29 U.S.C. § 1101 — Coverage

Page 503 TITLE 29—LABOR § 1101 (C) Funding liability The term ‘‘funding liability’’ for a plan year means the present value of all benefits accrued or earned under the plan as of the beginning of the plan year, based on the as- sumptions used by the plan pursuant to this section, including the interest rate described in subsection (b)(5)(A) (without regard to subsection (b)(5)(B)). (D) Spread gain funding method The term ‘‘spread gain funding method’’ has the meaning given such term under rules and forms issued by the Secretary of the Treasury. (Pub. L. 93–406, title I, § 306, as added Pub. L. 113–97, title I, § 102(a), Apr. 7, 2014, 128 Stat. 1102.) Editorial Notes REFERENCES IN TEXT Section 104 of the Pension Protection Act of 2006, re- ferred to in subsec. (b)(6), is section 104 of Pub. L. 109–280, which is set out as a note under section 401 of Title 26, Internal Revenue Code. The Social Security Act, referred to in subsecs. (c)(4)(A) and (h)(3)(C)(ii), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, which is classified generally to chapter 7 (§ 301 et seq.) of Title 42, The Public Health and Welfare. Title II of the Act is classified generally to subchapter II (§ 401 et seq.) of chapter 7 of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. This chapter, referred to in subsec. (d), was in the original ‘‘this Act’’, meaning Pub. L. 93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified prin- cipally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables. PRIOR PROVISIONS A prior section 1085a, Pub. L. 93–406, title I, § 306, as added Pub. L. 99–272, title XI, § 11015(a)(1)(A)(ii), Apr. 7, 1986, 100 Stat. 264; amended Pub. L. 100–203, title IX, § 9306(e)(2), Dec. 22, 1987, 101 Stat. 1330–355; Pub. L. 101–239, title VII, § 7891(a)(1), Dec. 19, 1989, 103 Stat. 2445, related to security for waivers of minimum funding standard and extensions of amortization period, prior to repeal by Pub. L. 109–280, title I, § 101(a), Aug. 17, 2006, 120 Stat. 784. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section applicable to years beginning after Dec. 31, 2013, see section 3 of Pub. L. 113–97, set out as an Effec- tive Date of 2014 Amendment note under section 401 of Title 26, Internal Revenue Code. §§ 1085b, 1086. Repealed. Pub. L. 109–280, title I, § 101(a), Aug. 17, 2006, 120 Stat. 784 Section 1085b, Pub. L. 93–406, title I, § 307, as added Pub. L. 100–203, title IX, § 9341(b)(2), Dec. 22, 1987, 101 Stat. 1330–370; amended Pub. L. 101–239, title VII, § 7881(i)(1)(B)–(3)(A), (4)(B), Dec. 19, 1989, 103 Stat. 2442, related to security required upon adoption of plan amendment resulting in significant underfunding. Section 1086, Pub. L. 93–406, title I, § 308, formerly § 306, Sept. 2, 1974, 88 Stat. 874, renumbered § 307, Pub. L. 99–272, title XI, § 11015(a)(1)(A)(i), Apr. 7, 1986, 100 Stat. 264; renumbered § 308, Pub. L. 100–203, title IX, § 9341(b)(1), Dec. 22, 1987, 101 Stat. 1330–370; amended Pub. L. 101–239, title VII, § 7894(h)(3), Dec. 19, 1989, 103 Stat. 2451, related to effective dates of part. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to plan years beginning after 2007, see section 101(d) of Pub. L. 109–280, set out as an Effec- tive Date note under section 1082 of this title. APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B OF TITLE I OF PUB. L. 109–280 For special rules on applicability of amendments by subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub. L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Pub. L. 109–280, set out as notes under section 401 of Title 26, Internal Revenue Code. PART 4—FIDUCIARY RESPONSIBILITY § 1101. Coverage (a) Scope of coverage This part shall apply to any employee benefit plan described in section 1003(a) of this title (and not exempted under section 1003(b) of this title), other than— (1) a plan which is unfunded and is main- tained by an employer primarily for the pur- pose of providing deferred compensation for a select group of management or highly com- pensated employees; or (2) any agreement described in section 736 of title 26, which provides payments to a retired partner or deceased partner or a deceased partner’s successor in interest. (b) Securities or policies deemed to be included in plan assets For purposes of this part: (1) In the case of a plan which invests in any security issued by an investment company registered under the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], the assets of such plan shall be deemed to include such se- curity but shall not, solely by reason of such investment, be deemed to include any assets of such investment company. (2) In the case of a plan to which a guaran- teed benefit policy is issued by an insurer, the assets of such plan shall be deemed to include such policy, but shall not, solely by reason of the issuance of such policy, be deemed to in- clude any assets of such insurer. For purposes of this paragraph: (A) The term ‘‘insurer’’ means an insur- ance company, insurance service, or insur- ance organization, qualified to do business in a State. (B) The term ‘‘guaranteed benefit policy’’ means an insurance policy or contract to the extent that such policy or contract provides for benefits the amount of which is guaran- teed by the insurer. Such term includes any surplus in a separate account, but excludes any other portion of a separate account. (c) Clarification of application of ERISA to insur- ance company general accounts (1)(A) Not later than June 30, 1997, the Sec- retary shall issue proposed regulations to pro- vide guidance for the purpose of determining, in cases where an insurer issues 1 or more policies to or for the benefit of an employee benefit plan (and such policies are supported by assets of Page 504 TITLE 29—LABOR § 1101 such insurer’s general account), which assets held by the insurer (other than plan assets held in its separate accounts) constitute assets of the plan for purposes of this part and section 4975 of title 26 and to provide guidance with respect to the application of this subchapter to the general account assets of insurers. (B) The proposed regulations under subpara- graph (A) shall be subject to public notice and comment until September 30, 1997. (C) The Secretary shall issue final regulations providing the guidance described in subpara- graph (A) not later than December 31, 1997. (D) Such regulations shall only apply with re- spect to policies which are issued by an insurer on or before December 31, 1998, to or for the ben- efit of an employee benefit plan which is sup- ported by assets of such insurer’s general ac- count. With respect to policies issued on or be- fore December 31, 1998, such regulations shall take effect at the end of the 18-month period fol- lowing the date on which such regulations be- come final. (2) The Secretary shall ensure that the regula- tions issued under paragraph (1)— (A) are administratively feasible, and (B) protect the interests and rights of the plan and of its participants and beneficiaries (including meeting the requirements of para- graph (3)). (3) The regulations prescribed by the Sec- retary pursuant to paragraph (1) shall require, in connection with any policy issued by an in- surer to or for the benefit of an employee benefit plan to the extent that the policy is not a guar- anteed benefit policy (as defined in subsection (b)(2)(B))— (A) that a plan fiduciary totally independent of the insurer authorize the purchase of such policy (unless such purchase is a transaction exempt under section 1108(b)(5) of this title), (B) that the insurer describe (in such form and manner as shall be prescribed in such reg- ulations), in annual reports and in policies issued to the policyholder after the date on which such regulations are issued in final form pursuant to paragraph (1)(C)— (i) a description of the method by which any income and expenses of the insurer’s general account are allocated to the policy during the term of the policy and upon the termination of the policy, and (ii) for each report, the actual return to the plan under the policy and such other fi- nancial information as the Secretary may deem appropriate for the period covered by each such annual report, (C) that the insurer disclose to the plan fidu- ciary the extent to which alternative arrange- ments supported by assets of separate ac- counts of the insurer (which generally hold plan assets) are available, whether there is a right under the policy to transfer funds to a separate account and the terms governing any such right, and the extent to which support by assets of the insurer’s general account and support by assets of separate accounts of the insurer might pose differing risks to the plan, and (D) that the insurer manage those assets of the insurer which are assets of such insurer’s general account (irrespective of whether any such assets are plan assets) with the care, skill, prudence, and diligence under the cir- cumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, taking into account all obligations sup- ported by such enterprise. (4) Compliance by the insurer with all require- ments of the regulations issued by the Secretary pursuant to paragraph (1) shall be deemed com- pliance by such insurer with sections 1104, 1106, and 1107 of this title with respect to those assets of the insurer’s general account which support a policy described in paragraph (3). (5)(A) Subject to subparagraph (B), any regula- tions issued under paragraph (1) shall not take effect before the date on which such regulations become final. (B) No person shall be subject to liability under this part or section 4975 of title 26 for con- duct which occurred before the date which is 18 months following the date described in subpara- graph (A) on the basis of a claim that the assets of an insurer (other than plan assets held in a separate account) constitute assets of the plan, except— (i) as otherwise provided by the Secretary in regulations intended to prevent avoidance of the regulations issued under paragraph (1), or (ii) as provided in an action brought by the Secretary pursuant to paragraph (2) or (5) of section 1132(a) of this title for a breach of fidu- ciary responsibilities which would also con- stitute a violation of Federal or State crimi- nal law. The Secretary shall bring a cause of action de- scribed in clause (ii) if a participant, bene- ficiary, or fiduciary demonstrates to the satis- faction of the Secretary that a breach described in clause (ii) has occurred. (6) Nothing in this subsection shall preclude the application of any Federal criminal law. (7) For purposes of this subsection, the term ‘‘policy’’ includes a contract. (Pub. L. 93–406, title I, § 401, Sept. 2, 1974, 88 Stat. 874; Pub. L. 101–239, title VII, § 7891(a)(1), Dec. 19, 1989, 103 Stat. 2445; Pub. L. 104–188, title I, § 1460(a), Aug. 20, 1996, 110 Stat. 1820.) Editorial Notes REFERENCES IN TEXT The Investment Company Act of 1940, referred to in subsec. (b)(1), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 80a–51 of Title 15 and Tables. AMENDMENTS 1996—Subsec. (c). Pub. L. 104–188 added subsec. (c). 1989—Subsec. (a)(2). Pub. L. 101–239 substituted ‘‘In- ternal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no change in text. Page 505 TITLE 29—LABOR § 1103 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–188, title I, § 1460(b), Aug. 20, 1996, 110 Stat. 1822, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendment made by this section [amending this section] shall take effect on January 1, 1975. ‘‘(2) CIVIL ACTIONS.—The amendment made by this section shall not apply to any civil action commenced before November 7, 1995.’’ EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7891(f) of Pub. L. 101–239, set out as a note under section 1002 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998 For provisions directing that if any amendments made by subtitle D [§§ 1401–1465] of title I of Pub. L. 104–188 require an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year begin- ning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104–188, set out as a note under section 401 of Title 26, Internal Revenue Code. § 1102. Establishment of plan (a) Named fiduciaries (1) Every employee benefit plan shall be estab- lished and maintained pursuant to a written in- strument. Such instrument shall provide for one or more named fiduciaries who jointly or sever- ally shall have authority to control and manage the operation and administration of the plan. (2) For purposes of this subchapter, 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 em- ployer or employee organization with respect to the plan or (B) by such an employer and such an employee organization acting jointly. (b) Requisite features of plan Every employee benefit plan shall— (1) provide a procedure for establishing and carrying out a funding policy and method con- sistent with the objectives of the plan and the requirements of this subchapter, (2) describe any procedure under the plan for the allocation of responsibilities for the oper- ation and administration of the plan (includ- ing any procedure described in section 1105(c)(1) of this title), (3) provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan, and (4) specify the basis on which payments are made to and from the plan. (c) Optional features of plan Any employee benefit plan may provide— (1) that any person or group of persons may serve in more than one fiduciary capacity with respect to the plan (including service both as trustee and administrator); (2) that a named fiduciary, or a fiduciary designated by a named fiduciary pursuant to a plan procedure described in section 1105(c)(1) of this title, may employ one or more persons to render advice with regard to any responsi- bility such fiduciary has under the plan; or (3) that a person who is a named fiduciary with respect to control or management of the assets of the plan may appoint an investment manager or managers to manage (including the power to acquire and dispose of) any assets of a plan. (Pub. L. 93–406, title I, § 402, Sept. 2, 1974, 88 Stat. 875.) § 1103. Establishment of trust (a) Benefit plan assets to be held in trust; author- ity of trustees Except as provided in subsection (b), all assets of an employee benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall be either named in the trust in- strument or in the plan instrument described in section 1102(a) of this title or appointed by a person who is a named fiduciary, and upon ac- ceptance of being named or appointed, the trust- ee or trustees shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that— (1) the plan expressly provides that the trustee or trustees are 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 this chapter, or (2) authority to manage, acquire, or dispose of assets of the plan is delegated to one or more investment managers pursuant to sec- tion 1102(c)(3) of this title. (b) Exceptions The requirements of subsection (a) of this sec- tion shall not apply— (1) to any assets of a plan which consist of insurance contracts or policies issued by an insurance company qualified to do business in a State; (2) to any assets of such an insurance com- pany or any assets of a plan which are held by such an insurance company; (3) to a plan— (A) some or all of the participants of which are employees described in section 401(c)(1) of title 26; or (B) which consists of one or more indi- vidual retirement accounts described in sec- tion 408 of title 26; to the extent that such plan’s assets are held in one or more custodial accounts which qual- ify under section 401(f) or 408(h) of title 26, whichever is applicable. (4) to a plan which the Secretary exempts from the requirement of subsection (a) and which is not subject to any of the following provisions of this chapter— (A) part 2 of this subtitle, (B) part 3 of this subtitle, or (C) subchapter III of this chapter; or (5) to a contract established and maintained under section 403(b) of title 26 to the extent that the assets of the contract are held in one or more custodial accounts pursuant to sec- tion 403(b)(7) of title 26.