[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: 29CFR2520.104-21]



[Page 441-442]

 

                             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 D_Provisions Applicable to Both Reporting and Disclosure 

                              Requirements

 

Sec.  2520.104-21  Limited exemption for certain group insurance 

arrangements.



    (a) Scope. Under the authority of section 104(a)(3) of the Act, the 

administrator of any employee welfare benefit plan which covers fewer 

than 100 participants at the beginning of the plan year and which meets 

the requirements of paragraph (b) of this section is exempted from 

certain reporting and disclosure provisions of the Act. Specifically, 

the administrator of such plan is not required to file with the 

Secretary a terminal report or furnish upon written request of any 

participant or beneficiary a copy of any terminal report as required by 

section 104(b)(4) of the Act.

    (b) Application. This exemption applies only to welfare plans, each 

of which has fewer than 100 participants at the beginning of the plan 

year and which are part of a group insurance arrangement if such 

arrangement:

    (1) Provides benefits to the employees of two or more unaffiliated 

employers, but not in connection with a multiemployer plan as defined in 

section 3(37) of the Act and any regulations prescribed under the Act 

concerning section 3(37);

    (2) Fully insures one or more welfare plans of each participating 

employer through insurance contracts purchased solely by the employers 

or purchased partly by the employers and partly by their participating 

employees, with all benefit payments made by the insurance company: 

Provided, That--

    (i) Contributions by participating employees are forwarded by the 

employers within three months of receipt,

    (ii) Refunds, to which contributing participants are entitled, are 

returned to them within three months of receipt, and

    (iii) Contributing participants are informed upon entry into the 

plan of the provisions of the plan concerning the allocation of refunds; 

and

    (3) Uses a trust (or other entity such as a trade association) as 

the holder of the insurance contracts and uses a trust as the conduit 

for payment of premiums to the insurance company.

    (c) Limitations. This exemption does not exempt the administrator of 

an employee benefit plan from any other requirement of title I of the 

Act, including the provisions which require that plan administrators 

furnish copies of the summary plan description to participants and 

beneficiaries (section 104(b)(1)), file an annual report with the 

Secretary of Labor (section 104(a)(1)) and furnish certain documents to 

the Secretary of Labor upon request (section 104(a)(6)), and authorize 

the Secretary of Labor to collect information and data from employee 

benefit plans for research and analysis (section 513).

    (d) Examples. (1) A welfare plan has 25 participants at the 

beginning of the plan year. It is part of a group insurance arrangement 

of a trade association which provides benefits to employees of two or 

more unaffiliated employers, but not in connection with a multiemployer 

plan as defined in the Act. Plan benefits are fully insured pursuant to 

insurance contracts purchased with premium payments derived half from 

employee contributions (which the employer forwards within three months 

of receipt) and half from the general assets of each participating 

employer. Refunds to the plan are paid to participating employees within 

three months of receipt as provided in the plan and as described to each 

participant upon entering the plan. The trade association holds the 

insurance contracts. A trust acts as a conduit for payments, receiving 

premium payments from participating employers and paying the insurance 

company. The plan appoints the trade association as its plan 

administrator. The association, as plan administrator, provides summary 

plan descriptions to participants and beneficiaries, enlisting the help 

of participating employers in carrying out this distribution. The plan 

administrator also makes copies of certain plan documents available to 

the plan's principal office and such other places as necessary to give 

participants reasonable access to them. The plan administrator files 

with the Secretary an annual report covering activities of the plan, as 

required by the Act and such regulations as the Secretary may issue. The 

exemption provided by this section applies because the conditions of 

paragraph (b) have been satisfied.

    (2) Assume the same facts as paragraph (d)(1) of this section except 

that



[[Page 442]]



the premium payments for the insurance company are paid from the trust 

to an independent insurance brokerage firm acting as the agent of the 

insurance company. The trade association is the holder of the insurance 

contract. The plan appoints an officer of the participating employer as 

the plan administrator. The officer, as plan administrator, performs the 

same reporting and disclosure functions as the administrator in 

paragraph (d)(1) of this section, enlisting the help of the association 

in providing summary plan descriptions and necessary information. The 

exemption provided by this section applies.

    (3) The facts are the same as paragraph (d)(1) of this section 

except the welfare plan has 125 participants at the beginning of the 

plan year. The exemption provided by this section does not apply because 

the plan had 100 or more participants at the beginning of the plan year. 

See, however, Sec.  2520.104-43.

    (4) The facts are the same as paragraph (d)(2) of this section 

except the welfare plan has 125 participants. The exemption provided by 

this section does not apply because the plan had 100 or more 

participants at the beginning of the plan year. See, however, Sec.  

2520.104-43.

    (e) Applicability date. For purposes of paragraph (b)(3) of this 

section, the arrangement may continue to use an entity (such as a trade 

association) as the conduit for the payment of insurance premiums to the 

insurance company for reporting years of the arrangement beginning 

before January 1, 2001.



[43 FR 10149, Mar. 10, 1978, as amended at 65 FR 21084, Apr. 19, 2000; 

67 FR 776, Jan. 7, 2002]