Delinquent Filer Voluntary Compliance Program; Final Rule [03/28/2002]
Volume 67, Number 60, Page 15051-15060
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Part IV
Department of Labor
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Pension and Welfare Benefits Administration
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29 CFR Parts 2560 and 2570
Delinquent Filer Voluntary Compliance Program; Final Rule
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2560 and 2570
RIN 1210-AA86
Delinquent Filer Voluntary Compliance Program
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Notice, Delinquent Filer Voluntary Compliance Program.
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SUMMARY: This Notice modifies the Delinquent Filer Voluntary Compliance
Program (``DFVC Program'' or ``Program'') announced by the Department
of Labor's Pension and Welfare Benefits Administration in 1995. The
DFVC Program is intended to encourage, through the assessment of
reduced civil penalties, delinquent plan administrators to comply with
their annual reporting obligations under Title I of the Employee
Retirement Income Security Act of 1974, as amended (ERISA). Following a
review of the DFVC Program, as adopted in 1995, the Department has
determined to update the Program and adjust the civil penalty structure
under the Program in an effort to further encourage and facilitate
voluntary compliance by plan administrators with ERISA's annual
reporting requirements. Because the modifications to the DFVC Program
include lower civil penalty assessments, the modifications are being
put into effect upon publication of this notice in the Federal
Register. Nonetheless, the Department is seeking comments from the
public on the modified Program.
DATES: Effective Date: March 28, 2002. The modified Program adopted
herein supercedes and replaces, as of its effective date, the DFVC
Program as adopted on April 27, 1995 (60 FR 20874).
Comment Date: Written comments must be received by the Department
no later than May 28, 2002.
ADDRESSES: Interested persons are invited to submit written comments on
the DFVC Program to: DFVC Comments, Office of Regulations and
Interpretations, Room N-5669, Pension and Welfare Benefits
Administration, U.S. Department of Labor, 200 Constitution Ave., NW.,
Washington, DC 20210. All submissions will be open to public inspection
at the Public Documents Room, Pension and Welfare Benefits
Administration, Room N-1513, U.S. Department of Labor, 200 Constitution
Ave., NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Jennifer C. Warner or Scott C. Albert,
Office of the Chief Accountant, Pension and Welfare Benefits
Administration, telephone (202) 693-8360. This is not a toll-free
number.
SUPPLEMENTARY INFORMATION:
A. Background
The Secretary of Labor has the authority under section 502(c)(2) of
ERISA to assess civil penalties of up to $1,100 \1\ a day against plan
administrators who fail or refuse to file complete and timely annual
reports as required under section 101(b) of ERISA and the Secretary's
regulations. Pursuant to 29 CFR 2560.502c-2 and 29 CFR 2570.60 et seq.,
the Pension and Welfare Benefits Administration (PWBA) has maintained a
program for the assessment of civil penalties for noncompliance with
ERISA's annual reporting requirements. Under this program, plan
administrators filing late annual reports may be assessed $50 per day
for each day an annual report is filed after the date on which the
annual report was required to be filed, without regard to any
extensions of time for filing. Plan administrators who fail to file an
annual report may be assessed a penalty of $300 per day, up to $30,000
per year, until a complete annual report is filed. The Department may,
in its discretion, waive all or part of a civil penalty assessed under
section 502(c)(2) upon a showing by the administrator that there was
reasonable cause for the failure to file a complete and timely annual
report or that there was reasonable cause why the penalty, as
calculated, should not be assessed.
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\1\ In accordance with the requirements of the Federal Civil
Penalties Inflation Adjustment Act of 1990, as amended, the
Department's regulation at 29 CFR 2575.502c-2 increased the maximum
civil penalty from $1,000 a day as stated in section 502(c)(2) of
ERISA to $1,100 a day for violations occurring after July 29, 1997.
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In an effort to encourage delinquent filers to voluntarily comply
with the annual reporting requirements under Title I of ERISA, the
Department adopted, on April 27, 1995, the Delinquent Filer Voluntary
Compliance (DFVC) Program (60 FR 20874). The Program, as adopted in
1995, permitted administrators otherwise subject to the assessment of
higher civil penalties for failing to file a timely annual report to
pay reduced civil penalties for voluntarily complying with the
requirement to file an annual report under Title I of ERISA.
Under the 1995 DFVC Program, plan administrators filing the Form
5500-C (plans with fewer than 100 participants at the beginning of the
plan year or plans filing the Form 5500-C pursuant to the ``80-120''
participant rule in Sec. 2520.103-1(d) (``small plans'')) were subject
to a civil penalty assessment of $50 per day up to $1,000 when the
annual report was twelve months or less late, and $2,000 when the
annual report was more than twelve months late.\2\ Plan administrators
filing the Form 5500 (plans with 100 or more participants at the
beginning of the plan year other than a plan filing pursuant to the
``80-120'' participant rule (``large plans'')) were subject to a civil
penalty assessment of $50 per day up to $2,500 when the annual report
was one year or less late, and $5,000 when the annual report was more
than one year late. A civil penalty assessment of $2,500 applied to
late filings by plan administrators for apprenticeship and training
plans described in Sec. 2520.104-22 and ``top hat'' plans described in
Sec. 2520.104-23(a). Under the terms of the DFVC Program, the
Department reserved the right to modify or terminate the Program upon
publication of a notice in the Federal Register.
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\2\ Plan administrators were not allowed to use the Form 5500-R
when filing annual reports under the DFVC Program.
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B. Modifications to the DFVC Program
The Department is modifying the DFVC Program in order to further
facilitate and encourage voluntary compliance with the annual reporting
requirements. These modifications take the form of reducing civil
penalty assessments, as well as simplifying and updating the process
governing participation in the DFVC Program. A discussion of the
changes follows.
1. Applicable Penalty Amount
Since the adoption of the DFVC Program in 1995, the Department has
received input from plan administrators, as well as from accountants,
third party administrators, and other members of the employee benefits
community, indicating that the civil penalty assessments provided for
under the 1995 Program, while less than the otherwise applicable
penalties, nonetheless may be an impediment to many delinquent filers,
especially administrators of small plans, because of the absence of a
per plan, rather than a per annual report, based cap on the penalty
amount. For example, under the 1995 Program, the administrator of a
small pension plan with respect to which no annual reports were filed
for plan years 1995--1999 would have to pay a civil penalty assessment
of $2,000 per report and, therefore, would be required to pay a civil
penalty
[[Page 15053]]
assessment of $10,000 ($2,000 x five plan years), a sizeable amount
for many small employers. Public input in this area is consistent with
the Department's finding that, although small employers constitute
about 80 percent of the Title I of ERISA filers, the majority of plan
administrators electing to comply under the DFVC Program are
administrators of large plans.
Accordingly, the Department, in an effort to encourage voluntary
compliance with ERISA's annual reporting requirements, is modifying the
civil penalty structure under the DFVC Program. Specifically, the per
day late filing penalty amount for plan administrators taking part in
the DFVC Program has been reduced for large and small plans from $50
per day to $10 per day. In the case of a single late annual report
filing for a plan, the cumulative daily penalty amount for a plan year
is capped at $750 for small plans and $2,000 for large plans. The DFVC
Program, as modified, also contains a new per plan cap on the penalty
to address the concerns about the cumulative effect of the per annual
report penalties when a plan has annual reporting delinquencies for
multiple plan years. The per plan cap is $1,500 for a small plan and
$4,000 for a large plan and applies on a submission-by-submission
basis. Thus, in the case of the previous example where the plan
administrator for a small plan did not file an annual report for a
five-year period, the applicable penalty amount under the revised DFVC
Program would be $1,500 (rather than $10,000 under the 1995 DFVC
Program) provided the plan administrator included the annual reports
for all five plan years in the same DFVC Program submission.\3\
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\3\ There is no ``per administrator'' or ``per sponsor'' cap.
Thus, if the same person is the administrator of several plans
required to file annual reports under Title I of ERISA, the
administrator would need to calculate the applicable penalty amount
for each plan.
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The Department believes that this approach to applying the caps
will encourage complete annual reporting compliance reviews with
respect to specific plans, while facilitating Program administration.
Although there is nothing in the DFVC Program that precludes a plan
administrator from making separate or multiple submissions under the
Program, the per plan cap on penalties starts over for each separate
submission for a plan that is made under the DFVC Program.\4\
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\4\ For purposes of determining whether there is one or more
submissions, the mere fact that a submission is transmitted in
multiple envelopes or packages will not affect the submission's
status as a single submission where there is evidence (e.g., an
accompanying letter or note) indicating that submission has been
transmitted contemporaneously in multiple envelopes or packages.
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The Department also is revising the applicable penalty structure
under the DFVC Program for apprenticeship and training plans and ``top
hat'' plans, as well as adding another class of plans that are eligible
to pay special reduced penalties under the Program. In lieu of the
$2,500 penalty amount for apprenticeship and training plans and ``top-
hat'' plans, the applicable penalty amount under the modified DFVC
Program for such plans is $750. As was the case under the 1995 Program,
the applicable penalty will be applied without regard to the number of
apprenticeship and training or ``top hat'' plans maintained by the same
plan sponsor and without regard to the number of plan participants
covered under such plan or plans. In addition, the Department is
establishing a maximum $750 per plan penalty cap for administrators of
small plans sponsored by Internal Revenue Code (Code) section 501(c)(3)
organizations (including small Code section 403(b) plans). This special
penalty amount, however, will not be available if, as of the date the
plan files under the DFVC Program, there is a delinquent or late annual
report due for a plan year during which the plan was a large plan. The
Department is establishing this reduced penalty for administrators of
such small plans in recognition of the special character of these
organizations, and in light of the fact that the administrators/
sponsors of such plans may receive most or all of their funding from
government programs and other charitable, educational, or scientific
grants, and, in the case of Code section 403(b) plans that are required
to file annual reports under ERISA, because the information that is
required to be filed annually is similar to the registration-type
information required to be filed by apprenticeship and training plans
and ``top hat'' plans under Secs. 2520.104-22 and 2520.104-23.
2. Simplification of Process
As noted above, the Department is simplifying the procedures
governing participation in the DFVC Program. These changes are intended
to make the Program easier for plan administrators to use and to
conform the Program to the recent streamlining of the annual report and
the implementation of the computerized ERISA Filing Acceptance System
(EFAST).
As with the 1995 DFVC Program, the Program adopted herein
conditions relief on the filing of a complete annual report, including
all required statements and schedules, for each plan year for which
relief is sought under the Program. Under the Program, this requirement
can be satisfied by the administrator filing an annual report for each
plan year for which relief is sought using either: (1) The annual
return/report form issued for the plan year(s) for which relief is
sought; or (2) the most current annual return/report form available at
the time the administrator elects to participate in the Program. By
affording this option, administrators can choose to file the Form which
is most efficient, and least burdensome, for their particular plan and
circumstance.
Also, as with the 1995 Program, the modified Program provides that
penalty amount payments must be accompanied by a paper copy of the
filed annual return/report (excluding any required statements or
schedules).\5\ Unlike the 1995 Program, however, the forms and penalty
payment no longer have to be annotated in bold red print identifying
the filing as a DFVC filing.
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\5\ While electronic filing of DFVC submissions and deposit of
penalty amounts is not currently available, the Department will be
evaluating this area for possible future improvements.
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3. Scope of Program
As with the 1995 DFVC Program, the modified Program only applies to
the correction of reporting violations under Title I of ERISA.\6\
Filings that are not required under Title I of ERISA, such as Form
5500-EZ filings, are not eligible for the DFVC Program. Annual reports
filed under the DFVC Program may be subjected to the usual edit tests
and plan administrators have an opportunity to correct identified
deficiencies in accordance with the procedures described in
Sec. 2560.502c-2. The failure to correct deficiencies in accordance
with these procedures may result in the assessment of further
penalties, and the payment of DFVC Program penalties do not serve to
reduce the additional civil penalties that may be assessed for the
filing of a deficient annual report.
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\6\ Although this Notice does not provide relief from late
filing penalties under the Code or Title IV of ERISA, both the IRS
and PBGC have agreed to provide certain penalty relief under the
Code and Title IV of ERISA. Sections 5.02 and 5.03 of this Notice
include information furnished to the Department by the Internal
Revenue Service (IRS) and the Pension Benefit Guaranty Corporation
(PBGC) regarding the penalty relief they are providing for
delinquent Form 5500 Annual Returns/Reports filed for Title I plans
when the condition of the DFVC Program have been satisfied.
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Request for Comments, Effective Date and Requests for Refunds
Although the Department is not required to seek public comments on
an enforcement policy, the Department
[[Page 15054]]
solicits comments from the public on all aspects of this Program,
including whether the reduced penalty amounts being adopted are set at
appropriate levels and whether additional classes of filers should be
provided special reduced penalty amounts. At the same time, the
Department has determined that the relief afforded by this Program
should be made available during and after the comment period. Delaying
implementation of the revisions to the DFVC Program until after the end
of the comment period would only deprive plan administrators of the
ability to pay reduced penalties during the comment period.
Accordingly, the DFVC Program adopted herein will be effective upon
publication in the Federal Register.
In general, the Department will consider requests for refunds under
the DFVC Program only when it is determined, upon review, that there
was no reporting violation (e.g., the plan was not required to file an
annual report or the report was filed timely) or the penalty assessment
was otherwise improper. In this regard, the Department will not make
refunds with respect to any DFVC filings merely because they were
submitted prior to the effective date of the Program adopted herein. In
the Department's view such filers received the relief with respect to
which the paid penalty related. With regard to DFVC filings received on
or after the effective date of the Program adopted herein and with
respect to which the plan administrator incorrectly determined the
penalty amount by referring to the superceded 1995 Program, the
Department intends to return the DFVC Program submission (but not the
annual report filing that is submitted to EFAST) to afford the filer
the opportunity to make a DFVC submission in accordance with the
modified program.
Summary of Economic Impact of the Amended DFVC Program
This amendment to the DFVC Program is intended to increase
compliance with reporting requirements by increasing Program
participation, especially among small plans. Under the existing
Program, administrators of small plans, which are likely to represent a
large majority of delinquent filers, have made up only a minority of
Program participants. This amendment will reduce Program penalties for
many participants, especially for administrators of small plans that
have failed to file reports for many years, thereby encouraging more
delinquent plan administrators to participate.
By increasing compliance with reporting requirements, the amended
Program will yield economic benefits. Greater compliance will improve
the quality and availability of information on plans. Plans' annual
reports are the principal source of information about the operation,
funding and investments of employee benefit plans. Information derived
from these reports is integral to PWBA's enforcement, research and
policy development programs, and is widely used by other Federal
agencies, Congress and the private sector in assessing employee
benefit, tax, and economic trends and policies. Plans' reports also
serve as the primary means by which participants, beneficiaries and the
general public can monitor plan operations. For all of these reasons,
better information will serve to improve the security of plan assets
and benefits and to promote sound employee benefits policy. Plans that
comply with reporting requirements also tend to stay in compliance with
reporting requirements, redoubling the benefit of bringing plans into
compliance at the earliest opportunity. Finally, participating plan
administrators will benefit insofar as they will be relieved of the
risk of incurring larger penalties outside the Program, and insofar as
the penalties that many must pay in order to participate in the Program
will be reduced.
The Department believes that the benefits of the amended Program
will exceed its costs. Participating plan administrators will incur a
cost in connection with the payment of penalties. Participation in the
Program is voluntary, however, so it is reasonable to conclude that
participating plans derive an economic benefit equal to or greater than
this cost. The Department also notes that the payment of such penalties
constitutes a transfer from plan administrators to the U.S. Treasury,
thereby benefiting taxpayers at large. The only potentially meaningful
economic cost of the Program is the potential for the loss of income to
the U.S. Treasury from reduced penalties. This loss of income will be
partly or fully offset by penalties paid by plan administrators that
would not have participated at the existing Program's higher penalty
levels. Moreover, any loss of Treasury revenue will be nominal and more
than offset by the benefits of fuller reporting outlined above.
Because the amended program will substantially reduce Program
penalties for many participating plan administrators, the Department
expects that participation in the Program will grow. The Department
lacks an empirical basis on which to estimate the amount by which it
will grow, however. In order to assess potential growth, the Department
adopted conservative assumptions regarding responsiveness to decreases
in Program penalties. On that basis, it is projected that participation
by plan administrators in the amended Program will increase to about
2,500 plans per year, up from 1,400 plans under the current Program, an
increase of about 75 percent. Participation by administrators of large
plans will increase by more than 50 percent to reach about 1,300, while
participation by administrators of small plans will grow by more than
100 percent to about 1,100. Total penalties paid under the Program are
projected to fall by about one-half, however, from about $9.3 million
annually to about $4.7 million. The Department believes that these
estimates are highly conservative, and that participation might
increase more, while penalties paid might decrease less or even
increase. The derivation of these estimates and basis for the
Department's conclusion that they are conservative is detailed below.
Executive Order 12866
Under Executive Order 12866, the Department must determine whether
a regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule (1) having an annual effect on the economy of $100 million or
more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. Pursuant to the terms
of the Executive Order, it has been determined that this action is
``significant'' and subject to OMB review under section 3(f)(4) of the
Executive Order because it offers a novel method for encouraging
compliance while reducing regulatory burden.
As described earlier in this preamble, PWBA introduced the DFVC
Program in
[[Page 15055]]
April of 1995 in an effort to encourage compliance with annual
reporting requirements, which are met generally by filing the Form 5500
Annual Return/Report of Employee Benefit Plan. This amendment to the
Program is intended to increase compliance with reporting requirements
by increasing Program participation, especially among administrators of
small plans. Under the existing Program, small plan administrators,
which are likely to represent a large majority of delinquent filers,
have made up only a minority of Program participants. (Among the
approximately 1 million plans expected to file annual reports normally
this year, about 750,000 are expected to be small plans.) This
amendment will reduce Program penalties for many Program participants,
especially for small plan administrators that have failed to file
reports for many years (whose penalties will be capped at $1,500 per
plan), thereby encouraging more delinquent administrators to
participate and come into compliance with reporting requirements.
To date under the existing Program, 17,545 separate filings have
been made by 8,634 separate plans, involving total penalties to plan
administrators in excess of $50 million. This amounts to approximately
1,400 participating plans filing about 2,900 annual reports each year,
and the administrators of those plans paying penalties of about $9
million. Of the 17,545 filings, 10,082 were for large plans, and 6,781
were for small plans. In addition, there were 672 ``top hat'' filers
and 10 apprenticeship and training plan filers.
About 70 percent of both large and small plan DFVC Program filings
were made twelve or more months after they were otherwise due. About 63
percent of participating plan administrators filed for one plan year,
about 16 percent filed for two plan years, and 21 percent filed for
three or more plan years. The average was approximately two plan years.
As a result, most DFVC Program participants paid the applicable maximum
for each filing based on the size of the plan and the filing's original
due date. Participating plan administrators filing two or more years'
reports paid such maximum penalties separately for each report filed.
In developing the amended Program, the Department endeavored to
select penalty levels that will maximize reporting compliance,
especially among small plans. Maximizing compliance means maximizing
Program participation, and with it the prompt submission of now
delinquent filings, while at the same time maximizing on-time
submission of future filings. The amended Program's penalties are
therefore calibrated to be at once low enough so that delinquent plan
administrators will not be dissuaded from participating, and high
enough to hold plan administrators appropriately accountable for filing
on time.
This amendment to the DFVC Program generally will reduce the
penalties owed by participating plan administrators. For example, the
penalty owed by small and large plan administrators submitting single
filings more than 12 months late will be reduced from $2,000 and
$5,000, respectively, to $750 and $2,000. The penalty owed by
administrators of small and large plans submitting five years' worth of
filings all more than 12 months late will be reduced from $10,000 and
$25,000 to $1,500 and $4,000.
To gauge the potential impact of the interaction of the new per
plan caps for delinquencies involving multiple plan years, which are
$1,500 for small plans and $4,000 for large plans, with the single plan
year maximum penalties of $750 and $2,000, we computed the penalties
that would have been paid by the past DFVC filers under the amended
structure, assuming no changes in Program participant characteristics
or increase in participation in response to the reduced penalties. This
simple calculation of penalties under the prior and amended structures
shows a reduction in total penalties paid of about $39 million or 70
percent.
The amended Program will yield economic benefits. Fuller compliance
will improve the quality and timeliness of information on the operation
and assets of employee benefit plans, which will help to secure plan
benefits and assets and promote sound public policy. Participating plan
administrators will benefit from shedding the risk of incurring larger
penalties outside the Program and from reductions in the penalties they
must pay under the Program.
The amended Program's benefits are expected to exceed its costs.
Because participation in the Program is voluntary, it is reasonable to
conclude that participating plan administrators derive an economic
benefit at least equal to the cost of the penalty. The payment of such
penalties also enriches the U.S. Treasury to the benefit of taxpayers.
Because the amended Program imposes smaller penalties, total penalties
paid to the Treasury may fall. The economic cost associated with such a
loss of Treasury revenue is expected to be small and more than offset
by the benefits of fuller reporting.
The Department estimates that plan participation in the amended
Program will increase to about 2,500 filings per year, up from 1,400
under the current Program. Total penalties paid by plan administrators
under the Program are projected to fall by about one-half, from about
$9.3 million annually to about $4.7 million. These estimates are highly
conservative; participation might increase more, while penalties paid
might decrease less or even increase.
Basis for Estimate of Economic Impact
As noted above, under the existing DFVC Program, 17,545 separate
filings have been made by 8,634 separate plans, involving total
penalties to plan administrators in excess of $50 million. This amounts
to approximately 1,400 plans participating each year, paying penalties
of about $9 million. Based on the discounts available under the amended
penalty structure, the Department expects the number of plan
administrators participating annually to increase to about 2,500,
resulting in annual penalties of about $4.7 million.
Assuming a plan administrator is aware of a plan's reporting
obligations, and of any failure to satisfy them, the decision whether
or not to participate in the Program is essentially an economic one.
The plan administrator must weigh the alternative of remaining out of
compliance--and the attendant risk of becoming subject to larger
penalties--against the cost of paying reduced penalties under the
amended Program. The penalty under the Program can be thought of as a
price the administrator can pay to achieve compliance and be relieved
from the risk of larger penalties. The size and risk of unreduced
penalties represents the value of such relief. Reduced penalties under
the Program and potential full penalties will be different for
different plans, reflecting their differing characteristics and
circumstances. All else equal, the smaller the penalties under the
Program relative to the potential unreduced penalties--that is, the
lower the price of participation relative to its value--the larger the
number of plan administrators that will participate.
Assuming that the risk and potential amount of full penalties are
fixed, the increase in participation in the amended Program will depend
on the number of delinquent plans, the amount by which penalties under
the amended Program are discounted relative to those under the existing
Program, and the responsiveness of plan administrators to this price
reduction. Price responsiveness is commonly expressed in terms of
``elasticity,'' or the percent increase in quantity demanded that will
result from a one percent decrease in price. If administrators'
elasticity of
[[Page 15056]]
demand for the Program is one, then a one percent decrease in the
penalty will result in a one percent increase in the number of
administrators participating.
The Department has no empirical basis on which to estimate the
price elasticity of demand for the Program. Estimating elasticity
generally requires observation of demand at different price levels.
Casual observation reveals that the number of plan administrators
participating in the existing Program generally is higher at lower
penalty levels. In particular, relatively few participating plan
administrators--and very few participating small plan administrators--
submitted several years of delinquent filings and consequently owed
relatively large penalties. This observation seems consistent with the
premise that lower penalties encourage higher participation, but it
falls short of providing formal supporting evidence. The Department
lacks data on the number and circumstances of nonparticipating
delinquent plan administrators. Therefore, it is not possible to
determine whether variations in the number of plans participating at
different penalty levels under the existing Program reflects
responsiveness to those levels or the numbers and circumstances (and
potential full penalties) of unobserved, nonparticipating delinquent
plan administrators whose participation would trigger penalties at
those levels. The Department also lacks any longitudinal basis for
estimating the elasticity, because prior to this amendment the penalty
levels under the Program had not been changed.
The Department nevertheless attempted to assess the potential
magnitude of increased participation in the amended DFVC Program. To do
this, the Department examined historical data on participation in the
Program, relying on the general assumption that the potential users of
the amended Program will resemble the past users of the existing
Program. Then, by adopting assumptions regarding the elasticity of
demand for the Program and comparing the penalties owed by past
participants in the existing Program with the penalties they would owe
under the amended Program, the Department projected participation in
the amended Program.
Lacking a basis for estimating plan administrators' true
elasticities, the Department adopted what it believes are conservative
assumptions (that is, assumptions which are likely to be lower then the
true elasticities). In the face of uncertainty, it is generally
appropriate to adopt conservative assumptions, in order to avoid over
estimating the potential benefits of the Program.
The Department assumed that the price elasticity of demand for the
Program among administrators of large plans (those with 100 or more
participants) is one, and that among administrators of small plans is
two. More precisely, it assumed that demand is linear and that large
and small plans' price elasticities of demand at the starting positions
on their demand curves (the equilibria under the current Program) are
equal to one and two, respectively. A large decrease in price will
result in movement down the demand curve into a region where elasticity
is less than at the starting position. (As a result, total penalties
collected under the amended Program are expected to be less than the
assumed starting-point elasticities alone would imply.) The Department
believes that these assumptions conservatively represent the likely
price responsiveness of nonparticipating delinquent plan
administrators.
First, the assumption of linear demand (and attendant decreasing
elasticity) is inherently conservative in connection with large price
decreases. A more plausible, nonlinear demand function with constant
elasticity would suggest much larger increases in Program
participation.
For administrators of many plans, the price decrease associated
with movement from the existing to the amended Program will be large.
This is especially true of administrators that are delinquent in
connection with several plan years' filings, because the amended
Program caps penalties for such plans, while the existing Program caps
them only for each separate filing by such plans. For example,
historical penalties owed under the existing Program equaled or
exceeded $25,000 for 74 participating large plans each year. These
would include plan administrators that submitted five or more years'
reports, all 12 months or more late, who would owe the maximum $5,000
per filing. Historical penalties equaled or exceeded $10,000 for 52
participating small plans annually, which similarly would include plan
administrators owing the maximum $2,000 penalty for each of five or
more years' worth of filings. Under the amended Program, similar large
plans' penalties will be capped at $4,000 per plan, small at $1,500,
representing price reductions of at least 84 percent and 70 percent,
respectively.
Microeconomic theory suggests that demand for most goods and
services is likely to be better represented by a demand curve with
constant elasticity than by a linear one, especially in connection with
large price changes. Consider the administrator of a large plans in
this example. The Department, assuming linear demand and a starting
elasticity of one, projects that an 84 percent fall in price results in
an 84 percent increase in participation. However, this implies that the
elasticity of demand at the new equilibrium would be just 0.09--that
is, an additional one percent price decrease would increase
participation by less than one-tenth of one percent. In the case of a
small plan administrator, and assuming a starting elasticity of two,
elasticity at the new equilibrium would be just 0.37. Under the
potentially more plausible assumption of constant demand elasticities
of one and two respectively for large and small plans, the 84 percent
price decrease available to the large plan administrator would increase
participation by 525 percent, while small plan administrators' price
decrease would increase their participation by 1,011 percent. This
suggests that the Department's assumptions are highly conservative and
that the increase in participation, particularly among small plans that
are many years delinquent, could be much larger than projected.
Second, the increase in the Program participation is unlikely to be
constrained by market saturation anytime soon, and this is especially
true for administrators of small plans. Thus, the premise that demand
might exhibit a constant elasticity (and that therefore large price
decreases could result in very large participation increases) is
especially plausible for administrators of small plans.
Participation by both large and small plan administrators over the
life of the Program is ultimately constrained to no more than the
number of nonparticipating delinquent plans that exist. The Department
has no way of knowing this number. As yet, however, there is no
evidence that participation in the Program is nearing this constraint.
Participation in the Program has been quite consistent since its
inception, at about 2,900 filings per year, with small plans
representing about 40 percent of each year's total. Small plans in
particular are likely to represent a large majority of nonparticipating
delinquent plans, just as they represent a large majority of plans that
file annual reports on time. For example, among the approximately one
million plans expected to file reports this year, about 250,000 will be
large and about 750,000 will be small.
Consider again the above example of plans that submitted five or
more years'
[[Page 15057]]
filings 12 or more months late under current Program. Is it plausible
that demand could exhibit constant elasticity and that participation
increases could therefore be very large? If participation by large plan
administrators in similar circumstances increased by 525 percent, the
number participating each year on average would grow from about 74
plans to about 463, which is equal to approximately 0.2 percent of
large plan filers. A 1,011 percent increase in small plan administrator
participation would mean that the number participating each year would
grow from about 52 plans to about 578, which is equivalent to about
0.08 percent of small plan filers. Given these relative magnitudes,
even these large increases in participation might be viewed as
plausible. This would seem to confirm that the Department's assumptions
of linear demand, with starting elasticities for large and small plans
of one and two respectively, are conservative.
The Department requests comments on all aspects of this analysis,
including the penalty levels as they apply to large and small plan
administrators, assumptions concerning price responsiveness, and the
characteristics of future filers as compared with the actual Program
participants. The Department is particularly interested in information
on existing rates and reasons for non-compliance with reporting
requirements, and specific factors that may influence the decision
whether or not to participate in the DFVC Program in light of the
penalty reductions being implemented.
Paperwork Reduction Act
The Department, as part of its continuing effort to reduce
paperwork and respondent burden, conducts a preclearance consultation
program to provide the general public and Federal agencies with an
opportunity to comment on proposed and continuing collections of
information in accordance with the Paperwork Reduction Act of 1995 (PRA
95) (44 U.S.C. Chapter 35). This helps to ensure that requested data
can be provided in the desired format, reporting burden (time and
financial resources) is minimized, collection instruments are clearly
understood, and the impact of collection requirements on respondents
can be properly assessed. OMB clearance of the information collection
request (ICR) included in the existing DFVC Program was scheduled to
expire prior to the implementation of this modified Program. In order
to maintain OMB approval of the ICR, PWBA published a preclearance
notice soliciting comments on the ICR (66 FR 44159, August 22, 2001).
OMB received the submission for continued approval of the ICR on
December 21, 2001. OMB approved the ICR on February 21, 2002. This
approval will continue through February 28, 2005, unless the ICR is
substantively or materially changed.
Although the Department has updated the Program and adjusted the
penalty structure in an effort to further facilitate voluntary
compliance, the information collection provisions of the Program are
not substantively or materially changed. Under both the existing and
amended DFVC Program, participating filers must supply a photocopy of
the Form 5500 (without schedules or attachments) as filed along with
their penalty check. The Department has, however, adjusted its burden
estimates to reflect the expectation of additional participation in the
Program due to the reduced penalty incentive and the addition of a
penalty cap for small plans sponsored by Code section 501(c)(3)
organizations. A summary of the effect of the adjustment has been
provided to OMB.
Requests for copies of the ICR may be addressed to: Gerald B.
Lindrew, Office of Policy and Research, U.S. Department of Labor,
Pension and Welfare Benefits Administration, 200 Constitution Avenue,
NW, Room N-5647, Washington, DC 20210. Telephone: (202) 693-8410; Fax:
(202) 219-4745 (these are not toll-free numbers).
It is estimated that 2,500 filers will avail themselves of the
opportunity to correct potential violations pursuant to the DFVC
Program annually. The Department estimates that approximately 30
minutes will be required to read instructions, prepare a check,
photocopy the Form 5500, and mail the package. It is further assumed
that 90 percent of plan administrators sponsors will purchase services
from a professional (e.g., accountant or attorney) to comply with the
requirements of the Program, and that 10 percent will use in-house
staff. The professional wage rate incorporated in the burden cost
estimates is $75 per hour. Material and mailing costs are estimated at
$0.70 per mailing.
The time and mailing cost assumptions have been increased from what
was used in the past (21 minutes and $0.37) due principally to the
change in the penalty structure to incorporate a penalty cap for
multiple plan year delinquencies. It is assumed that multiple plan year
delinquencies will be filed together, requiring some additional time
and mailing cost. The method for estimating the number of respondents
has also changed due to the change in the penalty structure, with
multiple plan year filings now considered one response. As a result,
the total number of respondents counted for PRA purposes is reduced,
despite the fact that participation in the Program is assumed to
increase.
Agency: Pension and Welfare Benefits Administration, Department of
Labor.
Title: Delinquent Filer Voluntary Compliance Program.
OMB Number: 1210-0089.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
Frequency of Response: On occasion.
Total Respondents: 2,500.
Total Responses: 2,500.
Estimated Burden Hours: 125.
Estimated Annual Costs (Operating and Maintenance): $86,000.
Persons are not required to respond to the collection of
information unless it displays a currently valid OMB control number.
Regulatory Flexibility Act
This document constitutes an enforcement policy of the Department
and is not being issued as a general notice of proposed rulemaking.
Therefore, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
does not apply. However, PWBA has considered the potential costs and
benefits of this action for administrators of small plans, that is,
plans with fewer than 100 participants, in connection with this
amendment to the DFVC Program. The basis of the definition of a small
plan is found in section 104(a)(2) of ERISA, which permits the
Secretary of Labor to prescribe simplified annual reports for pension
plans that cover fewer than 100 participants. Under section 104(a)(3),
the Secretary may also provide for simplified annual reporting and
disclosure if the statutory requirements of part 1 of Title I of ERISA
would otherwise be inappropriate for welfare benefit plans.
Small plans represent approximately 75 percent of all annual report
filers, but have represented only about 35 percent of DFVC Program
filings, despite lower scheduled maximum penalties for small plans.
Small plan participants in the Program have represented an average of
0.4 percent of small Form 5500 filers, while large plans have
represented about 2 percent of large filers. The reasons for these
differentials cannot be known with certainty. The rate of participation
in the Program by small plans has been relatively stable since its
inception at about 1,000 filings on behalf of 520 plans per year.
Historical DFVC Program data also show that more than 70 percent of
both large and small DFVC Program filers are more than 12 months late
when the filing is
[[Page 15058]]
completed, and small plan filers are about as likely as large plan
filers to be required to make two or more filings at the same time to
bring the plan into compliance with reporting requirements. This
suggests that the penalty structure in effect prior to this amendment,
though lower for small plan administrators on a per plan year filing
basis, might have discouraged participation when multiple years were
involved. Informal comments received by the Department have offered
this view.
Under PWBA's program for the assessment of civil penalties for
noncompliance with reporting requirements, plan administrators filing
late annual reports may be assessed $50 per day for each day an annual
report is filed after the date on which the annual report was required
to be filed, without regard to any extensions of time for filing. Plan
administrators who fail to file an annual report may be assessed a
penalty of $300 per day, up to $30,000 per year, until a complete
annual report is filed. The distribution of actual DFVC filers based on
the ratio of their voluntary penalty to the penalty that would have
been imposed by the Department in penalty enforcement under this
program shows that 80 percent of small plan DFVC filers, as compared
with only 30 percent of large plan filers, have paid less than 10
percent of the enforcement program penalty. Forty percent of small plan
filers paid less than 5 percent of the enforcement program penalty that
would otherwise have been imposed. This also seems consistent with the
conclusion that a large penalty serves as a significant disincentive
for small plan administrators.
The reduction in the participating small plan administrators'
maximum penalty for a single year's filing from $2,000 to $750 and the
availability of the $1,500 cap for multiple plan year delinquencies is
expected to significantly reduce the penalties paid by small DFVC
filers. A comparison of the penalties paid under the existing DFVC
structure with those that would have been paid under the amended
structure by small plans shows a reduction of about 72 percent, or
approximately $8 million, assuming no change in behavior or
characteristics of the filers.
Based on the discounts available under the amended penalty
structure, and assuming an elasticity of two, as described earlier, the
number of small plans coming into compliance is expected to increase by
561 plans, to about 1,081 plans per year, with penalties totaling $1.2
million. This expected outcome is consistent with the stated purpose of
the amendment.
The Department believes that the DFVC Program as modified offers a
flexible and economically advantageous method for administrators of
small plans to correct reporting delinquencies, which recognizes the
special circumstances of small plans. The Department invites comments
on this analysis and on alternatives that might further reduce
potential burdens for small plans.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, this regulatory action does
not include any Federal mandate that may result in expenditures by
State, local, or tribal governments, and will not impose an annual
burden of $100 million or more on the private sector.
Federalism Statement
Executive Order 13132 outlines fundamental principles of federalism
and requires the adherence to specific criteria by federal agencies in
the process of their formulation and implementation of policies that
have substantial direct effects on the States, the relationship between
the national government and States, or on the distribution of power and
responsibilities among the various levels of government. This action
does not have federalism implications because it has no substantial
direct effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Section 514 of
ERISA provides, with certain exceptions specifically enumerated, that
the provisions of Titles I and IV of ERISA supercede any and all laws
of the States as they relate to any employee benefit plan covered under
ERISA. The requirements implemented in this enforcement policy do not
alter the fundamental reporting requirements or penalty provisions of
Title I of the statute with respect to employee benefit plans, and as
such have no implications for the States or the relationship or
distribution of power between the national government and the States.
Congressional Review Act
The DFVC Program is subject to the provisions of the Congressional
Review Act (5 U.S.C. 801 et seq.) and will be transmitted to Congress
and the Controller General for review. The Program is not a ``major
rule'' as that term is defined in 5 U.S.C. 804 because it is not likely
to result in (1) An annual effect on the economy of $100 million or
more; (2) a major increase in costs or prices for consumers, individual
industries, or federal, State, or local government agencies, or
geographic regions; or (3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
the United States-based enterprises to compete with foreign-based
enterprises in domestic or export markets.
Section 1--Delinquent Filer Voluntary Compliance (DFVC) Program
The DFVC Program is intended to afford eligible plan administrators
(described in Section 2 of this Notice) the opportunity to avoid the
assessment of civil penalties otherwise applicable to administrators
who fail to file timely annual reports for plan years beginning on or
after January 1, 1988. Eligible administrators may avail themselves of
the DFVC Program by complying with the filing requirements and paying
the civil penalties specified in Section 3 or Section 4, as
appropriate, of this Notice.
Section 2--Scope, Eligibility and Effective Date
.01 Scope. The DFVC Program described in this Notice provides
relief from assessment of civil penalties otherwise applicable to plan
administrators who fail or refuse to file timely annual reports. Relief
under this Program does not extend to penalties that may be assessed
for annual reports that are determined by the Department to be
incomplete or otherwise deficient.
.02 Eligibility. The DFVC Program is available only to a plan
administrator that complies with the requirements of Section 3 or
Section 4, as appropriate, of this Notice prior to the date on which
the administrator is notified in writing by the Department of a failure
to file a timely annual report under Title I of ERISA.
.03 Effective date. The DFVC Program described herein shall be
effective March 28, 2002. The Department intends that this DFVC Program
to be of indefinite duration; however, the Program may be modified from
time to time or terminated in the sole discretion of the Department
upon publication of notice in the Federal Register.
Section 3--Plan Administrators Filing Annual Reports
.01 General. A plan administrator electing to file a late annual
report (Form 5500 Series Annual Return/Report) under this DFVC Program
must comply with the requirements of this Section 3.
[[Page 15059]]
.02 Filing a Complete Annual Report.
(a) The plan administrator must file a complete Form 5500 Series
Annual Return/Report, including all required schedules and attachments,
for each plan year for which the plan administrator is seeking relief
under the Program. This filing shall be sent to PWBA at the appropriate
EFAST address listed in the instructions for the most current Form 5500
Annual Return/Report, or electronically in accordance with the EFAST
electronic filing requirements. See the EFAST Internet site at
www.efast.dol.gov to view forms and instructions.
Note: Do not forward the applicable penalty amount described in
Section 3.03 to the EFAST addresses listed above.
(b) For purposes of subparagraph (a), the plan administrator shall
file either: (1) The Form 5500 Series Annual Return/Report form (but
not a Form 5500-R) issued for each plan year for which the relief is
sought, or (2) the most current Form 5500 Annual Return/Report form
issued (and, if necessary, indicate in the appropriate space on the
first page of the Form 5500 the plan year for which the annual return/
report is being filed). Forms may be obtained from the IRS by calling
1-800-TAX-FORM (1-800-829-3676). Forms for certain pre-1999 plan years
also are available through the Internet sites for PWBA and the Internal
Revenue Service (IRS) (www.dol.gov/dol/pwba, www.irs.gov). For further
information on EFAST filing requirements, see the EFAST Internet site
(www.efast.dol.gov) and the instructions for the most current Form
5500.
.03 Payment of Applicable Penalty Amount.
(a) The plan administrator shall pay the applicable penalty amount
by submitting to the DFVC Program the information described in
subparagraph (b) along with a check made payable to the ``U.S.
Department of Labor'' for the applicable penalty amount determined in
accordance with subparagraph (c). This separate submission shall be
made by mail to: DFVC Program, PWBA, P.O. Box 530292, Atlanta, GA
30353-0292. The annual returns/reports for multiple plans may not be
included in a single DFVC Program submission. A separate submission to
the DFVC Program (including a separate check for the applicable penalty
amount) must be made for each plan.
Note: Personal or private delivery service cannot be made to
this address.
(b)(1) The administrator shall submit to the DFVC Program, with the
applicable penalty amount, a paper copy of the Form 5500 Annual Return/
Report filed as described in paragraph .02(a), without schedules and
attachments. In the event that the plan administrator files as
described in paragraph .02(a) using a 1998 or prior plan year form, a
paper copy of only the first page of the Form 5500 or Form 5500-C, as
applicable, should be submitted to the DFVC Program.
(2) In the case of a plan sponsored by a Code section 501(c)(3)
organization described in paragraph .03(c)(4), the administrator shall
clearly note ``501(c)(3) Plan'' in the upper-right hand corner of the
first page of the Form 5500 Annual Return/Report submitted to the DFVC
Program (in Atlanta, Georgia). This notation should not be included on
the annual report filed with PWBA pursuant to paragraph .02 (in
Lawrence, Kansas) because it may interfere with the proper processing
of the required report.
(c) The applicable penalty amount shall be determined as follows:
(1) In the case of a plan with fewer than 100 participants at the
beginning of the plan year (or a plan that would be treated as such a
plan under the ``80-120'' participant rule described in 29 CFR
2520.103-1(d) for the subject plan year) (hereinafter ``small plan''),
the applicable penalty amount is $10 per day for each day the annual
report is filed after the date on which the annual report was due
(without regard to any extensions), not to exceed the greater of: $750
per annual report or, in the case of a DFVC submission relating to more
than one delinquent annual report filing for the plan, $1,500 per plan.
(2) In the case of a plan with 100 or more participants at the
beginning of the plan year (other than a plan that is eligible to use
and uses the ``80-120'' participant rule) (hereinafter ``large plan''),
the applicable penalty amount is $10 per day for each day the annual
report is filed after the date on which the annual report was due
(without regard to any extensions), not to exceed the greater of:
$2,000 per annual report or, in the case of a DFVC submission relating
to more than one delinquent annual report filing for the plan, $4,000
per plan.
(3) In the case of a DFVC submission relating to more than one
delinquent annual report filing for a plan, the applicable penalty
amount shall be determined by reference to paragraph (c)(2) if for any
plan year for which the submission is made the plan was a ``large
plan.''
(4) In the case of a plan administrator filing an annual report for
a ``small plan'' that is sponsored by a Code section 501(c)(3)
organization (including a Code section 403(b) plan), the applicable
penalty amount is $10 per day for each day the annual report is filed
after the date on which the annual report was due (without regard to
any extensions), not to exceed $750 per DFVC submission, including DFVC
submissions that relate to more than one delinquent annual report
filing for the plan. This paragraph (c)(4) shall not apply if, as of
the date the plan files pursuant to this DFVC Program, there is a
delinquent or late annual report due for a plan year for which the plan
was a ``large plan.'' See paragraph .03(b)(2) for special instructions
pertaining to small plans sponsored by Code section 501(c)(3)
organizations.
.04 Liability for Applicability Amount.
The plan administrator is personally liable for the payment of
civil penalties assessed under section 502(c)(2) of ERISA, therefore,
civil penalties, including amounts paid under this DFVC Program, shall
not be paid from the assets of an employee benefit plan.
Section 4--Plan Administrators Filing Notices for Apprenticeship
and Training Plans and Statements for ``Top Hat'' Plans
.01 General. Administrators of apprenticeship and training plans,
described in 29 CFR 2520.104-22, and administrators of pension plans
for a select group of management or highly compensated employees,
described in 29 CFR 2520.104-23(a) (``top hat plans''), who elect to
file the applicable notice and statement described in sections
2520.104-22 and 2520.104-23, respectively, as a condition of relief
from the annual reporting requirements may, in lieu of filing any past
due annual report and paying otherwise applicable civil penalties,
comply with the requirements of this Section 4. Administrators who have
complied with the requirements of this Section 4 shall be considered as
having elected compliance with the exemption(s) and/or alternative
method of compliance prescribed in Secs. 2520.104-22, or 2520.104-23,
as appropriate, for all subsequent plan years.
.02 Filing Applicable Notice or Statement with the U.S. Department
of Labor.
The plan administrator must prepare and file a notice or statement
meeting the requirements of Secs. 2520.104-22, or 2520.104-23, as
appropriate.
The apprenticeship and training plan notice described in
Sec. 2520.104-22 shall be sent by mail or by private delivery service
to: Apprenticeship and Training Plan Exemption, Pension and Welfare
Benefits Administration, Room N-1513, U.S. Department of Labor, 200
[[Page 15060]]
Constitution Avenue NW., Washington, DC 20210.
The ``top hat'' plan statement described in Sec. 2520.104-23 shall
be sent by mail or by private delivery service to: Top Hat Plan
Exemption, Pension and Welfare Benefits Administration, Room N-1513,
U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC
20210.
Note: A plan sponsor maintaining more than one ``top hat'' plan
is not required to file a separate statement for each such plan. See
Sec. 2520.104-23(b).
.03 Payment of Applicable Penalty Amount.
(a) The plan administrator shall pay the applicable penalty amount
by submitting to the DFVC Program the information described in
subparagraph (b) along with a check made payable to the ``U.S.
Department of Labor'' for the applicable penalty amount determined in
accordance with subparagraph (c). This submission shall be made by mail
to: DFVC Program, PWBA, P.O. Box 530292, Atlanta, GA 30353-0292.
Note: Personal or private delivery service cannot be made to
this address.
(b) The administrator shall submit to the DFVC Program with the
applicable penalty amount the most current Form 5500 Annual Return/
Report (without schedules and attachments). For purposes of this
requirement, the plan administrators must complete Form 5500 line items
1a-1b, 2a-2c, 3a-3c, and use plan number 888 for all ``top hat'' plans
and plan number 999 for all apprenticeship and training plans. In the
case of plan sponsors maintaining more than one ``top hat'' plan and
plan sponsors maintaining more than one apprenticeship and training
plan described in Sec. 2520.104-22, the plan administrator shall
clearly identify each such plan on the Form 5500 filed with the
Department of Labor or on an attachment thereto. The plan administrator
also must sign and date the Form 5500.
(c) The applicable penalty amount is $750 for each DFVC submission,
without regard to the number of plans maintained by the same plan
sponsor for which notices and statements are filed pursuant to Section
4 and without regard to the number of plan participants covered under
such plan or plans.
.04 Liability for Applicability Amount.
The plan administrator is personally liable for the payment of
civil penalties assessed under section 502(c)(2) of ERISA, therefore,
civil penalties, including amounts paid under this DFVC Program, shall
not be paid from the assets of an employee benefit plan.
Section 5--Waiver of Right to Notice, Abatement of Assessment and
Plan Status
.01 Payment of a penalty under the terms of this DFVC Program
constitutes, with regard to the filings submitted under the Program, a
waiver of an administrator's right both to receive notices of intent to
assess a penalty under Sec. 2560.502c-2 from the Department and to
contest the Department's assessment of the penalty amount.
.02 Although this Notice does not provide relief from late filing
penalties under the Code, the Internal Revenue Service (IRS) has
provided the Department with the following information. The Code and
the regulations thereunder require information to be filed on the Form
5500 Series Annual Return/Report and provide the IRS with authority to
impose or assess penalties for failing to timely file. The IRS has
agreed to provide certain penalty relief under the Code for delinquent
Form 5500 Annual Returns/Reports filed for Title I plans where the
conditions of this DFVC Program have been satisfied. See IRS Notice
2002-23.
.03 Although this Notice does not provide relief from late filing
penalties under Title IV of ERISA, the Pension Benefit Guaranty
Corporation (PBGC) has provided the Department with the following
information. Title IV of ERISA and the regulations thereunder require
information to be filed on the Form 5500 Series Annual Return/Report
and provide the PBGC with authority to assess penalties against a plan
administrator under ERISA Sec. 4071 for late filing of the Form 5500
Series Annual Return/Report. The PBGC has agreed that it will not
assess a penalty against a plan administrator under ERISA Sec. 4071 for
late filing of a Form 5500 Series Annual Return/Report filed for a
Title I plan where the conditions of this DFVC Program have been
satisfied.
.04 Acceptance by the Department of a filing and penalty payment
made pursuant to this DFVC Program does not represent a determination
by the Department of Labor as to the status of the arrangement as a
plan, the particular type of plan under Title I or ERISA, the status of
the plan sponsor under the Code, or a determination by the Department
of Labor that the provisions of Secs. 2520.104-22 or 2520.104-23 have
been satisfied.
Signed at Washington, DC, this 25th day of March, 2002.
Ann L. Combs,
Assistant Secretary, Pension and Welfare Benefits Administration, U.S.
Department of Labor.
[FR Doc. 02-7514 Filed 3-27-02; 8:45 am]
BILLING CODE 4510-29-P
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