[Code of Federal Regulations]

[Title 29, Volume 9]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 29CFR2520.103-6]



[Page 431-434]

 

                             TITLE 29--LABOR

 

 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 

                                  LABOR

 

PART 2520_RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE--Table of 

Contents

 

                  Subpart C_Annual Report Requirements

 

Sec.  2520.103-6  Definition of reportable transaction for Annual 

Return/Report.



    (a) General. For purposes of preparing the schedule of reportable 

transactions described in Sec.  2520.103-10(b)(6), and subject to the 

exceptions provided in Sec. Sec.  2520.103-3, 2520.103-4 and 2520.103-

12, with respect to individual transactions by a common or collective 

trust, pooled separate account, or a 103-12 investment entity, a 

reportable transaction includes any transaction or series of 

transactions described in paragraph (c) of this section.

    (b) Definitions. (1)(i) Except as provided in paragraphs (c)(2) and 

(d)(1)(vi) of this section (relating to assets acquired or disposed of 

during the plan year), ``current value'' shall mean the current value, 

as defined in section 3(26) of the Act, of plan assets as of the 

beginning of the plan year, or the end of the previous plan year.

    (ii) Except as provided in paragraphs (c)(2) and (d)(1)(vi) of this 

section (relating to assets acquired or disposed of during the plan 

year), with respect to schedules of reportable transactions for the 

initial plan year of a plan, ``current value'' shall mean the current 

value, as defined in section 3(26) of the Act, of plan assets at the end 

of a plan's initial plan year.

    (2)(i) A ``transaction with respect to securities'' is any purchase, 

sale, or exchange of securities. A transaction with respect to 

securities for purposes of this section occurs on either the trade date 

or settlement date of a purchase, sale, or exchange of securities; 

either the trade date or settlement date must be used consistently 

during the plan year for the purposes of this section. For the purposes 

of this section, except as provided in paragraph (b)(2)(ii) of this 

section, ``securities'' includes a unit of participation in a common or 

collective trust or a pooled separate account.

    (ii) Solely for purposes of paragraph (c)(1)(iv) of this section, 

the term ``securities'', as it applies to any transaction involving a 

bank or insurance company regulated by a Federal or State agency, an 

investment company registered under the Investment Company Act of 1940, 

or a broker-dealer registered under the Securities Exchange Act of 1934, 

shall not include:

    (A) Debt obligations of the United States or any United States 

agency with a maturity of not more than one year;

    (B) Debt obligations of the United States or any United States 

agency with a maturity of more than one year if purchased or sold under 

a repurchase agreement having a term of less than 91 days;

    (C) Interests issued by a company registered under the Investment 

Company Act of 1940;

    (D) Bank certificates of deposit with a maturity of not more than 

one year;

    (E) Commercial paper with a maturity of not more than nine months if 

it is ranked in the highest rating category for commercial paper by at 

least two nationally recognized statistical rating services and is 

issued by a company required to file reports under section 13 of the 

Securities Exchange Act of 1934;

    (F) Participations in a bank common or collective trust;

    (G) Participations in an insurance company pooled separate account;

    (3)(i) Except as provided by paragraph (b)(3)(ii) of this section, a 

transaction is ``with or in conjunction with a person'' for purposes of 

this section if that person benefits from, executes, facilitates, 

participates, promotes, or solicits a transaction or part of a 

transaction involving plan assets.

    (ii) Solely for the purposes of paragraph (c)(1)(iv) of this 

section, a transaction shall not be considered ``with or in conjunction 

with a person'' if:

    (A) That person is a broker-dealer registered under the Securities 

Exchange Act of 1934;

    (B) The transaction involves the purchase or sale of securities 

listed on a national securities exchange registered



[[Page 432]]



under section 6 of the Securities Exchange Act of 1934 or quoted on 

NASDAQ; and

    (C) The broker-dealer does not purchase or sell securities involved 

in the transaction for its own account or the account of an affiliated 

person.

    (c) Application. (1) Except as provided in paragraph (c)(4) of this 

section, this provision applies to--

    (i) A transaction within the plan year, with respect to any plan 

asset, involving an amount in excess of 3 percent of the current value 

of plan assets;

    (ii) Any series of transactions (other than transactions with 

respect to securities) within the plan year with or in conjunction with 

the same person which, when aggregated, regardless of the category of 

asset and the gain or loss on any transaction, involves an amount in 

excess of 3 percent of the current value of plan assets;

    (iii) Any transaction within the plan year involving securities of 

the same issue if within the plan year any series of transactions with 

respect to such securities, when aggregated, involves an amount in 

excess of 3 percent of the current value of plan assets; and

    (iv) Any transaction within the plan year with respect to securities 

with or in conjunction with a person if any prior or subsequent single 

transaction within the plan year with such person with respect to 

securities exceeds 3 percent of the current value of plan assets.

    (2) For purposes of determining whether any 3 percent transactions 

occur, the ``current value'' of an asset acquired or disposed of during 

the plan year is the current value, as defined in section 3(26) of the 

Act, at the time of acquisition or disposition of such asset.

    (3) Plans whose assets are held in whole or in part in a common or 

collective trust or a pooled separate account, as provided in Sec. Sec.  

2520.103-3 and 2520.103-4, and which satisfy the requirements of those 

sections, are not required to prepare schedules of reportable 

transactions with respect to the individual transactions of the common 

or collective trust or pooled separate account.

    (4) For plan years beginning on or after January 1, 1988, 5 percent 

shall be substituted for 3 percent in paragraphs (c)(1) and (2) of this 

section for purposes of determining whether a transaction or series of 

transactions constitutes a reportable transaction under this section.

    (d) Contents. (1) The schedule of transactions shall include the 

following information as to each transaction or series of transactions:

    (i) The name of each party, except that in the case of a transaction 

or series of transactions involving a purchase or sale of a security on 

the market, the schedule need not include the person from whom it was 

purchased or to whom it was sold. A purchase or sale on the market is a 

purchase or sale of a security through a registered broker-dealer acting 

as a broker under the Securities Exchange Act of 1934;

    (ii) A brief description of each asset;

    (iii) The purchase or selling price in the case of a purchase or 

sale, the rental in the case of a lease, and the amount of principal, 

interest rate, payment schedule (e.g., fully amortized, partly amortized 

with balloon) and maturity date in the case of a loan;

    (iv) Expenses incurred, including, but not limited to, any fees or 

commissions;

    (v) The cost of any asset;

    (vi) The current value of any asset acquired or disposed of at the 

time of acquisition or disposition; and

    (vii) The net gain or loss.

    (2) The schedule of transactions with respect to a series of 

transactions described in paragraph (c)(1)(iii) may include the 

following information for each issue in lieu of the information 

prescribed in paragraphs (d)(1)(i) through (vii):

    (i) The total number of purchases of such securities made by the 

plan within the plan year;

    (ii) The total number of sales of such securities made by the plan 

within the plan year;

    (iii) The total dollar value of such purchases;

    (iv) The total dollar value of such sales;

    (v) The net gain or loss as a result of these transactions.

    (e) Examples. These examples are effective for reporting for plan 

years beginning on or after January 1, 1988.

    (1) At the beginning of the plan year, XYZ plan has 10 percent of 

the current value of its plan assets invested in ABC



[[Page 433]]



common stock. Halfway through the plan year, XYZ purchases ABC common 

stock in a single transaction in an amount equal to 6 percent of the 

current value of plan assets. At about this time, XYZ plan also 

purchases a commercial development property in an amount equal to 8 

percent of the current value of plan assets. Under paragraph (c)(1)(i) 

of this section, the 6 percent stock transaction is a reportable 

transaction for the plan year because it exceeds 5 percent of the 

current value of plan assets. The 8 percent land transaction is also 

reportable under paragraph (c)(1)(i) of this section because it exceeds 

5 percent of the current value of plan assets.

    (2) During the plan year, AAA plan purchases a commercial lot from 

ZZZ corporation at a cost equal to 2 percent of the current value of the 

plan assets. Two months later, AAA plan loans ZZZ corporation an amount 

of money equal to 3.5 percent of the current value of plan assets. Under 

the provisions of paragraph (c)(1)(ii) of this section, the plan has 

engaged in a reportable series of transactions with or in conjunction 

with the same person, ZZZ corporation, which when aggregated involves 

5.5 percent of plan assets.

    (3) During the plan year NMN plan sells to OPO corporation a 

commercial property that represents 3.5 percent of the current value of 

plan assets. OPO simultaneously executes a note and mortgage on the 

purchased property to NMN which represents 3 percent of the current 

value of plan assets. Under the provisions of paragraph (c)(1)(ii) of 

this section, NMN has engaged in a reportable series of transactions 

with or in conjunction with the same person, OPO corporation, consisting 

of a simultaneous sale of property and a loan, which, when aggregated, 

involves 6.5 percent of the current value of plan assets.

    (4) At the beginning of the plan year, ABC plan has 10 percent of 

the current value of plan assets invested equally in a combination of 

XYZ Corporation common stock and XYZ preferred stock. One month into the 

plan year, ABC sells some of its XYZ common stock in an amount equal to 

2 percent of the current value of plan assets.

    (i) Six weeks later the plan sells XYZ preferred stock in an amount 

equal to 4 percent of the current value of plan assets. A reportable 

series of transactions has not occurred because only transactions 

involving securities of the same issue are to be aggregated under 

paragraph (c)(1)(iii) of this section.

    (ii) Two weeks later when the ABC plan purchases XYZ common stock in 

an amount equal to 3.5 percent of the current value of plan assets, a 

reportable series of transactions under paragraph (c)(1)(iii) of this 

section has occurred. The sale of XYZ common stock worth 2 percent of 

plan assets and the purchase of XYZ common stock worth 3.5 percent of 

plan assets aggregate to exceed 5 percent of the total value of plan 

assets.

    (5) At the beginning of the plan year, Plan X purchases through 

broker-dealer Y common stock of Able Industries in an amount equal to 6 

percent of plan assets. The common stock of Able Industries is not 

listed on any national securities exchange or quoted on NASDAQ. This 

purchase is a reportable transaction under paragraph (c)(1)(i) of this 

section. Three months later, Plan X purchases short term debt 

obligations of Charley Company through broker-dealer Y in the amount of 

0.2 percent of plan assets. This purchase is also a reportable 

transaction under the provisions of paragraph (c)(1)(iv) of this 

section.

    (6) At the beginning of the plan year, Plan X purchases from Bank B 

certificates of deposit having a 180 day maturity in an amount equal to 

6 percent of plan assets. Bank B is a national bank regulated by the 

Comptroller of the Currency. This purchase is a reportable transaction 

under paragraph (c)(1)(i) of this section. Three months later, Plan X 

purchases through Bank B 91-day Treasury bills in the amount of 0.2 

percent of plan assets. This purchase is not a reportable transaction 

under paragraph (c)(1)(iv) of this section because the purchase of the 

Treasury bills as well as the purchase of the certificates of deposit 

are not considered to involve a security under the definition of 

``securities'' in paragraph (b)(2)(ii) of this section.



[[Page 434]]



    (7) At the beginning of the plan year, Plan X purchases through 

broker-dealer Y common stock of Able Industries, a New York Stock 

Exchange listed security, in an amount equal to 6 percent of plan 

assets. This purchase is a reportable transaction under paragraph 

(c)(1)(i) of this section. Three months later, Plan X purchases through 

broker-dealer Y, acting as agent, common stock of Baker Corporation, 

also a New York Stock Exchange listed security, in an amount equal to 

0.2 percent of plan assets. This latter purchase is not a reportable 

transaction under paragraph (c)(1)(iv) of this section because it is not 

a transaction ``with or in conjunction with a person'' pursuant to 

paragraph (b)(3)(ii) of this section.

    (f) Special rule for certain participant-directed transactions. 

Participant or beneficiary directed transactions under an individual 

account plan shall not be taken into account under paragraph (c)(1) of 

this section for purposes of preparing the schedule of reportable 

transactions described in this section. For purposes of this section 

only, a transaction will be considered directed by a participant or 

beneficiary if it has been authorized by such participant or 

beneficiary.



[43 FR 10140, Mar. 10, 1978; 43 FR 14009, Apr. 4, 1978, as amended at 54 

FR 8628, Mar. 1, 1989; 61 FR 33849, July 1, 1996; 65 FR 21082, Apr. 19, 

2000]