only defined contribution plans), would be renumbered as line 6g(2) and a new line 6g(l) would be added to the 2022 Form 5500 read as follows. Line 6g(l). Number of participants with account balances as of the beginning of the plan year (only defined contribution plans). • Instructions to 2022 Form 5500. Instructions to line 6g of 2022 Form 5500 would be modified to read as follows: Line 6g. Enter in line 6g(l) the number of participants included on line 5 (total participants Enter in line 6g(2) the number of participants included on line 6f (total participants at the end of the plan year) who have account balances at the end of the plan year. For example, for a Code section VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.073</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 at the beginning of the plan year) who have account balances at the beginning of the plan year. 51574 Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 401(k) plan the number entered on line 6g(2) should be the number of participants counted on line 6fwho have made a contribution, or for whom a contribution has been made to the plan for this plan year or any prior plan year. Welfare benefit plans and defined benefit plans should leave lines 6g(l) and 6(g)(2) blank. • 2022 Form 5500-SF. Current line 5c, Number of participants with account balances as of the end of the plan year (only defined contribution plans), would be renumbered as line 5c(2) and a new line 5c(l) would be added to 2022 Form 5500-SF read as follows. • Line 5c(l). Number of participants with account balances as of the beginning of the plan year (only defined contribution plans). • Instructions to 2022 Form 5500-SF. Instructions to line 5c of 2022 Form 5500-SF would be added to read as follows: Line 5c. Enter in line 5c(l) the number of participants included on line 5a (total participants at the beginning of the plan year) who have account balances at the beginning of the plan year. Enter in line 5c(2) the number of participants included on line 5b (total participants at the end of the plan year) who have account balances at the end of the plan year. For example, for a Code section 401(k) plan the number entered on line 5c(2) should be the number of participants counted on line 6fwho have made a contribution, or for whom a contribution has been made to the plan for this plan year or any prior plan year. Welfare benefit plans and defined benefit plans should leave lines 5c(l) and 6(g)(2) blank. 9. Proposed changes to Form 5500-EZ to add new checkbox F to Part I for filer not required • 2022 Form 5500-EZ. The following new checkbox F would be added to Part I of the 2022 Form 5500-EZ. VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4725 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.074</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 toe-file Form 5500-EZ Federal Register / Vol. 86, No. 176 / Wednesday, September 15, 2021 / Proposed Rules 51575 F If you are not required to file Form 5500-EZ electronically pursuant to Treas. Regs. 301.6058-2, check this box (see instructions) .............................................. • ► D Instructions to 2022 Form 5500-EZ. Instructions to the new checkbox F added to Part I of the 2022 Form 5500-EZ would be added to read as follows: Instructions for Electronic Filing Certification Check box F only if you are filing using paper Form 5500-EZ and you are not required to electronically file Form 5500-EX pursuant to Treas. Regs. 301.6058-2, which requires a return required to be filed under Code section 6058, such as Form 5500-EZ, to be filed electronically if the filer is required by the Code or regulations to file at least 10 returns during the calendar year that includes the first day of the plan year. Statutory Authority Accordingly, pursuant to the authority in sections 101, 103, 104, 109, 110 and 4065 of ERISA and sections 6058 and 6059 of the Code, the Form 5500 Annual Return/Report and the instructions thereto are proposed to be amended as set forth herein. Signed at Washington, DC, Ali Khawar, Acting Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor. Eric Slack, Director, Employee Plans, Tax Exempt and Government Entities Division, Internal Revenue Service. Gordon Hartogensis, Director, Pension Benefit Guaranty Corporation. [FR Doc. 2021–19714 Filed 9–14–21; 8:45 am] VerDate Sep<11>2014 17:43 Sep 14, 2021 Jkt 253001 PO 00000 Frm 00089 Fmt 4701 Sfmt 9990 E:\FR\FM\15SEP2.SGM 15SEP2 EP15SE21.075</GPH> khammond on DSKJM1Z7X2PROD with PROPOSALS2 BILLING CODE 4510–29–C

Agencies

[Federal Register Volume 86, Number 176 (Wednesday, September 15, 2021)]
[Proposed Rules]
[Pages 51488-51575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19714]



[[Page 51487]]

Vol. 86

Wednesday,

No. 176

September 15, 2021

Part III





Department of Labor





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Employee Benefits Security Administration





Department of the Treasury





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Internal Revenue Service





Pension Benefit Guaranty Corporation





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26 CFR Part 301

29 CFR Parts 2520 and 4065





Proposed Revision of Annual Information Return/Reports; Proposed Rule

Federal Register / Vol. 86 , No. 176 / Wednesday, September 15, 2021 
/ Proposed Rules

[[Page 51488]]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2520

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4065

RIN 1210-AB97


Proposed Revision of Annual Information Return/Reports

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

ACTION: Notice of proposed forms revisions.

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SUMMARY: This document contains proposed changes to the Form 5500 
Annual Return/Report forms filed for employee pension and welfare 
benefit plans under the Employee Retirement Income Security Act of 1974 
(ERISA) and the Internal Revenue Code (Code). The proposed form 
revisions primarily relate to statutory amendments to ERISA and the 
Code enacted as part of the Setting Every Community Up for Retirement 
Enhancement Act of 2019 (SECURE Act). The Department of Labor (DOL), 
the Internal Revenue Service (IRS), and the Pension Benefit Guaranty 
Corporation (PBGC) (collectively ``Agencies'') are also proposing 
certain additional changes intended to improve reporting on 
multiemployer defined benefit pension plan funding, update Form 5500 
financial reporting to make the financial information collected on the 
Form 5500 more useful and usable, enhance the reporting of certain tax 
qualification and other compliance information by retirement plans, 
and, transfer to the DOL Form M-1 (Report for Multiple Employer Welfare 
Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)) 
(Form M-1) participating employer information for multiple employer 
welfare arrangements that are required to file the Form M-1. The 
proposed revisions would affect employee pension and welfare benefit 
plans, plan sponsors, administrators, and service providers to plans 
subject to annual reporting requirements under ERISA and the Code.

DATES: Written comments must be received by the Department of Labor on 
or before November 1, 2021.

ADDRESSES: You may submit written comments, identified by RIN 1210-
AB97, by one of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments. To facilitate receipt and 
processing of comments, the Agencies encourage interested parties to 
submit their comments electronically.
    Mail: Office of Regulations and Interpretations, Employee Benefits 
Security Administration, Room N-5655, U.S. Department of Labor, 200 
Constitution Ave. NW, Washington, DC 20210, Attention: Proposed Form 
5500 Revisions RIN 1210-AB97.
    Instructions: All submissions must include the agency name and 
Regulatory Identifier Number (RIN) for this rulemaking. The Agencies 
will share any comment submitted to one of the Agencies individually 
with the other Agencies. To avoid unnecessary duplication of effort, 
the DOL also will treat public comments submitted in response to this 
Notice of Proposed Forms Revisions as public comments on the Notice of 
Proposed Rulemaking to the extent they include information relevant to 
the proposed regulatory amendments. If you submit comments 
electronically, do not submit paper copies. Comments will be available 
to the public, without charge, online at: http://www.regulations.gov 
and http://www.dol.gov/agencies/ebsa and at the Public Disclosure Room, 
Employee Benefits Security Administration, Suite N-1513, 200 
Constitution Ave. NW, Washington, DC 20210.
    Warning: Do not include any personally identifiable or confidential 
business information that you do not want publicly disclosed. Comments 
are public records posted on the internet as received and can be 
retrieved by most internet search engines.

FOR FURTHER INFORMATION CONTACT: Janet Song or Colleen Brisport 
Sequeda, Office of Regulations and Interpretations, Employee Benefits 
Security Administration, U.S. Department of Labor, (202) 693-8500 for 
questions related to reporting requirements under Title I of ERISA. For 
information related to the IRS changes and questions under the Internal 
Revenue Code, contact Cathy Greenwood, Employee Plans Program 
Management Office, Tax Exempt and Government Entities, (470) 639-2503. 
For information related to PBGC changes, including proposed changes to 
the actuarial schedules, contact Karen B. Levin, Regulatory Affairs 
Division, Office of the General Counsel, Pension Benefit Guaranty 
Corporation, (202) 229-3559.
    Customer service information: Individuals interested in obtaining 
general information from the DOL concerning Title I of ERISA may call 
the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the DOL's 
website (www.dol.gov/agencies/ebsa).

SUPPLEMENTARY INFORMATION: 

I. Overview of the Proposal

A. Background of Form 5500 Annual Return/Report of Employee Benefit 
Plan

    Sections 101 and 104 of Title I and section 4065 of Title IV of the 
Employee Retirement Income Security Act of 1974 (ERISA) and sections 
6057(b), 6058(a), and 6059(a) of the Internal Revenue Code of 1986 
(Code), and related regulations, impose annual reporting and filing 
obligations on pension and welfare benefit plans, as well as on certain 
other entities. Plan administrators, employers, and others generally 
satisfy these annual reporting obligations by filing the Form 5500, 
Annual Return/Report of Employee Benefit Plan (Form 5500), or Form 
5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan 
(Form 5500-SF) (together ``Form 5500 Annual Return/Report'').\1\ 
Specifically, filing of the Form 5500 or the Form 5500-SF, as 
applicable, with any required schedules and attachments in accordance 
with the instructions and related regulations, constitutes compliance 
with the applicable annual reporting requirements under Title I of 
ERISA and the Department's implementing regulations.\2\ Filing of a

[[Page 51489]]

Form 5500 or Form 5500-SF, together with the required attachments and 
schedules in accordance with the instructions, by plan administrators, 
employers, and certain other entities also satisfies the annual filing 
and reporting requirements under Code sections 6057(b), 6058(a), and 
6059(a). Filing the Form 5500 Annual Return/Report will also satisfy an 
applicable plan administrator's annual reporting obligation under 
section 4065 of Title IV of ERISA.
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    \1\ Certain one-participant plans and foreign plans that are not 
subject to the requirements of section 104(a) of ERISA are required 
to file Form 5500-EZ, Annual Return of One Participant (Owners/
Partners and Their Spouses) Retirement Plan or a Foreign Plan. 
Beginning with 2020 forms filed on or after January 1, 2021, the 
Form 5500-EZ is required to be filed electronically through the same 
system as the Form 5500--the Form 5500 Electronic Filing Acceptance 
System (EFAST2). From 2009 to 2019, such plans had been permitted to 
file the Form 5500-SF electronically in lieu of filing the Form 
5500-EZ on paper with the IRS. See instructions for 2020 Form 5500-
EZ and Form 5500-SF.
    \2\ ERISA section 103 broadly sets out annual reporting 
requirements for employee benefit plans. The Form 5500 Annual 
Return/Report and the DOL's implementing regulations generally are 
promulgated under the ERISA provisions authorizing limited 
exemptions to these requirements and simplified reporting and 
disclosure for welfare plans under ERISA section 104(a)(3), 
simplified annual reports under ERISA section 104(a)(2)(A) for 
pension plans that cover fewer than 100 participants, and 
alternative methods of compliance for all pension plans under ERISA 
section 110. The forms, instructions, and related regulations are 
also promulgated under the DOL's general regulatory authority in 
ERISA sections 109 and 505.
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    The Form 5500 Annual Return/Report serves as the principal source 
of information and data available to the Agencies concerning the 
operations, funding, and investments of approximately 843,000 pension 
and welfare benefit plans that file.\3\ ERISA plans cover roughly 154 
million workers, retirees, and dependents of private sector pension and 
welfare plans \4\ with estimated assets of $12.2 trillion.\5\ 
Accordingly, the Form 5500 Annual Return/Report is essential to each 
Agency's enforcement, research, and policy formulation programs, as 
well for the regulated community, which makes increasing use of the 
information as more capabilities develop to interact with the data 
electronically. The data is also an important source of information and 
data for use by other federal agencies, Congress, and the private 
sector in assessing employee benefit, tax, and economic trends and 
policies. The Form 5500 Annual Return/Report also serves as a primary 
means by which the operations of plans can be monitored by 
participating employers in multiple employer plans and other group 
arrangements, plan participants and beneficiaries, and by the general 
public.
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    \3\ Estimates are based on 2019 Form 5500 filings. DOL notes 
that single employer welfare plans with under 100 participants that 
are unfunded or insured (generally don't hold assets in trust) are 
exempt from filing a Form 5500 under 29 CFR 2520.104-29. Therefore 
while DOL estimates there are 2.5 million health plans and 885,000 
non-health welfare plans, respectively, only 69,000 and 91,000 of 
these plans filed a 2019 Form 5500.
    \4\ Source: U.S. Department of Labor, EBSA calculations using 
the Auxiliary Data for the March 2019 Annual Social and Economic 
Supplement to the Current Population Survey.
    \5\ EBSA based these estimates on the 2018 Form 5500 filings 
with the U.S. Department of Labor (DOL), reported SIMPLE assets from 
the Investment Company Institute (ICI) Report: The U.S. Retirement 
Market, First Quarter 2021, and the Federal Reserve Board's 
Financial Accounts of the United States Z1 June 10, 2021.
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    The last time the Agencies implemented significant changes to the 
forms and schedules was for the 2009 form year, in conjunction with the 
move to mandatory electronic filing and a related update to the ERISA 
Filing Acceptance System (EFAST2).\6\ Those changes were proposed in 
2006, 71 FR 41615 (Jul. 21, 2006), and finalized in 2007, effective for 
the 2009 form series. 72 FR 64731 (Nov. 16, 2007). Other discrete 
changes that have been made to the Form 5500 Annual Return/Report over 
those years were generally set forth annually in the ``Changes to 
Note'' section in the instructions, some of which have involved 
targeted rulemaking activity to implement reporting changes required by 
law.\7\ The Agencies most recent significant initiative with respect to 
the Form 5500 was the publication of a proposal to modernize the forms 
and instructions in July 2016. 81 FR 47534 (July 16, 2016) (Tri-Agency 
Notice of Proposed Forms Revisions) and 81 FR 47496 (July 16, 2016) 
(DOL Notice of Proposed Rulemaking) (together the 2016 Modernization 
Proposal). The 2016 Modernization Proposal ultimately was not adopted 
as final changes to the forms, instructions, and regulations, although 
a small number of changes that were included in the 2016 proposal have 
been finalized, as set forth in the ``Changes to Note'' Section in the 
instructions to the Form 5500 Annual Return/Report for the years in 
which the changes were made.
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    \6\ EFAST2 is an all-electronic system that receives and 
displays Forms 5500 Series Annual Returns/Reports and Form PR Pooled 
Plan Provider Registrations. EFAST2 is operated by a private-sector 
government contractor on behalf of DOL, IRS, and PBGC.
    \7\ See, e.g., Revisions to Annual Return/Report-Multiple-
Employer Plans, Interim Final Rule, 79 FR 66617 (Nov. 10, 2014) 
(updating the Form 5500 instructions to require all multiple 
employer plans, including MEWAs, to provide a list of participating 
employers and certain financial information, as required by ERISA 
section 103(g)); Filings Required of Multiple Employer Welfare 
Arrangements and Certain Other Related Entities, Final Rule, 78 FR 
13781 (Mar. 1, 2013) (among other things, added new questions to 
Form 5500 for MEWAs that are required to complete the Form 5500 to 
provide information on their most recent Form M-1 (Report for 
Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities 
Claiming Exception (ECEs) filing) (Form M-1).
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B. Recent Legislative Changes Supporting Proposed Annual Reporting 
Improvements

    The SECURE Act,\8\ which overall was designed to expand and 
preserve workers' retirement savings, is the most significant 
legislation impacting ERISA and Code provisions pertaining to 
retirement plans since the Pension Protection Act of 2006. Among other 
things, the SECURE Act directed the Secretary of Labor and the 
Secretary of Treasury (together ``Secretaries'') to develop a new 
aggregate annual reporting option for certain groups of retirement 
plans and included other statutory amendments that directly impact 
annual reporting requirements for multiple-employer pension plans 
(MEPs). In relevant part, the SECURE Act's expansion of MEPs and 
direction for the Secretaries to establish a consolidated reporting 
option for defined contribution pension plans that share certain key 
characteristics should help expand retirement coverage by making it 
easier for record keepers and other financial services providers to 
offer attractive retirement plan alternatives and for employers, 
especially small ones, to pick from among a broader array of 
alternatives what works best for them and their employees.
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    \8\ The SECURE Act was enacted December 20, 2019, as Division O 
of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-
94).
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    Section 202 of the SECURE Act provides that the Secretaries, shall, 
in cooperation, modify the Form 5500 Annual Return/Report so that all 
members of a group of defined contribution individual account plans 
described in section 202 may file a single aggregated annual return/
report satisfying the requirements of both section 6058 of the Code and 
section 104 of ERISA. The SECURE Act further provides that, in 
developing the consolidated return/report, the Secretaries may require 
any information regarding each plan in the group as such Secretaries 
determine is necessary or appropriate for the enforcement and 
administration of the Code and ERISA. The SECURE Act also mandates that 
the consolidated reporting by such a group must include such 
information as will enable participants in each of the plans to 
identify any aggregated return/report filed with respect to their plan. 
Section 202 provides that to constitute an eligible group of plans, all 
of the plans in the group must be either individual account plans or 
defined contribution plans as defined in section 3(34) of ERISA or in 
section 414(i) of the Code; must have the same trustee as described in 
section 403(a) of ERISA; the same one or more named fiduciaries as 
described in section 402(a) of ERISA; the same administrator as defined 
in section 3(16)(A) of ERISA and plan administrator as defined in 
section 414(g) of the Code; must have plan years beginning on the same 
date; and must provide the same investments or investment options to 
participants and beneficiaries. Section 202 further provides that a 
plan not subject to Title I of ERISA shall be treated as meeting these 
requirements for being eligible to be part of a consolidated reporting

[[Page 51490]]

group of plans, if the same person that performs each of the functions 
described in the above requirements, as applicable, for all other plans 
in such group performs each of such functions for such plan.\9\
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    \9\ SECURE Act Section 202(c).
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    Section 101 of the SECURE Act amended ERISA section 3(2) and added 
ERISA sections 3(43) and 3(44) to allow for a new type of ERISA-covered 
MEP--a defined contribution pension plan called a ``pooled employer 
plan'' operated by a ``pooled plan provider.'' Pooled employer plans 
allow multiple unrelated employers to participate without the need for 
any common interest among the participating employers (other than 
having adopted the plan).\10\ Under section 3(2) of ERISA, a pooled 
employer plan is treated for purposes of ERISA as a single plan that is 
a multiple employer plan. A pooled employer plan is defined in section 
3(43) as a plan that is an individual account plan established or 
maintained for the purpose of providing benefits to the employees of 
two or more employers; that is a qualified retirement plan or a plan 
funded entirely with individual retirement accounts (IRA plan); and the 
terms of which must meet certain requirements set forth in the 
statute.\11\ The term pooled employer plan does not include a 
multiemployer plan as defined in ERISA section 3(37) or a plan 
maintained by employers that have a common interest other than having 
adopted the plan.\12\ The term also does not include a plan established 
before the date the SECURE Act was enacted unless the plan 
administrator elects to have the plan treated as a pooled employer plan 
and the plan meets the ERISA requirements applicable to a pooled 
employer plan established on or after such date. The existence of this 
new type of multiple employer plan requires some adjustments to the 
Form 5500 to provide for annual reporting by such plans.\13\
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    \10\ DOL sought comments through a Request for Information 
published on July 31, 2019, on ``open'' MEP structures (those 
without the need for any commonality among the participating 
employers or other genuine organization relationship unrelated to 
participation in the plan) being treated as one multiple employer 
plan for purposes of compliance with ERISA. The DOL does not have 
any current plan to take further action regarding defined 
contribution open MEPs due to the SECURE Act provisions permitting 
pooled employer plans as a type of open MEP.
    \11\ 29 U.S.C 1002(43).
    \12\ In establishing a pooled employer plan as a new type of 
multiple employer plan, the SECURE Act in section 101(c) 
specifically referred to plans maintained by employers that have a 
common interest other than having adopted the plan. For example, the 
DOL's recent final association retirement plan regulation, at 29 CFR 
2510.3-55, published July 31, 2019, clarified and expanded the types 
of arrangements that could be treated as MEPs under Title I of ERISA 
to include plans established and maintained by a bona fide group or 
association of employers or by a professional employer organization 
(PEO). The SECURE Act provision excluding a ``plan maintained by 
employers that have a common interest'' from the definition of a 
pooled employer plan does not preclude employers with a common 
interest other than participating in the plan from establishing or 
participating in a pooled employer plan. Rather, it means that if a 
group of employers with a common interest other than participating 
in the plan establish a MEP, e.g., an association retirement plan 
under the DOL's regulation, the association retirement plan will not 
be subject to the SECURE Act requirements for a plan to be a pooled 
employer plan.
    \13\ New section 3(44) of ERISA establishes requirements for 
pooled plan providers, including a requirement to register with the 
DOL before beginning operations as a pooled plan provider. A 
parallel requirement to file a registration statement with the 
Secretary of Treasury is in section 413(e)(3)(A)(ii) of the Code. On 
November 16, 2020, the DOL published a notice of final rulemaking 
establishing the registration requirement for pooled plan providers. 
85 FR 72934 (Nov. 16, 2020). The Treasury Department and the IRS 
have advised that filing the Form PR with the DOL will satisfy the 
requirement to register with the Secretary of the Treasury. The 
instructions to the Form PR (Pooled Plan Provider Registration) 
(Form PR) advised registrants to use the same identifying 
information on the Forms 5500 Annual Return/Report filed by the 
pooled employer plans, particularly name; EIN for the pooled plan 
provider; any identified affiliates providing services; trustees; 
and plan name and number for each pooled employer plan. The Form PR 
and its instructions, as well as any Form PR that have been filed 
with the DOL by pooled plan providers, are available on the DOL 
website at www.efast.dol.gov.
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    Section 101 of the SECURE Act also amended ERISA section 103(g) for 
MEPs. Section 103(g) of ERISA requires that the annual return/report of 
a MEP generally must include a list of participating employers and a 
good faith estimate of the percentage of total contributions made by 
each participating employer during the plan year. The SECURE Act 
amended section 103(g) to expand the participating employer information 
that must be reported on the Form 5500 Annual Return/Report \14\ also 
to require the aggregate account balances attributable to each employer 
in the plan (determined as the sum of the account balances of the 
employees of each employer and the beneficiaries of such employees), 
and applied section 103(g) to retirement plans that currently meet the 
definition of a MEP under ERISA section 210(a), including any pooled 
employer plans, for plan years beginning on or after January 1, 
2021.\15\ With respect to a pooled employer plan, section 103(g) 
further requires that the annual return/report must include the 
identifying information for the person designated under the terms of 
the plan as the pooled plan provider.
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    \14\ SECURE Act Section 101(d).
    \15\ SECURE Act Section 101(e)(1).
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    In addition to various changes to the forms and instructions to 
address these statutory changes and reflect the existence of pooled 
employer plans and defined contribution plan reporting arrangements, 
some of the annual reporting changes being proposed are intended to 
ensure appropriate transparency and financial accountability for pooled 
employer plans, other MEPs, and defined contribution plan reporting 
arrangements. The rationales for some of those changes apply more 
broadly to retirement plans as a class (for example, improvements to 
the content and format for the financial schedules that retirement 
plans use to report information regarding their assets, investments, 
income, and expenses), and, accordingly, some of the changes are being 
proposed for retirement plans in general.

C. Overview of Proposed Changes to Forms, Schedules, and Instructions

1. General Proposed Changes
    The proposed revisions involve the following major categories of 
changes, along with other technical revisions and updates, to the 
current structure and content of the Form 5500 Annual Return/Report.
     Update the Form 5500 and its instructions to establish 
requirements pursuant to section 202 of the SECURE Act for consolidated 
returns/reports for eligible defined contribution group (DCG) reporting 
arrangements as an alternative method of compliance for certain 
individual account or defined contribution retirement plans relying on 
the consolidated report to satisfy the generally applicable requirement 
that employee benefit plans file a Form 5500. This would include adding 
a new Schedule DCG (Individual Plan Information) to provide individual 
plan-level information for defined contribution pension plans covered 
by a DCG consolidated Form 5500 filing. It would also include adding a 
new checkbox on the Form 5500 (Part II, line 10a(4)) to indicate that 
Schedule DCG is attached to the Form 5500, with a space for the filer 
to enter the number of Schedules DCG (one per plan) attached to the 
Form 5500 filing.
     Update the Form 5500 and its instructions to add a new 
Schedule MEP (Multiple Employer Pension Plan). MEPs would report 
information specific to MEPs, including the ERISA section 103(g) 
participating employer information, updated to add the new aggregate 
account information that is

[[Page 51491]]

relevant only for pension plans, on the Schedule MEP. Questions 
intended to satisfy the SECURE Act's reporting requirements for pooled 
employer plans and questions to link the Form PR (Pooled Employer 
Registration) and the Form 5500 for each plan operated by a pooled plan 
provider would also be on the Schedule MEP. A new checkbox would be 
added to the Form 5500 (Part II, line 10a(5) to indicate that Schedule 
MEP is attached to the Form 5500.
     Transfer the participating employer information from the 
Form 5500 Annual Return/Report to the Form M-1 for all multiple 
employer welfare arrangements (MEWAs)) (plan and non-plan MEWAs)) that 
offer or provide coverage for medical benefits, and continue to require 
reporting of participating employer information on the Form 5500 Annual 
Return/Report for plan MEWAs that provide other benefits.\16\
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    \16\ The Agencies may choose as part of a final rule to have 
those plan MEWAs that are not required to file the Form M-1 complete 
the relevant participating employer information on the Schedule MEP 
rather than continuing to complete as an attachment to the Form 
5500. The agencies invite comment on any preference from a 
disclosure, forms preparation, or data usage perspective as to how 
the information is collected.
---------------------------------------------------------------------------

     Update Schedule H and instructions to standardize the 
schedules of investment assets required to be included in the annual 
return/report (Schedule H, line 4i Schedules), so that the information 
can be entered or imported for improved electronic use and 
transparency.
     Update the Form 5500 and 5500-SF and their instructions on 
counting participants to change the current threshold for determining 
when a defined contribution plan may file as a small plan, including 
eligibility for the waiver of the requirement for small plans to have 
an audit and include the report of an independent qualified public 
accountant (IQPA) with their annual report. Specifically, instead of 
using all those eligible to participate, filers generally would look at 
the number of participants/beneficiaries with account balances as of 
the beginning of the plan year (the first plan year would use an end of 
year measure). This proposed change would be reflected in a new line 
item on the Form 5500 and Form 5500-SF.\17\
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    \17\ This change was proposed partly in light of section 112 of 
the SECURE Act, which provides that long-term, part-time workers 
that have reached specified minimum age requirements and worked at 
least 500 hours in each of three consecutive 12-month periods must 
be permitted to make elective contributions to a Code section 401(k) 
qualified cash or deferred arrangement for plan years beginning on 
or after January 1, 2024. This could add to the number of 
participants who are eligible to, but who elect not to participate 
in a plan, which could impact whether a plan needs to file as a 
large plan. The DOL expects that excluding from the participant 
count those participants who are eligible to participate but did not 
have an account balance will reduce expenses for small employers to 
establish and maintain a small retirement plan, and as a 
consequence, encourage more employers to offer workplace-based 
retirement savings plans to their employees.
---------------------------------------------------------------------------

     Add trust questions to the Form 5500, the Form 5500-SF, 
and the IRS Form 5500-EZ, regarding the name of the plan's trust, the 
trust's EIN, the name of the trustee or custodian, and the trustee's or 
custodian's telephone number. This information will enable the Agencies 
to more efficiently focus on compliance concerns for retirement plan 
trusts, including those for pooled employer plans and DCG reporting 
arrangements.
     Revise the 2021 5500 Annual Return/Report instructions to 
provide an interim method of reporting participating employer 
information for MEPs and pooled plan provider identification 
information for pooled employer plans pending the Schedule MEP 
implementation for 2022 plan year filings.
    Section 101 of the SECURE Act also amended ERISA section 
104(a)(2)(A) to permit the Secretary of Labor to prescribe by 
regulation simplified reporting for MEPs subject to ERISA section 
210(a) with fewer than 1,000 participants in total, as long as each 
participating employer has fewer than 100 participants. The DOL is not, 
however, currently proposing to amend the current reporting rules to 
establish a ``simplified report'' for such plans. The DOL is interested 
in stakeholder comments on why MEPs subject to ERISA section 210(a) 
should be subject to different reporting requirements than single 
employer plans that cover fewer than 1,000 participants, and on 
appropriate conditions and limitations for such a simplified report 
that would ensure transparency and financial accountability comparable 
to that for other large retirement plans.
2. Internal Revenue Code-Based Questions for the 2022 Form 5500s
    To better identify non-compliant plans, the IRS is proposing the 
following changes to the 2022 forms, schedules, and instructions, 
including adding the proposed Schedule DCG, so that certain questions 
are answered at the individual plan level (not the DCG level) in order 
for a plan's annual reporting obligation to be satisfied by a DCG Form 
5500 filing:
     Add a nondiscrimination and coverage test question to Form 
5500, Form 5500-SF, and proposed Schedule DCG that was on the Schedule 
T before it was eliminated. The question asks if the employer 
aggregated plans in testing whether the plan satisfied the 
nondiscrimination and coverage tests of Code sections 401(a)(4) and 
410(b).
     Add a question to Form 5500, Form 5500-SF, and proposed 
Schedule DCG, for section 401(k) plans, asking whether, if applicable, 
the plan sponsor used the design-based safe harbor rules or the ``prior 
year'' or ``current year'' ADP test.
     Add a question to Form 5500, Form 5500-SF,\18\ and 
proposed Schedule DCG asking whether the employer is an adopter of a 
pre-approved plan that received a favorable IRS Opinion Letter, the 
date of the favorable Opinion Letter, and the Opinion Letter serial 
number.
---------------------------------------------------------------------------

    \18\ IRS will separately make a parallel update to the Form 
5500-EZ, which is solely in the jurisdiction of the IRS.
---------------------------------------------------------------------------

3. Defined Benefit Plan/Title IV Questions for the 2022 Form 5500s
    The proposal includes certain changes designed to improve reporting 
by defined benefit plans subject to Title IV of ERISA. The proposed 
changes would:
     Modify Schedule MB, line 3 instructions to require an 
attachment that breaks down the total withdrawal liability amounts by 
date, separately specifying the periodic withdrawal liability amounts 
and lump sum withdrawal liability amounts.
     Modify Schedule MB by adding a new requirement for plans 
that assess withdrawal liability to an employer during the plan year, 
to report the interest rate used to determine the present value of 
vested benefits for withdrawal liability determinations. This 
information would be reported in a renumbered new line, 6f.
     Modify Schedule MB for the questions related to the line 6 
``expense load'' to better align with the various ways multiemployer 
plans incorporate expense loads into their calculations.
     Modify Schedule MB, line 8 by requiring additional 
information about demographics, benefits and contributions for plans 
with 500 or more total participants on the valuation date. Certain 
PBGC-insured single-employer plans would be required to report the some 
additional information as well.
     Modify Schedule MB by changing the ``age/service'' scatter 
attachment which is currently required for PBGC-insured multiemployer 
plans with active participants, regardless of the number of 
participants.
     Modify Schedule MB by clarifying the line 4f instructions 
and Schedule language concerning when or if plans in critical status or 
critical and declining

[[Page 51492]]

status are projected to emerge or become insolvent.
     Make the Schedule SB, line 26 reporting requirements about 
demographics and benefits similar to the requirements for PBGC-insured 
multiemployer plans.
     Modify Schedule SB's Part IX, line 41 because the 
previously required information related to elective funding relief 
under the Pension Relief Act of 2010 is no longer relevant, and in its 
place, require information about the elective funding relief under the 
American Rescue Plan Act of 2021.
     Modify Schedule R's Part V, line 13 requirement that 
multiemployer defined benefit pension plans subject to minimum funding 
standards report identifying information about any participating 
employer whose contributions to the plan account for more than five (5) 
percent of the total contributions for the year to require that the ten 
employers who contributed the largest amounts be reported, even if that 
employer's contribution accounted for less than five (5) percent of the 
total.
     Modify the instructions to permit (but not require) 
certain attachments to Schedule MB and SB to be provided in a tabular 
format (spreadsheet) rather than PDF or TXT formats.

D. Appendices

    The Agencies have included the following appendices to provide more 
detailed illustrations and explanations of the proposed changes: (1) 
Appendix A--a facsimile of proposed Schedule MEP (Multiple Employer 
Pension Plan) and its instructions; (2) Appendix B--a facsimile of 
proposed Schedule DCG (Individual Plan Information) and its 
instructions; (3) Appendix C--a detailed description of proposed 
changes to the 2021 Form 5500, the Form 5500-SF, and their 
instructions; (4) Appendix D--a detailed description of proposed 
changes to the 2022 Form M-1 and its instructions; (5) Appendix E--a 
detailed description of proposed changes to the 2022 Form 5500, Form 
5500-SF, applicable schedules, and their instructions.\19\
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    \19\ The appendices include mock-ups of certain forms or parts 
of forms that are intended to be illustrative and facilitate 
stakeholders' ability to comment on the proposed changes. This 
approach of showing proposed changes will reduce costs associated 
with publication of the proposed form changes in the Federal 
Register and provide greater flexibility for the related EFAST2 
development processes. The Agencies intend to publish mock-ups of 
the forms on the DOL's website as part of the EFAST third party 
software developer certification process and in furtherance of 
public education efforts about the changes to be implemented.
---------------------------------------------------------------------------

    Certain amendments to the annual reporting regulations are 
necessary to accommodate some of the proposed revisions to the forms. 
The DOL is publishing separately today in the Federal Register proposed 
amendments to the DOL's annual reporting regulations. That document 
includes a discussion of the findings required under sections 104 and 
110 of ERISA that are necessary for the DOL to adopt the Form 5500 
Annual Return/Report, including the Form 5500-SF, if revised as 
proposed herein, as an alternative method of compliance, limited 
exemption, and/or simplified report under the reporting and disclosure 
requirements of Part 1 of Subtitle B of Title I of ERISA.

II. Request for Comments

    The Agencies invite comments from interested persons on all facets 
of the proposed forms and instruction changes. Comments should be 
submitted in accordance with the instructions at the beginning of this 
document. Commenters are asked to take into account the costs and 
burdens to plans, participants and beneficiaries, plan fiduciaries, 
plan service providers, and other affected parties, in commenting on 
the proposed annual reporting changes, including any suggested 
alternatives.
    As noted above, the DOL also is publishing elsewhere in today's 
Federal Register a Notice of Proposed Rulemaking with proposed 
amendments to the reporting and disclosure regulations at Part 2520 of 
Chapter XXV of Title 29 of the Code of Federal Regulations to implement 
certain proposed Form 5500 Annual Return/Report changes under Title I 
of ERISA. To avoid unnecessary duplication of effort, public comments 
submitted in response to this Notice of Proposed Forms Revisions will 
be treated as public comments on the Notice of Proposed Rulemaking to 
the extent they include information relevant to the proposed regulatory 
amendments.
    The DOL components of this proposal are generally focused on 
implementing annual reporting changes related to the SECURE Act and 
MEPs and a limited number of other supporting proposed changes intended 
to ensure the Form 5500 serves as an appropriate transparency and 
financial accountability tool for retirement plans, including pooled 
employer plans and MEPs. The DOL has added a separate project to its 
semi-annual regulatory agenda that would focus on a broader range of 
improvements to the Form 5500 annual reporting requirements. The 
regulatory action is part of a strategic project with the IRS and PBGC 
to improve the Form 5500 Annual Return/Report. Modernizing the 
financial and other annual reporting requirements on the Form 5500, 
continuing to make the investment and other information on the Form 
5500 more data mineable, and potential changes to group health plan 
annual reporting requirements are part of that evaluation. The project 
is also focused on enhancing the agencies' ability to collect employee 
benefit plan data that best meets the needs of changing compliance 
projects, programs, and activities. See www.reginfo.gov for more 
information. Public comments on such broader improvements to the Title 
I components of the Form 5500 are beyond the intended scope of this 
rulemaking.

III. Discussion of Proposed Changes

A. SECURE Act Section 202 Defined Contribution Group (DCG) Reporting 
Arrangements

    Section 202 of the SECURE Act directs the Secretaries to modify the 
Form 5500 to allow certain groups of defined contribution pension plans 
to file a single consolidated annual return/report. For a group of 
plans to be able to file a consolidated return/report, the SECURE Act 
provides that all of the plans must be either individual account plans 
or defined contribution pension plans that have the same trustee; the 
same one or more named fiduciaries; the same plan administrator under 
ERISA and the Code; the same plan year; and provide the same 
investments or investment options for participants and beneficiaries.
    The SECURE Act also provides that in developing the consolidated 
return or report for such arrangements, the Secretaries shall require 
such information as will enable a participant in a plan to identify any 
consolidated return or report filed with respect to the plan, and may 
require such return or report to include any information regarding each 
plan in the group as each Secretary determines is necessary or 
appropriate for the enforcement and administration of the provisions of 
ERISA and the Code.
    Pursuant to Section 202 of the SECURE Act directing the Secretaries 
to modify the Form 5500 to allow certain groups of defined contribution 
pension plans to file a single consolidated annual return/report, the 
DOL and the IRS (the ``Departments'') have determined that an efficient 
and effective approach to establishing such a consolidated return/
report option would be to amend the Form 5500 and its related 
instructions to provide that the filing requirements for large pension 
plans and direct filing entities (DFEs)

[[Page 51493]]

would generally apply to this new type of DFE--a defined contribution 
group (DCG) reporting arrangement, except that an additional schedule 
to report individual plan level information--the proposed Schedule DCG, 
would have to be attached for each plan included in the DCG filing.\20\ 
Consistent with section 202(b) of the SECURE Act, as discussed in more 
detail below, the Departments are proposing to obtain for each plan in 
the DCG the additional information requested on a new proposed Schedule 
DCG, and are proposing certain other key conditions for DCG reporting 
arrangements that are intended to ensure appropriate transparency and 
financial accountability. Specifically, under the proposal: (1) The DCG 
would file a Form 5500 under rules and conditions that apply generally 
to large defined contribution pension plans; (2) each of the plans 
participating in the DCG would need to meet certain conditions as 
discussed in more detail below, including that the participating plan 
must not hold any employer securities, be 100% invested in certain 
secure, easy to value assets that meet the definition of ``eligible 
plan assets'' and be audited by an IQPA or be eligible for the waiver 
of the annual examination and report of an IQPA under 29 CFR 2520.104-
46, but not by reason of enhanced bonding; (3) the DCG's Form 5500 
would have to provide the plan level information reported on the 
proposed Schedule DCG regarding the covered plans, including an IQPA 
audit report for each participating large plan; and (4) the investment 
assets of the plans participating in the DCG would have to be held in a 
single trust of the DCG reporting arrangement and the consolidated Form 
5500 filed by the DCG would include an audit of the DCG's trust 
financial statements.
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    \20\ The proposed new regulation that would be at 29 CFR 
2520.104a-9 published in the parallel NPRM provides that, as would 
be the case for all of the participating plans in the DCG reporting 
arrangement if they were filing individually, the aggregated Form 
5500 for the DCG is due no later than the end of the 7th month after 
the end of the common plan year that all the plans must have in 
order to participate in a DCG reporting arrangement pursuant to the 
requirement in section 202 of the SECURE Act and the proposed 
regulation that would be at 29 CFR 2520.104-51. Because the DCG 
filing is an alternative to each participating plan filing its own 
Form 5500, that would mean that each plan would have to submit its 
own IRS Form 5558 to extend the plan's due date, and, as a 
consequence, extend the due date for the DCG filing. A plan that did 
not submit a timely Form 5558 and that participated in a DCG filing 
that was submitted after the 7th month normal due date would be 
treated as having filed late. Public comments are specifically 
solicited on how the filing extension process should be structured 
for DCGs, including whether DCG reporting arrangements should be 
able to file a single Form 5558 to obtain an extension for filing 
the DCG consolidated report on behalf of the participating plans as 
an alternative to having each individual plan file a Form 5558 for 
there to be an extension for the reporting group as a whole. The 
Departments note that under the somewhat similar consolidated 
reporting provisions applicable to GIAs, the GIA is permitted to use 
the Form 5558 to apply for an extension of time the GIA consolidated 
report on behalf of the plans participating in the GIA.
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    An important aspect of the audit of the DCG trust would be that, in 
the DOL's view, the versions of the separate schedules referenced in 
ERISA section 103(a)(3)(A) and 29 CFR 2520.103-10(b) and proposed 
2520.103-14(b) that would be filed as part of the DCG consolidated Form 
5500 would be treated as ERISA section 103(b)(3) supplemental schedules 
for purposes of the required IQPA's opinion on whether those schedules 
are presented in conformity with DOL rules and regulations, including 
the delinquent participant contributions schedule filed by the DCG in 
connection with line 4a of its Form 5500, Schedule H. The DOL views 
these conditions as providing important financial accountability and 
oversight protections while also allowing DCGs to offer annual 
reporting cost-efficiencies, particularly for the small plans that we 
believe SECURE Act section 202 was intended to benefit, that are 
comparable to those that can be offered by MEPs, including pooled 
employer plans.
    The DOL is also publishing a separate Notice of Proposed Rulemaking 
that includes a proposal to add new regulations at 29 CFR 2520.103-14 
and 2520.104-51 pursuant to section 110 of ERISA that would set forth 
this DCG option as an alternative method of compliance for eligible 
plans with the generally applicable requirement to file their own 
separate Form 5500.
1. General Section 202 Conditions Applicable to Covered Plans
    The Departments' review of the conditions in section 202 of the 
SECURE Act suggests that it was primarily aimed at plans of unrelated 
small businesses that adopt a plan that has received approval from the 
IRS as to its form through the IRS Pre-Approved Program (pre-approved 
plan) offered by the same provider, and that section 202 was intended 
to provide this type of business structure with annual reporting cost 
efficiencies similar to those that MEPs and pooled employer plans can 
offer to their participating employers. Accordingly the conditions and 
reporting requirements in this proposal focus on such arrangements. The 
Departments solicit public comments on whether the final rule should 
include other or different conditions for DCG reporting arrangements.
    Under the proposed Form 5500 form changes and the DOL's related 
proposed regulation, and pursuant to the terms of section 202 of the 
SECURE Act, all of the plans relying on the DCG consolidated return/
report must be individual account plans or defined contribution pension 
plans that have the same trustee and trust(s); the same one or more 
named fiduciaries; the same plan administrator under ERISA and the 
Code; the same plan year; and provide the same investments or 
investment options for participants and beneficiaries. The Departments 
are providing the following explanations of some aspects of and 
limitations related to those conditions that are part of the proposal.
    With respect to the same trustee requirement, section 403(a) of 
ERISA provides that, except as provided in ERISA section 403(b), all 
assets of an employee benefit plan shall be held in trust by one or 
more trustees. The criteria set forth in ERISA section 403(b) apply to 
the DCG trustee under the proposal, except, pursuant to the SECURE Act 
provision there must be only one trustee for all the plans 
participating in a DCG reporting arrangement. The common trustee must 
be either named in the trust instrument or in the plan instrument or 
appointed by a person who is a named fiduciary of the participating 
plan, and upon acceptance of being named or appointed, the trustee 
shall have exclusive authority and discretion to manage and control the 
assets of the plan, except to the extent that the plan expressly 
provides that the trustee is subject to the direction of a named 
fiduciary who is not a trustee (in which case the trustees shall be 
subject to proper directions of such fiduciary which are made in 
accordance with the terms of the plan and which are not contrary to 
ERISA), or authority to manage, acquire, or dispose of assets of the 
plan is delegated to one or more investment managers pursuant to 
section 402(c)(3) of ERISA.
    The Departments note that, historically, the IRS conditions 
applicable to many pre-approved plans required that employers who used 
what was known as a ``master'' plan were required to use the same trust 
or custodial account, whereas each employer had a separate trust or 
custodial account in a ``prototype plan.'' \21\ Under the proposal, the 
``same trust'' requirement for the consolidated report would be 
satisfied by the same trust structure historically used by

[[Page 51494]]

employers using ``master'' plans. Use of sub-trusts of the DCG trust 
would be permitted, but the proposal would not cover arrangements that 
allow separate plans to have a separate trust for investments. As 
discussed in more detail below, part of the reason for this provision 
stems from considerations related to the establishment of audit 
requirements for DCG reporting arrangements and the otherwise generally 
applicable requirement under Title I of ERISA for plans that cover 100 
or more participants file with their Form 5500 an audit report of an 
independent qualified public accountant (IQPA) and the application of 
Generally Accepted Auditing Standards or GAAS (which ERISA section 103 
applies to employee benefit plan audits).
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    \21\ See www.irs.gov/retirement-plans/types-of-pre-approved-retirement-plans.
---------------------------------------------------------------------------

    Although, as described above, section 202 of the SECURE Act 
includes a requirement that the eligible plans must have the same 
``trustee'' as described in section 403(a) of ERISA, the Departments 
note that it is commonplace for ERISA covered plans to use insurance 
(e.g., individual account plans using variable annuity structures and 
Code section 403(b)(1) plans) and custodial accounts (e.g., Code 
section 403(b)(7) plans) as funding vehicles. ERISA section 403(b) 
includes explicit exceptions to the trust requirement for such plan 
designs. There is no legislative history for SECURE Act section 202 
discussing why the provision was limited to plans with ``trustees,'' 
and the Departments do not believe that the SECURE Act section 202 
requirement for a ``trustee'' can be read to include plans without 
trustees funded by insurance or custodial accounts pursuant to the 
trust exceptions in ERISA section 403(b). Nonetheless, the Departments 
specifically solicit comments on whether they should, pursuant to their 
general regulatory authority, provide a consolidated reporting option 
for plans that use the same custodial account or insurance policy as 
the funding vehicle for their plans, and if so, whether special 
conditions should apply in light of the absence of a trustee or 
trustees.
    With respect to the ``same one or more named fiduciaries 
requirement,'' ERISA section 402 provides that every employee benefit 
plan shall be established and maintained pursuant to a written 
instrument. Such instrument shall provide for one or more named 
fiduciaries who jointly or severally have authority to control and 
manage the operation and administration of the plan. Section 402 of 
ERISA further provides that the term ``named fiduciary'' means a 
fiduciary who is named in the plan instrument, or who, pursuant to a 
procedure specified in the plan, is identified as a fiduciary (A) by a 
person who is an employer or employee organization with respect to the 
plan or (B) by such an employer and such an employee organization 
acting jointly. The Departments understand that it is customary for the 
employer/plan sponsor to be a named fiduciary of the employer's plan. 
The Departments do not believe the SECURE Act intended that each 
employer in a group of plans be a named fiduciary of every plan in the 
group. Accordingly, the proposal would allow for the employer/plan 
sponsor to be a named fiduciary of each employer's own plan, provided 
that the other named fiduciaries under the plans are the same and 
common to all plans.
    The SECURE Act further requires that all the plans have the same 
administrator as defined in section 3(16)(A) of ERISA and plan 
administrator as defined in section 414(g) of the Code. Under the 
proposal, the plans must designate the same person (which could be an 
entity or organization) as the administrator. In general, under ERISA 
and the Code the ``plan administrator'' or ``administrator'' is the 
person specifically so designated by the terms of the instrument under 
which the plan is operated. If an administrator is not so designated, 
the plan administrator is the plan sponsor, as defined in section 
3(16)(B) of ERISA. The Departments do not believe that the default 
``plan sponsor'' provision is workable in this context, and, 
accordingly, the proposal requires that there be a designated common 
plan administrator and that the administrator be the same for all the 
plans relying on the DCG consolidated Form 5500.
    The proposal also requires that all the plans provide the same 
investments or investment options to participants and beneficiaries to 
be able to rely on the DCG consolidated Form 5500 as satisfying their 
annual reporting obligation. In the Departments' view, this requirement 
in part was intended to allow for appropriate transparency in the 
consolidated financial information that would be filed by the DCG. To 
the extent the covered plans had different investments or investment 
options, much more detailed financial reporting would be needed to 
provide appropriate oversight and accountability. The Departments also 
believe that, even absent the proposed ``eligible plan assets condition 
for DCGs,'' the SECURE Act's ``same investments or investment options'' 
requirement effectively precludes plans that hold employer securities 
from participating in a DCG reporting arrangement as well as precluding 
treatment of brokerage windows as an ``investment option'' because such 
investments and investment alternatives would conflict with the 
investment uniformity objectives of the SECURE Act requirement. The 
Departments, however, specifically solicit comments on whether the 
final rule should allow employer securities as an exception to the 
``same investments or investment options'' requirement. The Departments 
also solicit comments on whether the final rule should allow brokerage 
windows, self-directed brokerage accounts, and similar features in 
plans participating in DCG arrangements, and, if so, what reporting 
requirements should be applied, e.g., what information should be 
collected regarding the brokerage windows/accounts, the participants 
using the brokerage windows/accounts, and the individual assets held by 
the plans as a result of investments made through brokerage windows/
accounts.
    Section 202 further provides that a plan not subject to Title I of 
ERISA can be part of a DCG reporting arrangement if the non-Title I 
plan and all other plans in the reporting group have the same persons 
acting as the trustee as defined in ERISA section 403(a), the named 
fiduciaries as described in ERISA section 402(a), the administrator as 
defined in ERISA section 3(16)(A), and the plan administrator as 
defined in Code section 414(g), as applicable. In the Departments' 
view, this provision was directed at so-called ``one-participant'' 
plans required to file the IRS Form 5500-EZ. IRS views the current Form 
5500-EZ as providing plan sponsors with a simple and streamlined means 
to satisfy the annual reporting requirement under section 6058 of the 
Code. The information being requested on the Schedule DCG for a DCG is 
almost identical to the information already provided on the Form 5500-
EZ, so that the group filing arrangement would not effectively reduce 
the information a Form 5500-EZ filer would need to provide to IRS in a 
separate filing. Additionally, the plan administrator will need to file 
a consolidated Form 5500 (with any required schedules) for the DCG that 
provides aggregate information for all Form 5500-EZ filers. Presumably, 
the DCG will require a Form 5500-EZ filer to provide at least as much 
information as would be required to file an individual Form 5500-EZ. 
Finally, IRS might incur significant costs and use significant 
resources if it were to develop a separate group filing arrangement for 
Form 5500-EZ filers.

[[Page 51495]]

Before incurring these costs and using these resources, IRS requests 
comments from interested parties on whether Form 5500-EZ filers are 
expected to be interested in participating in a DCG structure, 
including a separate DCG structure only for Form 5500-EZ filers, in 
light of the lack of burden reduction that a Form 5500-EZ filer would 
experience by participating in a DCG structure. With respect to the 
latter, the Departments request comments on the feasibility of 
including both ERISA and non-ERISA filers in a single DCG filing, 
including with respect to the application of the audit requirements 
under Title I.
2. Conditions for Plans To Participate in a DCG Reporting Arrangement
    To be eligible to rely on the proposed alternative method of 
compliance, the employee benefit plan (1) must have all of its 
investment assets held in a single trust of the DCG reporting 
arrangement; (2) the plan must not hold any employer securities at any 
time during the plan year; (3) at all times during the plan year, the 
plan must be 100% invested in certain secure, easy to value assets that 
meet the definition of ``eligible plan assets'' (see the instructions 
for line 6a of the Form 5500-SF), such as mutual fund shares, 
investment contracts with insurance companies and banks valued at least 
annually, publicly traded securities held by a registered broker 
dealer, cash and cash equivalents, and plan loans to participants; (4) 
the plan must be audited by an IQPA or be eligible for the waiver of 
the annual examination and report of an IQPA under 29 CFR 2520.104-46, 
but not by reason of enhanced bonding (see instructions for line 6b of 
the Form 5500-SF); and (5) multiemployer plans and MEPs (including 
pooled employer plans and professional employer organizations (PEOs)) 
cannot participate in DCG reporting arrangements.
    An important aspect of the audit of the DCG trust would be that, in 
the DOL's view, the versions of the separate schedules referenced in 
ERISA section 103(a)(3)(A) and 29 CFR 2520.103-10(b) and 2520.103-2(b) 
that would be filed as part of the DCG consolidated Form 5500 would be 
treated as ERISA section 103(b)(3) supplemental schedules for purposes 
of the required IQPA's opinion on whether those schedules are presented 
in conformity with DOL rules and regulations, including the delinquent 
participant contributions schedule filed by the DCG in connection with 
line 4a of its Form 5500, Schedule H. The DOL views these conditions as 
providing important financial accountability and oversight protections 
while also allowing DCGs to offer annual reporting cost-efficiencies, 
particularly for the small plans that we believe SECURE Act section 202 
was intended to benefit, that are comparable to those that can be 
offered by MEPs, including pooled employer plans.
    With respect to the audit requirement for large plans participating 
in a DCG, the DOL understands that under GAAS, it would not be possible 
to have a consolidated audit of all the participating plans in the DCG 
reporting arrangement. Rather, under GAAS, each large plan in the DCG 
reporting arrangement would have to be subject to its own separate 
audit. By comparison it would be possible, under GAAS, for a DCG 
reporting arrangement to be subjected to a single audit if it used a 
single trust for all of the plans covered by the DCG report. Such a 
``single trust'' audit, however, would cover only the trust's financial 
statements and would not cover aspects of plan operations and finances 
that would be covered by a GAAS audit at the plan level. The DOL views 
an IQPA audit as an important financial transparency and accountability 
condition for DCG reporting arrangements. Generally, pension plans and 
funded welfare plans with 100 or more participants are required to have 
an audit of the plan's financial statements performed by an IQPA. Under 
Statement on Auditing Standards No. 136 (SAS 136), Forming an Opinion 
and Reporting on Financial Statements of Employee Benefit Plans Subject 
to ERISA, independent qualified public accountants are required to 
consider relevant plan provisions that affect the risk of material 
misstatement for various transactions, account balances, and related 
disclosures. Areas such as participant eligibility, plan contributions, 
benefit payments and participant loans are all covered as part of a 
plan level audit. Additionally, auditors are required to communicate 
reportable findings to the plan that are identified during the audit of 
the plan. For example, it has been the DOL's experience that plan 
audits lead to increased reporting of prohibited transactions, such as 
identifying and disclosing delinquent participant contributions.
    An audit of a trust, such as a DCG trust, does not have similar 
requirements. In a trust audit, the line items on the trust's financial 
statement are audited, but because the underlying participating plans 
themselves are not audited, compliance with the provisions of the plans 
that are invested in and funded by the trust are not audited. 
Therefore, in a trust audit, the amount of contributions received by 
the trust might be tested against the contributions remitted by 
participating plans, but, whether those contributions amounts remitted 
are in accordance with the individual plan provisions would not be 
tested, as they would be tested in an audit of the plan. There could be 
undisclosed, material errors in the amount of contributions remitted to 
the trust versus what should have been remitted. Similarly, in a trust 
audit, the benefit payments to participants might be tested in terms of 
amounts paid and whether they were authorized, but whether those were 
in compliance with plan provisions, such as vesting provisions, would 
not be tested as they would be tested in a plan's audit. In a plan 
audit, participant data is tested. Participant data testing involves 
determining whether employees are properly included or excluded from 
participating and whether the census data upon which eligibility for 
certain contributions and distributions are made is accurate. The audit 
of a trust would not test this at all. Finally, the materiality 
threshold for a trust audit could be significantly higher than that 
which would apply in the case of an individual participating plan 
because the trust threshold would be based on total assets in the trust 
rather than assets in each individual plan. After carefully considering 
these issues, the Departments decided to propose that a large plan that 
elects to participate in a DCG must continue to be subject to an IQPA 
audit and that the audit report for the plan would have to be filed 
with the consolidated Form 5500 of the DCG reporting arrangement.
    The DOL acknowledges that at least some of these considerations 
could be applied to small plans participating in the DGC arrangement. 
While the DOL did not believe it would be appropriate to relieve from 
the IQPA audit requirement those large plans currently subject to the 
audit, it also did not believe that it would be appropriate to require 
small plans that are not currently required to have an IQPA audit to 
have such an audit as a condition of participating in a DCG reporting 
arrangement. Rather, in light of the fact that DCG reporting 
arrangements would be consolidating the assets of many unaffiliated 
small plans under the control of a single trustee in a single trust, 
and the DOL's understanding that such a trust could be subject to a 
single GAAS audit, the DOL is proposing that the DCG trust be audited 
by an IQPA as a way of adding protections for funds aggregated in the 
DCG trust. The DOL notes that this structure has some parallels to the

[[Page 51496]]

current reporting alternative for group insurance arrangements (GIAs) 
under 29 CFR 2520.103-2, another type of DFE that files the Form 5500 
Annual Return/Report on behalf of participating welfare benefit plans. 
The need for more information for DCGs than for GIAs is due to the 
difference between retirement and welfare plans, including the 
respective requirements under the Code, and also due to the fact that 
GIAs must provide welfare benefits fully through insurance.
    DOL further acknowledges that, under the proposal, for plans to be 
able to satisfy their annual reporting obligation by relying on the 
Form 5500 filing by a DCG reporting arrangement, the plans would have 
to be 100% invested in eligible plan assets as defined in the Form 
5500-SF instructions.
    Accordingly, plan assets in the DCG trust would, by definition, be 
held by regulated financial institutions, including banks or similar 
financial institutions and insurance companies, and may qualify for 
limited scope audit treatment in accordance with ERISA section 
103(a)(3)(C). Thus, even for large plans, the investment assets 
certified by those financial institutions/insurance companies would not 
be audited, and the auditor would not be performing valuation work on 
the assets covered by the bank or insurance company certifications. 
Although that may diminish some aspects of the IQPA requirement for 
large plans in DCG reporting arrangements, the DOL did not believe that 
it would be appropriate to propose that large plans be precluded from 
participating in a DCG unless the plan disclaimed reliance on the 
limited scope audit provisions in ERISA section 103(a)(3)(C) and had a 
full scope audit performed.
    The DOL further expects that, because all of the investments held 
in the DCG's single trust would be the subject of the DCG audit, it is 
likely that to reduce expenses the DCG reporting arrangement and the 
participating large plans would engage the same auditor to perform the 
audits of the DCG trust and any individual large plans participating in 
the DCG reporting arrangement. Alternatively, to the extent the 
individual plans engage different auditors, the DOL expects that the 
use of reports issued under Statement on Standards for Attestation 
Engagements No. 16 (SSAE 16) may permit the individual plan auditors to 
use those reports for the DCG trust to reduce their own audit work on 
the trust as part of the individual plan audit. The same rules for 
determining whether an individual plan is required to file as a large 
plan would apply to the plans within a DCG, including the ``80 to 120'' 
transition rule at 29 CFR 2520.103-1(d). Similarly, if finalized, the 
proposed change on using participants with account balances, rather 
than all eligible participants, to determine small plan status for 
general annual reporting purposes also would apply.
    With respect to the condition prohibiting multiemployer plans and 
MEPs from being part of DCG reporting arrangements, the Departments do 
not believe that section 202 of the SECURE Act was focused on allowing 
groups of multiemployer plans or MEPs, which already file a single Form 
5500 that covers all of the employers that participate in the plan, to 
file a single consolidated Form 5500 covering the group of 
multiemployer plans or MEPs. The Departments are also concerned that 
allowing a single consolidated Form 5500 in the case of such plans, for 
example, a group of multiemployer section 401(k) plans, could result in 
an undesirable reduction in transparency and financial accountability. 
Further, creating a consolidated report for such groups of plans would 
likely be much more complicated and costly than what is being proposed 
in this document. Nonetheless, the Departments acknowledge that such a 
limitation is not expressly set forth in section 202 of the SECURE Act, 
and, accordingly, solicits public comments on whether the final rule 
should include multiemployer plans and MEPs, and if so, what conditions 
should apply to DCG reporting arrangements that would include such 
plans.
3. Content Requirements for DCG Form 5500
    The proposal also sets forth the content requirements for the 
consolidated Form 5500 return/report filed by the DCG reporting 
arrangement. Under the proposal, DCGs would not be permitted to file a 
Form 5500-SF. Rather, DCG reporting arrangements would be required to 
file a Form 5500 Annual Return/Report that includes largely the same 
information that large pension plans and other DFEs are generally 
required to file, except that a DCG reporting arrangement would also be 
required to include in its annual report a proposed Schedule DCG 
(described below) to report individual participating plan information 
for each plan that is a part of the DCG reporting arrangement. 
Specifically, the content of the DCG annual return/report would include 
a Form 5500 Annual Return/Report of Employee Benefit Plan and any 
statements or schedules required to be attached to the form for such 
entity, completed in accordance with the instructions for the form, 
including Schedule A (Insurance Information), Schedule C (Service 
Provider Information), Schedule D (DFE/Participating Plan Information), 
Schedule G (Financial Transaction Schedules), Schedule H (Financial 
Information), Schedule R (Retirement Plan Information), Schedule DCG 
(Individual Plan Information), schedules described in Sec.  2520.103-
10(b)(1) and (b)(2), an IQPA audit report and the related financial 
statements covering the DCG trust, and, for DCG consolidated Form 5500 
filings that are intended to cover large plans (generally those with 
100 or more participants), an IQPA audit report and the related 
financial statements attached to the Schedule DCG for each such 
individual large plan. Financial statements include the financial 
statements of the trust, the notes to the financial statements and the 
schedules described in paragraph (b)(1) of Sec.  2520.103-10.
    Information reported on the various schedules to the Form 5500, 
other than the proposed Schedule DCG, would be reported in the 
aggregate. Thus, a Schedule A would be required for all insurance 
contracts that constitute one of the investments or investment 
alternatives available to all of the participants in a plan, regardless 
of whether certificates were to be issued to individual plans or 
participants upon selection of that option by a participant. The fees 
and commissions paid with respect to any insurance contracts available 
for investment by any of the plans/participants would be reported on 
the Schedule A. Similarly, a service provider to the trust and to each 
of the plans would be reported on Schedule C, even if the service 
provider did not actually provide services or charge fees to a 
particular plan because, for example, the service provider provided 
investment management services with respect to a particular investment 
option that was not selected by any of the participants in a particular 
plan. The $5,000 threshold would be based on the total amount received 
by the service provider. Reporting on Schedule C would still be 
required if the total amount was $5,000 or more, even if the amount 
paid by or charged against the assets of each the participating plans 
was less than $5,000 per plan. Reportable transactions on Schedule G 
would include any involving the assets of the trust and any parties in 
interest with respect to the trust. For reporting delinquent 
participant contributions on Schedule H, Line 4a, the Agencies would 
expect the DCG filing the annual report to identify the delinquent

[[Page 51497]]

participating employer in the attachment already required in the 
instructions.
    The Departments expect that cost savings for plans relying on a DCG 
filing compared to plans filing separately would generally only begin 
to emerge when the DCG collectively exceeds an aggregate participant 
count of 100 participants. In other words, the Departments do not 
expect a DCG filing to provide meaningful cost savings for plans, as 
compared to filing their own annual report, in the case of DCG 
arrangements with an aggregate participant count of under 100 
participants. Rather, the Departments expect in such cases that the 
individual plans would likely qualify for filing the Form 5500-SF and 
that they would likely find it more cost effective to file their own 
separate Form 5500-SF.\22\ Accordingly, this proposal does not include 
an option under which such a ``small'' DCG could file as a small plan 
filer. The Departments solicit comments on whether stakeholders expect 
there to be ``small'' DGCs, whether a ``small'' DCG alternative should 
be made available, and what the content requirements for such an 
alternative should be, e.g., whether the content of the ``small'' DCG 
annual return/report should include Schedule I instead of Schedule H, 
whether it should include the IQPA audit report and/or the schedules of 
assets, and whether it should include the Schedule C.\23\
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    \22\ Section III.A.1 of this preamble discusses the Departments' 
view that creating a consolidated group filing for employers 
required to file a Form 5500-EZ is similarly unlikely to generate 
administrative efficiencies for those employers, as compared to 
continuing to file separately.
    \23\ Since the aggregate participant count of the entire DCG 
would be less than 100, there could be no ``large plans'' 
participating in such a ``small'' DCG so the issue of an individual 
audit for a participating large plan would not arise.
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4. Proposed Schedule DCG (Individual Plan Information)
    Section 202(b) of the SECURE Act specifically provides that IRS and 
DOL may require the consolidated Form 5500 return/report filed by the 
DCG reporting arrangement to include any information regarding each 
plan in the group as IRS and DOL may determine necessary or appropriate 
for the enforcement and administration of the Code and ERISA. The 
proposed Schedule DCG would contain the plan level information needed 
by the IRS for administrating and enforcing tax laws passed by Congress 
and by the DOL for important Title I oversight functions, particularly 
with respect to large plans. A separate Schedule DCG would be required 
to be completed for each individual plan, similar to the requirement to 
complete a separate Schedule A for each insurance contract held by a 
plan or DFE filing the Form 5500. IRS examines individual plans, not 
groups of plans, to ensure that plan sponsors and/or employers comply 
with the tax laws governing retirement plans, and to help protect the 
retirement benefits of participants and beneficiaries. Thus, IRS 
requires information with respect to a plan's qualification, financial 
condition, and operation on a separate basis for each plan filing as 
part of a DCG. Individual plan financial information already reported 
on the Form 5500-SF is important for the DOL to continue to ensure that 
participants and beneficiaries of the individual plans participating in 
a DCG receive their promised benefits. The proposed Schedule DCG 
includes:
     Part I--DCG name and EIN/PN modeled on the similar plan-
level information on other schedules to the Form 5500. Information in 
Part I must match the DCG information reported on Part II of the 
consolidated Form 5500.
     Part II--confirmation that the plan for which the Schedule 
DCG is being filed is a single employer plan (as noted above, MEPs and 
multiemployer plans may not participate in a DCG under the proposal) 
and, if applicable, identification of the plan as a collectively 
bargained plan.
     Part III--basic individual plan information, including the 
plan name, plan number, plan effective date, plan sponsor's name and 
address, plan sponsor's EIN, plan sponsor's telephone number, plan 
sponsor's business code, total number of participants, total number of 
active participants, number of participants with account balances, and 
number of participants who terminated employment during the plan year 
with accrued benefits that were less than 100% vested.
     Part IV--plan financial information, including total plan 
assets (including participant loans), total plan liabilities, net plan 
assets, contributions received or receivable in cash from the employer, 
participants, and others; noncash contributions and, total 
contributions; benefit payments, corrective distributions, and certain 
deemed distributions of participant loans, direct expense information, 
net income, and assets transferred to (from) plans.
     Part V--two-digit boxes for entry of all applicable codes 
in the List of Plan Characteristics Codes in the instructions to the 
Form 5500.
     Part VI--compliance questions relating to delinquent 
participant contributions, plan assets/liabilities transferred from the 
plan, indication of whether the plan is a defined contribution plan 
subject to section 412 of the Code, plan coverage and nondiscrimination 
information, and whether a plan is a pre-approved plan that received a 
favorable IRS Opinion Letter.
     Part VII--questions for large plans (generally plans 
covering 100 or more participants as of the beginning of the plan year) 
regarding the required individual IQPA report and financial statements 
that must be filed with the Schedule DCG filed for the participating 
large plan.

B. SECURE Act Section 101 Amendment to ERISA Section 103(g) 
Participating Employer Information

1. Participating Employer Reporting Under ERISA Section 103(g)
    As discussed above, section 103(g) of ERISA, which was added to 
ERISA by the Cooperative and Small Employer Charity Pension Flexibility 
Act (CSEC Act) in 2014,\24\ requires multiple employer plans to include 
with their annual reports ``a list of participating employers'' and, 
with respect to each participating employer, ``a good faith estimate of 
the percentage of total contributions made by such participating 
employers during the plan year.'' The DOL issued an interim final rule 
on November 10, 2014, which implemented the section 103(g) reporting 
requirements by requiring filers that check the ``multiple employer 
plan'' box on the face of the Form 5500 or the Form 5500-SF, and to 
attach a list of participating employers and a good faith estimate of 
the percentage of total contributions made by each participating 
employer during the plan year. \25\ The 2014 interim final rule and the 
corresponding instructions further provided that unfunded or insured 
multiple employer welfare plans that are exempt under 29 CFR 2520.104-
44 from filing financial statements with their annual report must 
attach a list of participating employers, but do not have to include an 
estimated amount of contributions from each employer.\26\ Pursuant to 
the interim final rule, the section 103(g) reporting change became 
effective with the 2014 Form 5500 Annual Return/Report forms. The 2016 
proposal on modernization of the Form 5500 included a proposal to 
finalize these changes.\27\
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    \24\ Public Law 113-97 (Apr. 7, 2014).
    \25\ 79 FR 66617 (Nov. 10, 2014).
    \26\ See, e.g., 2020 Form 5500 instructions at 14; see also 2020 
Form 5500-SF instructions at 8-9.
    \27\ 81 FR 47534, 47564-47565.
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    The DOL received four comments on the interim final rule and six 
additional

[[Page 51498]]

comments in connection with the Paperwork Reduction Act (PRA) notice 
associated with the publication of the interim final rule.\28\ In 
addition, two comments on the 2016 proposal related to the proposal to 
finalize the 2014 interim final rule.\29\ The central concerns of most 
of the commenters was that filing the participating employer list 
imposes material costs and burdens on multiple employer plans and that 
making the employer list public was not in the best interests of plan 
participants and beneficiaries. One commenter suggested that the DOL 
should not apply the section 103(g) reporting changes to defined 
contribution or welfare plans because ERISA section 103(g) was added as 
part of the CSEC Act, which generally focused on ERISA minimum funding 
requirements that are not applicable for the majority of defined 
contribution pension plans or to any group health and welfare plans. In 
the 2016 proposed rule as well as in the Field Assistance Bulletin No. 
2019-01,\30\ DOL stated its position that it believes the section 
103(g) reporting requirements adopted by the 2014 interim final rule, 
which apply the new requirements to all multiple employer plans 
(defined benefit pension plans, defined contribution plans, and welfare 
plans), are a reasonable and appropriate way to implement Congress' 
directive in the CSEC Act. The information has proven useful to the DOL 
for its oversight functions for both MEPs and those MEWAs that file the 
Form 5500, regardless of the types of benefits provided by the MEWA. 
Before the DOL finalized the section 103(g) reporting requirements, the 
SECURE Act was enacted, which amended the original language in ERISA 
section 103(g), reaffirming that MEPs, including association retirement 
plans, PEOs, and the newly created pooled employer plans would have to 
report not just the existing identifying information, but also new 
financial information.
---------------------------------------------------------------------------

    \28\ See Proposed Extension of Information Collection Request 
Submitted for Public Comment; Revisions to Annual Return/Report--
Multiple Employer Plans, 79 FR 66741 (Nov. 10, 2014).
    \29\ Comments are available on the DOL's website.
    \30\ In 2019, the DOL issued Field Assistance Bulletin No. 2019-
01, which provided transition relief for MEPs that failed to file a 
complete and accurate participating employer information with their 
Form 5500 Annual Return/Report for the 2017 and prior plan years.
---------------------------------------------------------------------------

    Specifically, section 101 of the SECURE Act amended ERISA section 
103(g) by providing that annual reports for ``any plan to which [ERISA] 
section 210(a) applies (including a pooled employer plan)'' must 
include (1) a list of participating employers in the plan, a good faith 
estimate of the percentage of total contributions made by such 
participating employers during the plan year, and the aggregate account 
balances attributable to each employer in the plan (determined as the 
sum of the account balances of the employees of such employer (and the 
beneficiaries of such employees)); and (2) with respect to a pooled 
employer plan, identifying information for the person designated under 
the terms of the plan as the pooled plan provider. Although the SECURE 
Act added a specific reference to ERISA section 210(a), DOL believes 
that this reference was meant to emphasize that defined contribution 
multiple employer pension plans and different types of MEPs that became 
more accessible in recent years, such as association retirement plans, 
professional employer organization plans (PEOs), and the newly created 
pooled employer plan are required to comply with the participating 
employers reporting requirements, and not just defined benefit pension 
plans.
    The SECURE Act reporting changes are effective for plan years 
beginning on or after January 1, 2021. In order to implement the SECURE 
Act reporting requirements on a timely basis, the Agencies are 
proposing that, for the 2021 plan year, MEPs (including pooled employer 
plans, association retirement plans, and PEOs) would be required to 
provide the participating employer information as a nonstandard 
attachment to the 2021 Form 5500 Annual Return/Report in a similar 
manner as currently required, and the content of the attachment would 
be updated to add the aggregate account balances attributable to each 
participating employer in the plan to the current requirement to 
provide identifying information and the percent of contributions by 
each participating employer. In addition, a MEP that is a pooled 
employer plan would be required to indicate on the nonstandard 
attachment for 2021 that it is a pooled employer plan and provide 
information similar to information required to be reported on a 
proposed Schedule MEP, as discussed below, for the 2022 and following 
plan years, including confirming that the entity identified as the plan 
sponsor and administrator in Part I of the Form 5500 is the pooled plan 
provider, and providing the ACK ID for the pooled plan provider's most 
recent Form PR. For the 2022 and following plan years, MEPs would be 
required to report the participating employer information in a standard 
format on a proposed new Schedule MEP, as discussed below.
2. Participating Employer Reporting for MEWAs
    As discussed above, the SECURE Act amended ERISA section 103(g) by 
directing the reporting requirements specifically to multiple employer 
plans subject to ERISA section 210(a). The DOL continues to believe 
that receiving participating employer information from multiple 
employer welfare plans is important for oversight of such arrangements 
and should be continued. Even though the DOL originally relied on ERISA 
section 103(g) when it added the requirement for all multiple employer 
plans to provide the participating employer information, there are 
other rulemaking and reporting authorities that support continuing the 
reporting requirement for multiple employer welfare plans and extending 
it to non-plan MEWAs that file the Form M-1 (Report for Multiple 
Employer Welfare Arrangements (MEWAs) and Certain Other Entities 
Claiming Exception (ECEs) (Form M-1).
    Based on the authority in ERISA sections 101(g), 505, and 734, the 
DOL in 2003 promulgated a regulation at 29 CFR 2520.101-2 that required 
the administrators of both multiple employer welfare plans and non-plan 
MEWAs that offer or provide coverage for medical benefits to file the 
Form M-1 on an annual basis (Form M-1 annual report) as well as upon 
occurrence of certain registration events (Form M-1 registration 
filing). Effective for plan years beginning on or after January 1, 
2022, DOL is proposing to require MEWAs (plan and non-plan MEWAs) that 
offer or provide coverage for medical benefits to provide the 
participating employer information on the Form M-1 and not as an 
attachment to the Form 5500 Annual Return/Report. Specifically, new 
questions would be added to Form M-1 requiring MEWAs (plan and non-plan 
MEWAs) that offer or provide coverage for medical benefits to identify 
each participating employer in the MEWA by name and EIN and provide a 
good faith estimate of each participating employer's percentage of the 
total contributions made by all participating employer during the plan 
year. However, similar to the 2014 interim final rule issued under 
ERISA section 103(g), the Form M-1 proposal does not require 
contribution information from unfunded or insured MEWAs. Furthermore, 
the Form M-1 proposal would require contribution information on the 
Form M-1 annual report filing but not the Form M-1 registration filing. 
The DOL specifically solicits comments on whether the final rule should 
require participating

[[Page 51499]]

employer information on only the annual Form M-1 filing, and not on 
other M-1 required filings, in light of the fact that only annual 
information is required for plans reporting participating employer 
information on the Form 5500.
    With respect to multiple employer welfare plans that do not offer 
or provide coverage for medical benefits, and thus are not required to 
file a Form M-1 (for example, life or disability benefits), section 103 
of ERISA provides the DOL with the authority to require the plan 
administrator to furnish, as part of the Form 5500 annual report, the 
``name and address of each fiduciary.'' See ERISA section 103(c)(2). In 
the DOL's view, the employer is acting as a fiduciary with respect to 
its decision to provide ERISA-covered benefits through a MEWA rather 
than through a single employer plan and also is a fiduciary for 
purposes of continuing to monitor the plan that it adopted.\31\ 
Accordingly, the DOL is relying on ERISA section 103(c)(2) as its 
authority for requiring multiple employer welfare plans (other than 
those that file the Form M-1) to continue reporting the participating 
employer identifying information, and unless unfunded or insured, a 
good faith estimate of each participating employer's percentage of the 
total contributions made by all participating employer during the plan 
year.\32\ As is currently required for such plans, the information 
would continue to be filed as an attachment to the Form 5500 Annual 
Return/Report. MEWAs, however, whether those reporting on the Form 
5500/Form 5500-SF or the Form M-1, would not be required to provide the 
new aggregate account balances information that was added by the SECURE 
Act to section 103(g).
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    \31\ See Advisory Opinion Letter 2007-06A (Aug. 16, 2007) 
(``decisions regarding the method through which benefits are to be 
paid under an employee welfare benefit plan, including the selection 
of an insurer and the negotiation of the terms of any contractual 
arrangement obligating the plan, are matters that generally are 
subject to the fiduciary responsibility provisions of Title I of 
ERISA''.); Information Letter to Diana Ceresi (Feb. 2, 1998) (``when 
the selection of a health care provider involves the disposition of 
employee benefit plan assets, such selection is an exercise of 
authority or control with respect to the management and disposition 
of the plan's assets within the meaning of section 3(21) of ERISA, 
and thus constitutes a fiduciary act . . .''); See also Advisory 
Opinion Letter 2018-01A (Nov. 5, 2018) (In the context of a pension 
plan rollover service provider, not covered by Title 1 of ERISA, 
``When plan sponsors or other responsible fiduciaries choose to have 
a plan participate in the RCH Program, they are acting in a 
fiduciary capacity, and would be subject to the general fiduciary 
standards and prohibited transaction provisions of ERISA in 
selecting and monitoring the RCH Program.'')
    \32\ Similar to the 2014 interim final rule issued under ERISA 
section 103(g), such multiple employer welfare plans that are 
unfunded or insured and exempt under 29 CFR 2520.104-44 from filing 
financial statements with their annual report will continue to be 
required to attach a list of participating employers, but do not 
have to include the contribution information. See, e.g., 2020 Form 
5500 instructions at 14; see also 2020 Form 5500-SF instructions at 
8-9.
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    For the 2021 plan year, pending the implementation of the Form M-1 
changes, all plan MEWAs would continue to provide participating 
employer information as a nonstandard attachment to the 2021 Form 5500 
Annual Return/Report in a similar manner as currently required.
    The proposal, by transferring the participating employer 
information from the Form 5500 Annual Return/Report to the Form M-1 for 
MEWAs that offer or provide coverage for medical benefits and 
continuing to require reporting of participating employer information 
on the Form 5500 Annual Return/Report for plan MEWAs that provide other 
benefits, would enable the DOL to receive such information from both 
plan and non-plan MEWAs, regardless of how they are funded or 
structured. The DOL and other users of the Form M-1 data (e.g., state 
insurance regulators) would have access to updated and current lists of 
participating employers because the Form M-1 must be filed annually as 
well as upon the occurrence of certain registration events (30 days 
prior to MEWAs operating in any state or expanding their operations 
into an additional state; and within 30 days of a merger, material 
change, or a participant increase of 50% or more).

C. Proposed Form 5500-Schedule MEP (Multiple Employer Pension Plan 
Information) and Requirement That MEPs (Including Pooled Employer 
Plans) File the Form 5500 and not the Form 5500-SF

    The proposal would add a new Schedule MEP (Multiple Employer 
Pension Plan Information) to the Form 5500 Annual Return/Report that 
would be completed by MEPs. The proposal also would add a limited 
number of additional data items elsewhere on the Form 5500 relevant to 
MEPs. The proposed Schedule MEP would provide a unified vehicle to 
report information related to new SECURE Act provisions, including 
information unique to MEPs. The first section, Part I, like the other 
schedules to the Form 5500, would require filers to enter identifying 
information (which must match the information entered on the Form 5500) 
and to indicate the plan type by checkbox. The instructions would 
provide general definitions for purposes of annual reporting for the 
various categories of pension plans that must complete the Schedule 
MEP. This would include different types of MEPs (group or association 
retirement plans within the meaning of 29 CFR 2510.3-55(b) (association 
retirement plans), professional employer organization plans within the 
meaning of 29 CFR 2510.3-55(c) (PEO plans), pooled employer plans 
within the meaning of ERISA section 3(43), and other MEPs covering the 
employees of two or more employers that are not single or multiemployer 
plans for annual reporting purposes). Multiemployer plans, as defined 
under section 3(37) of ERISA, would not be required to complete the 
Schedule MEP.\33\
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    \33\ Multiemployer defined pension benefit plans are required to 
provide, on Form 5500, Schedule R (Retirement Plan Information), 
identifying information and the percentage of contributions for 
those plans that are five percent or more contributors for the plan 
year being reported.
---------------------------------------------------------------------------

    Part II of the proposed Schedule MEP would be a repeating line item 
on which all MEPs would report information under ERISA section 103(g) 
regarding participating employers, including employer/plan sponsor 
name, EIN, and the percentage of total contributions to the plan or 
arrangement by each participating employer, and the aggregate account 
balances information the SECURE Act added to ERISA section 103(g).\34\ 
That information is currently collected for MEPs as a non-standard 
attachment to the Form 5500 and Form 5500-SF.\35\ Pursuant to the 
SECURE Act, a new data element would be added to require reporting of 
the aggregate account balances for each participating employer in the 
MEP.
---------------------------------------------------------------------------

    \34\ As discussed above, MEWAs would report the participating 
employer information either as an attachment to the Form 5500 or on 
the Form M-1.
    \35\ The total contributions are the amount reported on Form 
5500, Schedule H, line 2(a)(3) or the total of lines 8a(1), 8a(2), 
and 8a(3) on the Form 5500-SF.
---------------------------------------------------------------------------

    Part III would be completed by pooled employer plans. A pooled 
employer plan would be required to indicate whether the pooled plan 
provider operating the plan (identified on the Form 5500 for each of 
the pooled employer plans it operates as both the plan sponsor and the 
plan administrator) has complied with the registration requirements for 
pooled plan providers under section 3(43) and 3(44) of ERISA by filing 
a Form PR, in accordance with that form's instructions.\36\ The pooled 
employer plan would be required to provide the ``ACK ID''--the 
acknowledgement code generated by the system in response to a completed 
filing--for the most recent

[[Page 51500]]

Form PR submitted.\37\ Pooled employer plans would also be required to 
indicate whether certain services were provided by an affiliate, and, 
if relying on a prohibited transaction exemption for the use of an 
affiliate, to identify the prohibited transaction (whether a class or 
individual) exemption.
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    \36\ See Form PR and its instructions, available at 
www.efast.dol.gov.
    \37\ The instructions to the Form PR advise the pooled plan 
provider that it must keep, under section 107, the electronic 
receipt for the Form PR filing as part of the records of the pooled 
employer plans operated by the pooled plan provider.
---------------------------------------------------------------------------

    The DOL, through rules and other initiatives, has pursued and 
required improvements in fee transparency to ensure that ERISA plan 
fiduciaries and plan participants are effectively informed about 
service provider fees and expenses, including cost and performance 
information of designated investment alternatives under the plan. These 
considerations are particularly important in the case of pooled 
employer plans and MEPs given their structure and the roles that 
traditional service providers end up playing as plan sponsors and plan 
administrators. Accordingly, comments are specifically solicited on 
whether more specifically tailored questions should be added, in 
addition to those already on the Schedules C and H, to report fee and 
expense information on pooled employer plans and other MEPs, including 
information on how fees and expenses are allocated among participating 
employers and among covered participants and beneficiaries.
    Further, the proposal would require all MEPs, similar to the 
current rule for multiemployer plans and the proposed rule for DCGs, to 
file the Form 5500 regardless of whether they would otherwise be 
eligible to file the Form 5500-SF. Making the filings across plan types 
more uniform would enable more consistent and informed oversight of 
collective retirement arrangements. Small MEPs would have the same 
simplified Form 5500 reporting as small pension plans, including MEPs, 
that currently file the Form 5500. They would be able to file the 
Schedule I instead of the Schedule H and its financial attachments, 
would not be required to complete the Schedule C or Schedule G, and 
would be able to file without having an IQPA audit and attaching an 
IQPA report.

D. Improving Usability of Data Collection for Schedule H, Line 4i 
Schedules of Assets

    By their nature, MEPs have the potential to build up a substantial 
amount of assets quickly and the effect of any abusive schemes on 
future retirement distributions may be hidden or difficult to detect 
for a long period. The DOL is aware that MEPs could be the target of 
fraud or abuse for this reason. Although DOL is not aware of direct 
information indicating that the risk for fraud and abuse is greater for 
MEPs than for other defined contribution pension plans, a key component 
of the proposal is to make the financial information reported on the 
Form 5500 Annual Return/Report more data mineable and accessible for 
enforcement and analysis purposes. The DOL does not believe it would be 
sensible to limit this aspect of the proposal to just pooled employer 
plans and other MEPs because, although an important data improvement 
for MEPs, the need for more relevant and comparable financial 
information extends to defined contribution and defined benefit pension 
plans generally. Reports from GAO, the DOL--Office of Inspector 
General, the ERISA Advisory Council, and the Treasury Inspector General 
for Tax Administration (``TIGTA'') have focused on the need for 
increased transparency and accountability generally in connection with 
employee benefit plan investments in hard-to-value and alternative 
assets and those held through pooled investment vehicles. It also would 
be confusing and inefficient to try to adopt these kinds of financial 
reporting improvement just for MEPs or for certain types of MEPs.
    Mandatory e-filing, which was implemented for the 2009 form filing 
year, changed both the regulated community's and the government's 
ability to use the Form 5500 Annual Return/Report data. The data sets 
developed from e-filing information have been helping researchers, 
businesses, and other plan professionals.\38\ The Form 5500 Annual 
Return/Report data sets can be one of the major building blocks for a 
private organization to use in developing information for employees and 
employers on plan administration. Currently, however, the line 4i 
attachments to Schedule H (Schedule of Assets Held at End of Year, 
Schedule of Assets Acquired and Disposed of Within Year and the 
Schedule of Reportable Transactions) are difficult to search, filter, 
aggregate, and analyze because they are not filed in a standardized 
electronic format. As a result, the Agencies, policymakers, employers, 
labor organizations, participants and beneficiaries, and the public 
have difficulty accessing key information about plan investments. This 
proposal to establish a standardized electronic filing format for the 
Schedule H, line 4i Schedules of Investments is also intended to be 
responsive to the OIG's recommendation that the Agencies create a 
searchable reporting format for the Schedule H, line 4i Schedules of 
Assets and otherwise increase the accessibility of Form 5500 Annual 
Return/Report information, particularly information on hard-to-value 
assets and multiple-employer plans. See DOL-OIG EBSA Needs to Provide 
Additional Guidance and Oversight to ERISA Plans Holding Hard-To-Value 
Alternative Investments, at 17. See also Private Pensions: Targeted 
Revisions Could Improve Usefulness of Form 5500 Information, at 37; see 
also U.S. Gov't Accountability Office, GAO-12-665, Federal Agencies 
Should Collect Data and Coordinate Oversight of Multiple Employer Plans 
(2012), at 30.
---------------------------------------------------------------------------

    \38\ EBSA is responsible for collecting the Form 5500 Annual 
Return/Report, in part, to fulfill the statutory requirements under 
Sections 104 and 106 of ERISA, which require that DOL make annual 
reports filed under Title I of ERISA available to the public. EBSA 
also makes the Form 5500 filings and data available to the public 
under the Freedom of Information Act (FOIA), 5 U.S.C. 552. EBSA 
fulfills its responsibilities by making the Form 5500 Annual Return/
Report data available for downloading in bulk. See http://www.dol.gov/ebsa/foia/foia.html. These bulk data files, which EBSA 
updates at the end of each month with the Form 5500 Annual Return/
Report data collected during that month, are downloaded by private-
sector organizations that, in some cases, also make the data 
available on the internet. Thus, most returns/reports are currently 
open to public inspection, and the contents are public information 
subject to publication on the internet.
---------------------------------------------------------------------------

    Schedule H, line 4i would be separated into two elements--line 
4i(1) would ask whether the plan held assets for investment at the end 
of the year; line 4i(2) would ask about assets acquired and disposed of 
during the plan year. The information to be collected as part of the 
schedules would be largely unchanged, but some adjustments are being 
proposed to improve the consistency and quality of the data. The 
proposal clarifies conventions for identifying filers by name and 
identifying number(s).\39\ The proposal would require plans to use 
legal entity and other industry and regulatory identifiers for 
investment assets whenever possible. Check boxes are also being added 
for participant directed individual account plans to identify 
investments that are designated investment alternatives and qualified 
default investment alternatives and to require entry of the total 
annual

[[Page 51501]]

operating expenses for the investments expressed as a percentage of 
assets that was furnished to participants and beneficiaries in their 
most recent ``404a-5 statement.'' \40\ With the expected increase in 
employers choosing to offer retirement benefits through MEPs and DCGs, 
instead of stand-alone plans that file their own annual return/report, 
and the requirement for DCGs to provide the same investments and 
investment alternatives, these changes are intended to help the 
Agencies, employers, and other interested stakeholders compare plan 
participation, investment options, and investment performance from 
year-to-year.
---------------------------------------------------------------------------

    \39\ These changes are also intended to address concerns raised 
by the GAO in recommending that ``the Agencies develop a central 
repository for EIN and Plan Numbers (PNs) for filers and service 
providers to improve the comparability of form data across 
filings.'' GAO Private Pensions: Targeted Revisions Could Improve 
Usefulness of Form 5500 Information, at 37.
    \40\ See 29 CFR 2550.404a-5. The DOL published a final rule in 
2012 that was designed to help America's workers manage and invest 
the money they contribute to their 401(k)-type pension plans. The 
rule requires that workers in this type of plan are given, or have 
access to, the information they need to make informed decisions, 
including information about fees and expenses; the delivery of 
investment-related information in a format that enables workers to 
meaningfully compare the investment options under their pension 
plans; that plan fiduciaries use standard methodologies when 
calculating and disclosing expense and return information so as to 
achieve uniformity across the spectrum of investments that exist 
among and within plans, thus facilitating ``apples-to-apples'' 
comparisons among their plan's investment options; and a new level 
of fee and expense transparency. Requiring the total annual 
operating expenses from those statements to be included on the 
plan's Form 5500 is intended to help further that objective by 
allowing third-party data aggregators to build tools that will help 
employers, participants and beneficiaries, the Agencies, and other 
interested members of the public evaluate and monitor investment 
alternatives being made available for America's workers to save to 
their retirement.
---------------------------------------------------------------------------

E. Schedules MB, SB and R--Proposed Modifications and Additions to 
Information Reported

    As described more fully below, the Agencies propose adding new 
questions to the Form 5500 Schedule MB (Multiemployer Defined Benefit 
Plan and Certain Money Purchase Plan Actuarial Information), Schedule 
SB (Single-Employer Defined Benefit Plan Actuarial Information), and 
Schedule R (Retirement Plan Information), and modifying the demographic 
and benefit attachment requirements to enable the Agencies to project 
more precisely defined benefit pension plans' and insurance programs' 
liabilities. Also for multiemployer defined benefit pension plans, 
among other changes, the Agencies propose identifying a larger number 
of contributing employers. For both single-employer and multiemployer 
defined benefit pension plans, the Agencies propose the option to 
provide certain required attachments in a spreadsheet file to make it 
easier for the Agencies to access the information.
1. Schedule MB Modifications
    Currently, Schedule MB requires that if any of the employer 
contributions reported in line 3 include amounts owed for withdrawal 
liability, an attachment must be provided listing the total withdrawal 
liability amounts and the dates such amounts were contributed. The 
Agencies propose modifying the line 3 instructions to require an 
attachment that breaks down the total withdrawal liability amounts by 
date, separately specifying the periodic withdrawal liability amounts 
and lump sum withdrawal liability amounts.
    Currently, line 6 of Schedule MB requires filers to provide 
information about the actuarial assumptions used to determine plan 
liabilities. The Agencies propose adding a new requirement for plans 
that assess withdrawal liability to an employer during the plan year to 
report the interest rate used to determine the present value of vested 
benefits for withdrawal liability determinations. This information 
would be reported in a new line, which would become line 6f. In 
addition, the Agencies propose modifying the questions related to the 
line 6 ``expense load'' to better align with the various ways 
multiemployer plans incorporate expense loads into their calculations. 
Filers would be required to indicate if an expense load is included in 
normal cost and, if so, whether it is determined as a percentage of 
normal cost, a dollar amount that varies from year to year, or 
something else. As part of the modification, the Agencies propose 
moving the expense load from line 6e to a new line 6i and to revise the 
instructions accordingly.
    In addition, the Agencies propose modifying line 8 of Schedule MB 
by requiring additional information about demographics, benefits, and 
contributions as described below. As is the case currently with respect 
to line 8, these requirements would apply only to PBGC-insured 
multiemployer plans with 500 or more total participants as of the 
beginning of the plan year.
     Benefit Projections--Currently, such plans are required to 
attach a projection of benefits expected to be paid in each of the next 
ten years (see line 8b(1)).\41\ The Agencies propose modifying the 
format of the attachment to show the benefit projection broken down 
into three categories based on the participant's or beneficiary's 
status on the valuation date (i.e., active, terminated vested, in pay 
status). In addition, the projection period would be extended from 10 
to 50 years. It is the Agencies' understanding that almost all 
valuation software automatically generates these numbers and that it 
takes the same amount of effort to project 50 years as it does to 
project 10 years.
---------------------------------------------------------------------------

    \41\ The current instructions provide that the line 8b(1) 
attachment is required for plans with 500 or more participants as of 
the valuation date, not as of the beginning of the plan year. The 
Agencies are proposing to change that to ``the beginning of the plan 
year'' because the only participant count reported on Schedule MB is 
the count at the beginning of the plan year (i.e., line 2b(3)(c), 
column 1) and because doing so is consistent with another Schedule 
MB requirement, See instructions for line 8b(2).
---------------------------------------------------------------------------

     Contribution Projections--The Agencies propose adding a 
new requirement that such plans provide, as an attachment, a 10-year 
projection of employer contributions and withdrawal liability payments. 
A new line, line 8b(3), would be added to Schedule MB where the filer 
would report whether the projection is required. As is the case with 
the benefit projection attachments, the instructions would provide the 
required format for the attachment.
     Average age/benefit--The Agencies propose requiring such 
plans to report the average age and average monthly benefit separately 
for terminated vested participants and retired participants and 
beneficiaries receiving payments. This information would be provided 
directly on Schedule MB, in new line 8b(4).
    The Agencies also propose a change to the ``age/service'' scatter 
attachment which is currently required for PBGC-insured multiemployer 
plans with active participants, regardless of the number of 
participants. Currently, the scatter shows, for each ``attained age'' 
and ``years of credited service'' grouping of active participants, the 
number of active participants, and if the total number of active 
participants at the beginning of the plan year is 1,000 or more, (1) 
for plans that use compensation to determine benefits, the average 
compensation, and (2) for cash balance plans, the average cash balance 
account (see line 8b(2)). The Agencies propose modifying the age/
service scatter by deleting the required information related to cash 
balance plans and adding a requirement to report average accrued 
monthly benefits as of the valuation date for each grouping (for plans 
with 1,000 or more active participants at the beginning of the year). 
As is the case with respect to average compensation, the accrued 
benefit information would not be required for any age/service 
combination that contains fewer than 20 participants.
    The Agencies also propose clarifying the line 4f instructions and 
Schedule language concerning when (or if) plans in critical status or 
critical and

[[Page 51502]]

declining status are projected to emerge or become insolvent, as 
filers' previous responses indicate they may have been confused as to 
how to fill out line 4f correctly.
2. Modifications to Schedule SB
    The Agencies propose making the Schedule SB (actuarial schedule), 
line 26 reporting requirements about demographics and benefits similar 
to the requirements for PBGC-insured multiemployer plans. Consistent 
with the requirements for PBGC-insured multiemployer plans, the new 
single-employer plan requirements would apply only to plans with 500 or 
more total participants. However, because the only participant count 
information reported on Schedule SB is as of the valuation date, for 
single-employer plans, participants are counted as of the valuation 
date for this purpose instead of as of the beginning of the plan year. 
Such plans would be required to attach a projection of benefits 
expected to be paid in each of the next 50 years broken down into three 
categories based on the participant's or beneficiary's status on the 
valuation date (i.e., active, terminated vested, in pay status). The 
instructions would provide the requirements for the attachment's 
format. The Agencies are also proposing that these plans report the 
average age and average monthly benefit separately for terminated 
vested participants and retired participants and beneficiaries 
receiving payments. As discussed above, the Agencies do not believe the 
benefit projection requirement would be burdensome for such single-
employer plans, as almost all valuation software automatically 
generates these numbers.
    To facilitate these changes, the Agencies propose rearranging 
Schedule SB line 26. Currently, line 26 relates only to the ``age/
service'' scatter of active participant data required to be attached to 
Schedule SB for PBGC-insured single-employer plans with active 
participants. The Agencies propose changing line 26 into a three-part 
question (26a, 26b, and 26c). Line 26a would be the current line 26. 
New line 26b would require PBGC-insured single-employer plans with 500 
or more total participants as of the valuation date to attach a 
projection of expected benefit payments. New line 26c would be the line 
for plans to report average age and average monthly benefit 
information.
    The Agencies propose modifying Part IX of the Schedule SB, and its 
instructions, so that it relates to elective funding relief provided 
under the American Rescue Plan (ARP) Act of 2021 instead of elective 
funding relief provided under the Pension Relief Act of 2010 (PRA 
2010). The PRA 2010 information is no longer needed because the ARP Act 
reduces to zero all shortfall amortization bases, including 
amortization bases established pursuant to the PRA 2010 elective 
funding relief. As modified, plan sponsors of single-employer defined 
benefit plans that elect to have the ARP Act extended amortization rule 
apply before the 2022 plan year would be required to report the first 
plan year to which the extended amortization rule applies.
3. Modification to Schedule R Reporting Requirement
    The Agencies propose modifying Schedule R's Part V, line 13 
requirement that multiemployer defined benefit pension plans subject to 
minimum funding standards report identifying information about any 
participating employer whose contributions to the plan account for more 
than five (5) percent of the total contributions for the year. The 
proposed change would require that plans report identifying information 
about any participating employer who either (1) contributed more than 
five percent of the plan's total contributions or (2) was one of the 
top ten highest contributors. This will ensure that reported data 
represents a reasonable sampling of contributors.
4. Change in Format for Certain Schedule MB and SB Attachments
    EFAST filers currently file Form 5500 attachments as PDF and plain 
text (TXT) files. A PDF file is required only if the attachment is 
supposed to be signed. TXT attachments are rarely provided. Many 
attachments include a lot of numbers (e.g., benefit projections, age/
service scatters) that are reported in tables. These numbers have to be 
extracted out of PDF tables and entered into databases or spreadsheets 
before the Agencies can use the information for various projects, 
studies, etc. This is costly and inefficient. It would be more 
efficient for the Agencies if this information was instead provided by 
filers in a tabular format (spreadsheet). Therefore, the Agencies 
propose modifying the instructions to allow and suggest (but not 
require) that certain attachments be provided in a tabular format 
(spreadsheet) such as CSV or XLS rather than PDF or TXT formats. The 
attachments affected by this change are:

------------------------------------------------------------------------
         Attachment             Schedule MB           Schedule SB
------------------------------------------------------------------------
Schedule of Projection of     Line 8b(1).....  Line 26b.
 Expected Benefit Payments.
Schedule of Active            Line 8b(2).....  Line 26a.
 Participant Data (i.e., Age/
 service scatter).
Withdrawal Liability Amounts  Line 3.........  N/A.
Schedule of Projection of     Line 8b(3).....  N/A.
 Employer Contributions and
 Withdrawal Liability.
------------------------------------------------------------------------

    Because much of this information is automatically generated by 
valuation software, the Agencies expect that this option may simplify 
the process for preparing attachments as well.

F. Internal Revenue Code-Based Questions for the 2022 Form 5500s

    Prior to 2009, Schedule E, ESOP Annual Information, Schedule P, 
Annual Return of Fiduciary of Employee Benefit Trust, and Schedule T, 
Qualified Pension Plan Coverage Information, were required as part of 
the annual return under section 6058(a) of the Code and associated 
regulations, but they were not information collections of the DOL or 
the PBGC. Beginning in 2009, DOL mandated electronic filing of Form 
5500, Annual Return/Report of Employee Benefit Plan, and Form 5500-SF, 
Short Form Annual Return/Report of Small Employee Benefit Plan. 
Limitations on the IRS' authority to require electronic filing of 
annual returns resulted in the removal of the ``IRS-only'' schedules 
from the Form 5500 filing requirements. See Code section 6011(e).
    The 2011 report from the TIGTA entitled ``The Employee Plans 
Function Should Continue Its Efforts to Obtain Needed Retirement Plan 
Information'' notes that the lack of information contained on Schedules 
E, P, and T can negatively impact the IRS's ability to effectively 
focus on specific factors of noncompliance when selecting retirement 
plans for examination. This lack of information may result in the IRS 
selecting relatively compliant plans, which increases the burden on 
these plans and affects the IRS's ability to identify and focus on 
potentially noncompliant plans. Additionally, the Employee Plans (EP) 
function has

[[Page 51503]]

focused its examination strategy on identifying plans with non-
compliance by using compliance strategies and data analysis. Compliance 
strategies use agents' experience to identify certain types of plans 
where EP sees numerous qualification failures. EP uses data analysis by 
identifying certain responses to questions on the Form 5500 that 
indicate that a plan may be non-compliant.
    Rather than reinstating the Schedules E, P, and T, the IRS is 
proposing to add new questions to the 2022 Form 5500 that are designed 
to assist the IRS in identifying plans that are non-compliant relating 
to Code section 410(b) coverage, Code section 401(a)(4) non-
discrimination, and Code section 401(k) non-discrimination testing. 
Additionally, the IRS is proposing to add a question that will help it 
identify whether adopters of pre-approved plans have been updated 
timely for changes in the law. DCGs would report this information at 
the plan level as part of the Schedule DCG.
    Specifically, the proposal would add a nondiscrimination and 
coverage test question to Form 5500 and Form 5500-SF that was on the 
Schedule T before it was eliminated. The question asks if the employer 
aggregated plans in testing whether the plan satisfied the 
nondiscrimination and coverage tests of Code sections 401(a)(4) and 
410(b). A plan that is aggregated with another plan to pass either 
nondiscrimination or coverage testing generally has more issues that 
are technically complicated and raise the possibility of non-
compliance. Adding this question will allow EP to identify these plans 
for examination over plans that are likely more compliant with the law. 
This question is also helpful when performing pre-examination analysis 
and allows the IRS to narrow any inquiries for information that is 
requested from the plan sponsor. The restoration of this question also 
reflects the elimination of optional coverage and nondiscrimination 
demonstrations in the IRS determination letter process. See Rev. Proc. 
2012-6, 2012-1 I.R.B. 235, and Announcement 2011-82, 2011-52 I.R.B. 
1052.
    The proposal would add a question to Form 5500 and Form 5500-SF, 
for section 401(k) plans, asking whether the plan sponsor used the 
design-based safe harbor rules or, if applicable, the ``prior year'' or 
``current year'' ADP test. ADP testing and nondiscrimination are 
significant compliance issues for section 401(k) plans. For example, a 
plan that performs prior year or current year ADP testing is more 
likely to have compliance issues than a plan with a designed-based safe 
harbor. Adding this question will allow EP to identify for examination 
section 401(k) plans that use ADP testing over plans that have 
designed-based safe harbors. This question will also help the IRS 
perform pre-examination analysis and, for design-based safe harbor 
plans, verify whether (1) allocations of required safe harbor 
contributions comply with the terms of the plan, and (2) proper notice 
requirements are satisfied on an annual basis.
    The proposal would add a question to Form 5500 and Form 5500-
SF,\42\ asking whether the employer is an adopter of a pre-approved 
plan that received a favorable IRS Opinion Letter, the date of the 
favorable Opinion Letter, and the Opinion Letter serial number. This 
question will help the IRS identify whether a plan sponsor has adopted 
a pre-approved plan and to determine whether the plan was adopted 
timely in accordance with the Code section 401(b) remedial amendment 
period. This question will also assist the IRS in determining whether 
to select a plan for examination as a late amender for changes in the 
law.
---------------------------------------------------------------------------

    \42\ IRS will separately make a parallel update to the Form 
5500-EZ, which is solely in the jurisdiction of the IRS.
---------------------------------------------------------------------------

    Finally, the proposal would add a new checkbox F to Form 5500-EZ, 
Part I, asking whether a filer is required to file Form 5500-EZ 
electronically pursuant to Treas. Reg Sec.  301.6058-2. A filer who has 
to file at least the applicable number of returns with the IRS during a 
calendar year generally must file Form 5500-EZ electronically under 
EFAST2. The applicable number is 10 for returns required to be filed 
during calendar years after 2022. If a filer is required to file Form 
5500-EZ electronically, but fails to do so, the filer is deemed to have 
failed to file Form 5500-EZ. This question will assist IRS in 
determining if a filer is in compliance with IRS mandatory electronic 
filing rules, in the event a paper Form 5500-EZ is filed.

G. Change to Participant-Count Methodology for Determining Independent 
Qualified Public Accountant Audit Requirement for Individual Account 
Plans

    The Agencies are proposing to change the rules for determining when 
a defined contribution pension plan is exempt from the requirement to 
include an IQPA report with its annual return/report filing. Currently, 
the plan size measure for the IQPA audit requirement is based on the 
total number of participants at the beginning of the plan year, 
including those eligible to elect to have contributions made under a 
section 401(k) qualified cash or deferred arrangement even if they have 
not elected to participate and do not have an account balance in a 
section 401(k) or 403(b) plan. Some stakeholders have pointed out that 
the use of this definition for the audit threshold may result in two 
plans with the same number of active participants, e.g., 85 account 
holders, with one subject to an audit and the other not based on the 
number of non-participating but eligible employees of the plan sponsor. 
They questioned the policy basis for such a difference in application 
of the audit requirement. Further, under this definition, some 
stakeholders have suggested that section 112 of the SECURE Act could 
make it even more likely that a plan with a small number of active 
participants may be required to bear the cost of an audit based on 
eligible but not participating employees being counted toward the audit 
threshold. Specifically, because section 112 provides that long-term, 
part time workers that have reached the plan's minimum age requirement 
and worked at least 500 hours in each of three consecutive 12-months 
period must be permitted to make elective contributions to a section 
401(k) qualified cash or deferred arrangement for plan years beginning 
on or after January 1, 2024, there could be more employees eligible to 
participate that elect not to do so. These eligible employees who are 
not active participants would still be impacting the threshold for 
determining whether the plan would have to file as a large plan.\43\
---------------------------------------------------------------------------

    \43\ The Agencies proposed a similar change in 2016 and received 
few comments on that aspect of the proposal. 81 FR 47534 (Jul. 16, 
2016).
---------------------------------------------------------------------------

    To address these issues, the Agencies are proposing to add to the 
Form 5500 and Form 5500-SF a new question for defined contribution 
pension plans only, asking for the number of participants with account 
balances at the ``beginning of the year,'' in addition to the current 
end-of-year count for defined contribution pension plan participants 
with account balances. Defined contribution pension plans would 
determine whether they have to file as a large plan and whether they 
have to attach an IQPA report and audited financial statements based on 
the number of participants with account balances as of the beginning of 
the plan year, as reported on the face of the Form 5500 or Form 5500-
SF. To avoid circumstances in which a beginning-of-year count would 
result in an inappropriate exclusion of large plans

[[Page 51504]]

from the audit requirement, for first plan year filings, the 
participant count for this purpose would exclude only plans that have 
fewer than 100 participants with account balances both at the beginning 
of the first plan year and the end of the first plan year.\44\ Thus, 
under the proposal, the determination would be based on the number of 
participants with account balances as of the beginning of the plan year 
(as reported on proposed line 6g(1) of the Form 5500 or line 5c(1) of 
the Form 5500-SF), except that the determination for first plan year 
filings would be based on the number of participants with account 
balances both at the beginning of the plan year and at the end of the 
plan year (as reported on proposed line 6g(2) of the Form 5500 and line 
5c(2) of the Form 5500-SF).
---------------------------------------------------------------------------

    \44\ This would not otherwise change how participants are 
counted for Form 5500 reporting purposes.
---------------------------------------------------------------------------

H. Miscellaneous and Conforming Changes for Forms and Instructions

    Various other technical, formatting, and conforming changes to the 
forms, schedules, and instructions are being proposed as part of the 
substantial restructuring of the Form 5500 Annual Return/Report 
described in this notice. For example, to implement the proposed 
Schedule MEP and Schedule DCG, the proposal includes conforming changes 
to other parts of the forms, schedules, and instructions. The 
instructions for what constitutes a multiple employer plan for purposes 
of the Form 5500 would generally be left unchanged, but conforming 
changes would be made throughout the instructions as necessary to 
reference the Schedule MEP and pooled employer plans for pension plans. 
The instructions would also be amended to reflect the transferring of 
the participating employer information from the Form 5500 Annual 
Return/Report to the Form M-1 for MEWAs that offer or provide coverage 
for medical benefits, and continued reporting of participating employer 
information on the Form 5500 Annual Return/Report as an attachment for 
plan MEWAs that provide other benefits. The instructions for Part I, 
DFE box, would be updated to add a code for DCGs, which would be 
instructed to check the DFE box, enter the correct code, and attach the 
proposed Schedule DCG. The proposed Schedule MEP and Schedule DCG would 
be added to the list of pension schedules. DCG filers would have to 
check that they are adding the Schedule DCG and enter the number of 
Schedules DCG attached. Other conforming changes would also be made 
throughout the instructions as necessary to reference DCGs and Schedule 
DCG. The DOL's reporting regulation at 29 CFR 2520.103-1(c)(2)(ii) and 
the Form 5500-SF instructions would be amended to add MEPs and DCGs to 
those types of filers that are not permitted to file a Form 5500-SF, 
but must instead file the Form 5500, with all required schedules and 
attachments. The instructions would be revised to state that pooled 
employer plans and DCGs would not report investment assets aggregated 
into master trust investment accounts (MTIAs) because the purpose of 
the MTIA reporting structure is to provide a financial reporting 
structure for groups of affiliated plans (e.g., separate plans of 
controlled group members) that utilize master trusts for the collective 
investment of the assets of the affiliated plans. The Departments do 
not believe that separate pooled employer plans and DCGs are 
``affiliated'' in the way that was envisioned for master trust 
reporting by plans and may in fact create an overly complex and 
undesirable lack of transparency if used in the case of pooled employer 
plans and DCGs.
    The proposal would also add new breakout categories to the 
``Administrative Expenses'' category of the Income and Expenses section 
of the Schedule H balance sheet. The Agencies have determined that to 
get a better picture of plan expenses, particularly those related to 
service providers, more detail in this category is warranted. 
Accordingly, data elements would be added for ``Salaries and 
allowances,'' ``Independent Qualified Public Accountant (IQPA) Audit 
fees,'' ``Recordkeeping and Other Accounting Fees,'' ``Bank or Trust 
Company Trustee/Custodial Fees,'' ``Actuarial fees,'' ``Legal fees,'' 
``Valuation/appraisal fees,'' and ``Trustee fees/expenses (including 
travel, seminars, meetings.'' Other than IQPA Audit Fees and Bank or 
Trust Company Trustee/Custodial Fees, these questions were on the Form 
5500 prior to 1999.\45\ As noted above in connection with pooled 
employer plans and MEPs, transparency and improved reporting of fees 
and expenses is an ongoing objective for the DOL and an important goal 
for continuing to improve the Form 5500 as a tool for financial 
transparency and accountability among employee benefit plans. 
Accordingly, the agencies specifically request comments on whether the 
final rule should require more detailed reporting regarding fee and 
expense information on the Form 5500. Useful comments would include, 
for example, suggestions on how to improve reporting of direct and 
indirect service provider compensation, generally and in particular 
with respect to pooled employer plans, other MEPs, and DCG reporting 
arrangements (including information about how the fees and expenses are 
allocated among participating plans, employers, and plan participants 
and beneficiaries, as applicable). Another example of an area of 
interest on fee information is whether the Form 5500 would be an 
appropriate vehicle for collecting information on fees charged to 
participants or alternate payees by a retirement plan--including plan 
service provider fees the plan passes on to participants--for review 
and qualification of domestic relations orders.\46\
---------------------------------------------------------------------------

    \45\ See 1998 Form 5500, line 32(g).
    \46\ See Government Accountability Office (GAO) Report GAO 20-
541, ``Retirement Security: DOL Could Better Inform Divorcing 
Parties About Dividing Savings,'' which recommended that ``EBSA 
should explore ways to collect information on fees charged to 
participants or alternate payees by a retirement plan--including 
plan service provider fees the plan passes on to participants--for 
review and qualification of domestic relations orders and evaluate 
the burden of doing so. For example, DOL could consider collecting 
fee information as part of existing reporting requirements in the 
Form 5500.''
---------------------------------------------------------------------------

    The proposal would also amend the Form 5500 instructions to make 
explicit that the pooled plan provider operating the pooled employer 
plan must report the same identifying information--i.e., name and EIN 
for itself, identified affiliates and other service providers, and 
trustees--on the Form PR for the pooled plan provider and on the Forms 
5500 for every pooled employer plan the pooled plan provider operates. 
The instructions to the new Form PR have parallel instructions. The 
proposal would also amend the Form 5500 and Form 5500-SF instructions 
and make conforming changes to the other parts of the forms, schedules, 
and instructions to implement the proposed changes described above to 
the participant count methodology for individual account plans for 
determining whether such plans have to file as a large plan and whether 
they have to attach an IQPA report.

IV. Paperwork Reduction Act Statement

    As part of continuing efforts to reduce paperwork and respondent 
burden, the general public and Federal agencies are invited to comment 
on proposed and/or continuing collections of information in accordance 
with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3506(c)(2)(A)). This helps to ensure that requested data will be 
provided in the

[[Page 51505]]

desired format, reporting burden (time and financial resources) will be 
minimized, collection instruments will be clearly understood, and the 
impact of collection requirements on respondents is properly assessed. 
Currently, the DOL is soliciting comments concerning the proposed 
revisions of the Form 5500 Annual Return/Report, Form M-1 and Summary 
Annual Report, which are information collection requests subject to the 
PRA. A copy of the ICRs may be obtained by contacting the person listed 
in the PRA Addressee section below. The DOL has submitted a copy of the 
proposed revisions to the Office of Management and Budget (OMB) in 
accordance with 44 U.S.C. 3507(d) for its review of the DOL's 
information collection. The IRS and the PBGC intend to submit separate 
requests for OMB review and approval based upon the final forms 
revisions. The DOL and OMB are particularly interested in comments 
that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the Agencies, 
including whether the information will have practical utility;
     Evaluate the accuracy of the estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    Comments should be sent to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503 and marked ``Attention: Desk 
Officer for the Employee Benefits Security Administration.'' Comments 
can also be submitted by Fax: 202-395-5806 (this is not a toll-free 
number), or by email: [email protected]. OMB requests that 
comments be received by October 15, 2021, which is 30 days from 
publication of the proposed rule to ensure their consideration.
    PRA Addressee: Address requests for copies of the ICR to James 
Butikofer, Office of Regulations and Interpretations, U.S. Department 
of Labor, Employee Benefits Security Administration, 200 Constitution 
Avenue NW, Room N-5655, Washington, DC 20210. Email: [email protected]. 
ICRs submitted to OMB also are available at http://www.RegInfo.gov.
    Form 5500 ICR: As described below, DOL is requesting a new OMB 
Control Number for this collection. The request for a new control 
number is for administrative reasons only. The DOL is currently in the 
process of requesting an extension for OMB Control Number 1210-0110, 
Annual Information Return/Report of Employee Benefit Plan. Once all of 
the outstanding actions are complete, the DOL intends to submit a 
nonmaterial change request to transfer the burden from the new ICR to 
the existing OMB control number for the Annual Information Return/
Report of Employee Benefit Plan (1210-0110) and proceed to discontinue 
the use of the new control number.
    The Agencies' burden estimation methodology excludes certain 
activities from the calculation of ``burden.'' If the activity is 
performed for any reason other than compliance with the applicable 
federal tax administration system or the Title I annual reporting 
requirements, it was not counted as part of the paperwork burden. For 
example, most businesses or financial entities maintain, in the 
ordinary course of business, detailed accounts of assets and 
liabilities, and income and expenses for the purposes of operating the 
business or entity. These recordkeeping activities were not included in 
the calculation of burden because prudent business or financial 
entities normally have that information available for reasons other 
than federal tax or Title I annual reporting. Only time for gathering 
and processing information associated with the tax return/annual 
reporting systems, and learning about the law, was included. In 
addition, an activity is counted as a burden only once if performed for 
both tax and Title I purposes. The Agencies also have designed the 
instruction package for the Form 5500 Annual Return/Report so that 
filers generally will be able to complete the Form 5500 Annual Return/
Report by reading the instructions without needing to refer to the 
statutes or regulations. The Agencies, therefore, have included in 
their PRA calculations a burden for reading the instructions and find 
there is no recordkeeping burden attributable to the Form 5500 Annual 
Return/Report. The DOL solicits comments regarding whether or not any 
recordkeeping beyond that which is usual and customary is necessary to 
complete the Form 5500 Annual Return/Report. Comments are also 
solicited on whether the Form 5500 Annual Return/Report instructions 
are generally sufficient to enable filers to complete the Form 5500 
Annual Return/Report without needing to refer to the statutes or 
regulations.
    Summary Annual Report ICR: Section 2520.104b-10 sets forth the 
requirements for the Summary Annual Report (SAR) appendix and 
prescribes formats for such reports. The DOL is proposing to revise the 
currently approved information collection (1210-0040) to include 
required additions to the SAR formats that reflect the addition of the 
new Schedule MEP and Schedule DCG to the 5500 Annual Report/Return.
    Form M-1 ICR: Effective for plan years beginning on or after 
January 1, 2022, DOL is proposing to amend the Form M-1 information 
collection (1210-0116) by adding new questions requiring MEWAs (plan 
and non-plan MEWAs) that offer or provide coverage for medical care to 
identify each participating employer in the MEWA by name and EIN. MEWAs 
that are not unfunded or insured must also provide participating 
employer's percentage of the total contributions (employer and 
employee) made by all employer participating in a MEP. This information 
is currently reported as a non-standard attachment as part of the Form 
5500 filing. The reporting of this burden is being moved from OMB 
control number 1210-0110. For the 2021 plan year, pending the 
implementation of the Form M-1 changes, plan MEWAs that offer or 
provide coverage for medical care would be required provide 
participating employer information as a nonstandard attachment to the 
2021 Form 5500 Annual Return/Report in a similar manner as currently 
required. A summary of paperwork burden estimates follows:
    Agency: DOL-EBSA.
    Type of Review: New information collection.
    Title: Annual Information Return/Report of Employee Benefit Plan.
    Affected Public: Individuals or households; Private Sector--
Business or other for-profit; Not-for-profit institutions.
    Forms: Form 5500 and Schedules.
    Total Respondents: 804,000.
    Total Responses: 804,000.
    Frequency of Response: Annually.
    Estimated Total Burden Hours: 588,000.
    Total Annualized Costs: $275 million.

    Agency: Department of Treasury--IRS.
    Type of Revision: Revision of existing collection.
    Title of Collection: Annual Return/Report of Employee Benefit Plan.

[[Page 51506]]

    OMB Control Number: 1545-1610.
    Affected Public: Individuals or households; Private Sector--
Business or other for-profit; Not-for-profit institutions.
    Forms: Form 5500 and Schedules.
    Total Respondents: 804,000.
    Total Responses: 804,000.
    Frequency of Response: Annually.
    Estimated Total Burden Hours: 354,000.
    Total Annualized Costs: $142 million.

    Agency: PBGC.
    Type of Revision: Revision of existing collection.
    Title of Collection: Annual Information Return/Report.
    OMB Control Number: 1212-0057.
    Affected Public: Individuals or households; Private Sector--
Business or other for-profit; Not-for-profit institutions.
    Forms: Form 5500 and Schedules.
    Total Respondents: 24,744.
    Total Responses: 24,744.
    Frequency of Response: Annually.
    Estimated Total Burden Hours: 1,242.
    Total Annualized Costs: $2 million.

    Agency: DOL-EBSA.
    Type of Revision: Revision of existing collection.
    Title of Collection: Annual Report for Multiple Employer Welfare 
Arrangements.
    OMB Control Number: 1210-0116.
    Affected Public: Not-for-profit institutions, Businesses or other 
for-profits.
    Forms: Form M-1.
    Total Respondents: 687.
    Total Responses: 687.
    Frequency of Response: Annually.
    Estimated Total Burden Hours: 141.
    Total Annualized Costs: $126,556.

    Agency: DOL-EBSA.
    Type of Revision: Revision of existing collection.
    Title of Collection: Summary Annual Report Requirement.
    OMB Control Number: 1210-0040.
    Affected Public: Not-for-profit institutions, Businesses or other 
for-profits.
    Total Respondents: 761,170.
    Total Responses: 177,793,034.
    Frequency of Response: Annually.
    Estimated Total Burden Hours: 1,110,692.
    Total Annualized Costs: $20,320,505.
    The DOL solicits comments regarding whether or not any 
recordkeeping beyond that which is usual and customary is necessary to 
complete the Form 5500 Annual Return/Report. Comments are also 
solicited on whether the Form 5500 Annual Return/Report instructions 
are generally sufficient to enable filers to complete the Form 5500 
Annual Return/Report without needing to refer to the statutes or 
regulations.
    Paperwork and Respondent Burden: Estimated time needed to complete 
the forms listed below reflects the combined requirements of the IRS, 
the DOL, and the PBGC. The times will vary depending on individual 
circumstances. The estimated average times are:

----------------------------------------------------------------------------------------------------------------
                                                                     Pension plans
                                      --------------------------------------------------------------------------
                                                Large           Small, filing Form 5500   Small, filing 5500-SF
----------------------------------------------------------------------------------------------------------------
Form 5500............................  1 hr, 51 min...........  1 hr, 19 min...........
Sch A................................  2 hr, 52 min...........  2 hr, 52 min...........
Sch MB...............................  8 hr, 49 min...........  8 hr, 6 min............  8 hr, 6 min.
Sch SB...............................  6 hr, 38 min...........  6 hr, 49 min...........  6 hr, 49 min.
Sch C................................  2 hr, 52 min...........
Sch D................................  1 hr, 39 min...........  20 min.................
Sch G................................  14 hr, 22 min..........
Sch H................................  11 hr, 51 min..........
Sch I................................  2 hr, 6 min............  2 hr, 6 min............
Sch R................................  1 hr, 45 min...........  1 hr, 7 min............
Form 5500-SF.........................  .......................  .......................  2 hr, 35 min.
Sch MEP..............................  10 min.................
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                     Welfare plans that include health
                                                 benefits
                                 ---------------------------------------
                                                       Small, unfunded,
                                                          combination
                                                        unfunded/fully
                                         Large        insured, or funded
                                                      with a trust 5500-
                                                              SF
------------------------------------------------------------------------
Form 5500.......................  1 hr, 45 min......  1 hr, 14 min.
Sch A...........................  3 hr, 40 min......  2 hr, 43 min.
Sch C...........................  3 hr, 38 min......
Sch D...........................  1 hr, 52 min......  20 min.
Sch G...........................  11 hr, 0 min......
Sch H...........................  12 hr, 46 min.....
Sch I...........................  ..................  1 hr, 56 min.
Form 5500-SF....................  ..................  2 hr, 35 min.
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                   Welfare plans that do not include health benefits
                                      --------------------------------------------------------------------------
                                                                                         Small, filing Form 5500-
                                                Large           Small, filing Form 5500             SF
----------------------------------------------------------------------------------------------------------------
Form 5500............................  1 hr, 45 min...........  1 hr, 14 min...........
Sch A................................  3 hr, 40 min...........  2 hr, 43 min...........
Sch C................................  3 hr, 38 min...........
Sch D................................  1 hr, 52 min...........  20 min.................
Sch G................................  11 hr, 0 min...........
Sch H................................  12 hr, 46 min..........
Sch I................................  .......................  1 hr, 56 min...........
Form 5500-SF.........................  .......................  .......................  2 hr, 35 min.
Sch M1...............................  15 min.................
----------------------------------------------------------------------------------------------------------------


[[Page 51507]]


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Direct filing entities
                                 -----------------------------------------------------------------------------------------------------------------------
                                     Master trusts           CCTs                PSAs             103-12 IEs             GIAs                DCGs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form 5500.......................  1 hr, 50 min......  1 hr, 30 min......  1 hr, 23 min......  1 hr, 38 min......  1 hr, 26 min......  1 hr, 50 min.
Sch A...........................  2 hr, 54 min......  2 hr, 48 min......  2 hr, 46 min......  2 hr, 51 min......  3 hr, 1 min.......  2 hr, 52 min.
Sch C...........................  3 hr, 2 min.......  1 hr, 2 min.......  29 min............  1 hr, 56 min......  1 hr, 22 min......  2 hr, 42 min.
Sch D...........................  1 hr, 30 min......  48 min............  34 min............  1 hr, 1 min.......  54 min............  1 hr, 39 min.
Sch G...........................  12 hr, 34 min.....  ..................  ..................  8 hr, 3 min.......  ..................  11 hr, 6 min.
Sch H...........................  12 hr, 19 min.....  11 hr, 47 min.....  11 hr, 43 min.....  12 hr, 16 min.....  12 hr, 1 min......  8 hr, 36 min.
Sch DCG.........................  ..................  ..................  ..................  ..................  ..................  1 hr, 33 min.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The aggregate hour burden for the Form 5500 Annual Return/Report 
(including schedules and short form) is estimated to be 0.9 million 
hours annually. The hour burden reflects filing activities carried out 
directly by filers. The cost burden is estimated to be $419 million 
annually. The cost burden reflects filing services purchased by filers. 
Presented below is a chart showing the total hour and cost burden of 
the revised Form 5500 Annual Return/Report separately allocated across 
the DOL and the IRS. There is no separate PBGC entry on the chart 
because, as explained below, its share of the paperwork burden is very 
small relative to that of the IRS and the DOL.

----------------------------------------------------------------------------------------------------------------
                                                           DOL                                IRS
                                           ---------------------------------------------------------------------
                                                 Hours            Costs             Hours            Costs
----------------------------------------------------------------------------------------------------------------
Pension:
    Large Plans...........................         261,464     $62,431,639.11         142,897     $31,568,313.36
    Small Plans...........................         174,999      87,694,622.39         176,481     103,113,327.32
Welfare:
    Large Plans...........................         108,142     111,593,190.83           9,953       1,811,627.38
    Small Plans...........................           6,137       5,407,649.86           2,507       1,252,295.71
Total:
    Large Plans...........................         369,607     174,024,829.94         152,850      33,379,940.74
    Small Plans...........................         181,136      93,102,272.24         178,988     104,365,623.03
    DFEs..................................          37,642       8,014,192.20          21,908       4,543,173.65
                                           ---------------------------------------------------------------------
        Total Plans.......................         588,385     275,141,294.38         353,746     142,288,737.43
----------------------------------------------------------------------------------------------------------------

    The paperwork burden allocated to the PBGC includes a portion of 
the general instructions, basic plan identification information, a 
portion of Schedule MB, a portion of Schedule SB, a portion of Schedule 
H, and a portion of Schedule R. The PBGC's Estimated Share of Total 
Form 5500 Annual Return/Report Burden is: 1,242 Hours and $1.6 million 
per year.
BILLING CODE 4510-29-P

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Statutory Authority

    Accordingly, pursuant to the authority in sections 101, 103, 104, 
109, 110 and 4065 of ERISA and sections 6058 and 6059 of the Code, the 
Form 5500 Annual Return/Report and the instructions thereto are 
proposed to be amended as set forth herein.

    Signed at Washington, DC,
Ali Khawar,
Acting Assistant Secretary, Employee Benefits Security Administration, 
U.S. Department of Labor.
Eric Slack,
Director, Employee Plans, Tax Exempt and Government Entities Division, 
Internal Revenue Service.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2021-19714 Filed 9-14-21; 8:45 am]
BILLING CODE 4510-29-C