[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2520.104-26]

[Page 403-404]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE--Table of Contents
 
   Subpart D--Provisions Applicable to Both Reporting and Disclosure 
                              Requirements
 
Sec. 2520.104-26  Limited exemption for certain unfunded dues financed welfare plans maintained by employee organizations.

    (a) Scope. Under the authority of section 104(a)(3) of the Act, a 
welfare benefit plan that meets the requirements of paragraph (b) of 
this section is exempted from the provisions of the Act that require (i) 
filing with the Secretary a plan description and annual report and (ii) 
furnishing a summary annual report to participants and beneficiaries. 
Such plans may use a simplified method of reporting and disclosure to 
comply with the requirements (i) to furnish a summary plan description 
to participants and beneficiaries and (ii) to file a copy of the summary 
plan description with the Secretary, as follows:
    (1) In lieu of filing a plan description and a summary plan 
description with the Secretary,
    (i) Filing is made under the Labor-Management Reporting and 
Disclosure Act (LMRDA) and regulations thereunder, of the Report Form 
LM-1 or LM-1A, together with a copy of the employee organization 
constitution or by-laws in which the plan is described, and
    (ii) Filing is made of any document furnished to participants and 
beneficiaries, in accordance with paragraph (a)(3) of this section.
    (2) In lieu of filing an annual report with the Secretary or 
distributing a summary annual report, a filing is made of Report Form 
LM-2 or LM-3, pursuant to the LMRDA and regulations thereunder.
    (3)(i) The plan meets the requirements for furnishing a summary plan 
description of Sec. 2520.104b-2(f), except the requirement of paragraph 
(f)(1) of that section to have furnished the summary plan description 
before the date of publication of these regulations. The employee 
organization constitution or by-laws may be used as the summary plan 
description, if they meet the requirements of that paragraph.
    (ii) Notwithstanding paragraph (a)(3)(i) of this section, if any 
provisions of such documents indicate that a certain portion of members' 
dues or a certain portion of the employee organization's assets will be 
used only for the payment of benefits, although such portion of dues or 
assets may legally be used for general employee organization purposes, 
or are subject to the claims of general creditors of the employee 
organization, such documents may nevertheless be used as the summary 
plan description; Provided, That:
    (A) The supplement required by Sec. 2520.104b-2(f) contains a clear 
statement that such portion of dues or assets may legally be used for 
general employee organization purposes or are subject to the claims of 
general creditors of the employee organization, and
    (B) The employee organization constitution or by-laws are amended as 
soon as possible following normal procedures (e.g., at the next 
regularly scheduled employee organization convention, in the case of a 
constitution or by-laws which provide for amendment in regularly 
scheduled conventions) to reflect accurately the funded or unfunded 
status of the plan.
    (b) Application. This exemption is available only to welfare benefit 
plans maintained by an employee organization, as that term is defined in 
section

[[Page 404]]

3(4) of the Act, paid for out of the employee organization's general 
assets, which are derived wholly or partly from membership dues, and 
which cover employee organization members and their beneficiaries.
    (c) Limitations. This exemption does not exempt the administrator 
from any other requirement of part 1 of title I of the Act.

[42 FR 37184, July 19, 1977]