[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2580.412-2]

[Page 585]
 
                             TITLE 29--LABOR
 
 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2580_TEMPORARY BONDING RULES--Table of Contents
 
          Subpart A_Criteria for Determining Who Must Be Bonded
 
Sec. 2580.412-2  Plans exempt from the coverage of section 13.

    Only completely unfunded plans in which the plan benefits derive 
solely from the general assets of a union \1\ or employer, and in which 
plan assets are not segregated in any way from the general assets of a 
union or employer and remain solely within the general assets until the 
time of distribution of benefits, shall be exempt from the bonding 
provisions. As such, the language ``where such plan is one under which 
the only assets from which benefits are paid are the general assets of a 
union or of an employer'' shall not be deemed to exempt a plan from the 
coverage of section 13 if the plan is one in which:
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    \1\ For purposes of the exemption discussed in Sec. 2580.412-2, the 
term ``union'' shall include ``* * * any organization of any kind or any 
agency or employee representation committee, association, group, or 
plan, in which employees participate and which exists for the purpose in 
whole or in part, of dealing with employers concerning an employee 
welfare or pension benefit plan, or other matters incidental to 
employement relationships * * *'' (29 U.S.C. 302(a)(3)).
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    (a) Any benefits thereunder are provided or underwritten by an 
insurance carrier or service or other organization, or
    (b) There is a trust or other separate entity to which contributions 
are made or out of which benefits are paid, or
    (c) Contributions to the plan are made by the employees, either 
through withholding or otherwise, or from any source other than the 
employer or union involved, or
    (d) There is a separately maintained bank account or separately 
maintained books and records for the plan or other evidence of the 
existence of a segregrated or separately maintained or administered fund 
out of which plan benefits are to be provided.

As a general rule, the presence of special ledger accounts or accounting 
entries for plan funds as an integral part of the general books and 
records of an employer or union shall not, in and of itself, be deemed 
sufficient evidence of segregation of plan funds to take a plan out of 
the exempt category, but shall be considered along with the other 
factors and criteria discussed above in determining whether the 
exemption applies. Again, it should be noted, however, that the fact 
that a plan is not exempt from the coverage of section 13 does not 
necessarily mean that its administrators, officers or employees are 
required to be bonded. As stated previously, this will depend in each 
case on whether or not they ``handle'' funds or other property of the 
plan within the meaning of section 13 and under the standards set forth 
in Sec. 2580.412-6.