temporary waiver period for a collectively bargained plan maintained on January 1, 1974. In connection with the granting of a waiver (or variation) of the vesting standards with respect to a particular plan, the Secretary of the Treasury rather than the Secretary of Labor is to make a determination as to whether the participation and vesting rules of the plan on the date ERISA was enacted are in the aggregate as favorable to covered employees as the participation and vesting standards of ERISA. The bill has no effect on the validity of any waiver (or variation) granted by the Secretary of Labor under provisions of present law.

B. Termination of Treasury Department's General Jurisdiction Over Prohibited Self-Dealing Transactions

(Sec. 3 of the Bill, Sec. 4975 of the Code, and Secs. 407, 408, 414, and 502 of ERISA

Under the bill, the Secretary of the Treasury will administer the prohibited self-dealing rules and the fiduciary responsibility rules only with respect to ESOPS.33 The bill continues the authority of the Secretary of Labor to administer the fiduciary responsibility standards of ERISA (part 4 of title I of ERISA), except that in the case of an ESOP these standards will be administered by the Secretary of the Treasury. Accordingly, questions concerning fiduciary responsibilities and prohibited self-dealing with respect to a plan other than an ESOP will be resolved solely by the Secretary of Labor.

Under the bill, if a plan is an ESOP for a portion of a plan year and a conventional plan for the remainder of the year, the Secretary of the Treasury will administer the fiduciary responsibility and prohibited self-dealing standards with respect to the plan for the portion of the year for which the plan is an ESOP, and the Secretary of Labor will administer these standards for the remainder of the year. If a single trust forms a part of an ESOP and a part of a conventional employee pension benefit plan, the fiduciary responsibility and prohibited self-dealing standards will be administered by the Secretary of the Treasury with respect to the portion of the trust forming a part of an ESOP, and by the Secretary of Labor with respect to the remainder of the trust.

The authority of the Secretary of Labor to intervene in an action under the fiduciary responsibility or prohibited self-dealing rules of ERISA is continued by the bill, except that under the bill the right to intervene in a case involving the application of those rules to an ESOP is reserved to the Secretary of the Treasury. The committee expects that if the Secretary of the Treasury and the Secretary of Labor bring concurrent civil actions 34 under the fiduciary responsibility or prohibited self-dealing standards, with respect to a plan, then the actions will be joined and considered by a single court.

33 Under hte bill, the term "employee stock ownership plan" means (1) a defined contribution plan (A) which is a stock bonus plan which is qualified, or a stock bonus and a money purchase plan both of which are qualified under sec. 401(a). and which is designed to invest primarily in qualifying employer securities, and (B) which is otherwise defined in regulations prescribed by the Secretary of the Treasury; or (2) an investment credit ESOP.

34

Two actions will be considered concurrent for this purpose if they each relate to the same arrangement or self-dealing.

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C. Authority to Require Reports

(Sec. 4 of the Bill, and Secs. 102, 103 and 104 or ERISA) The bill authorizes the Secretary of Labor to prescribe regulations requiring employee benefit plans (employee pension benefit plans and employee welfare benefit plans) to file such annual reports as are necessary to carry out the policy of ERISA and deletes the provisions of present law which detail specific information required to be included in the annual reports of employee benefit plans. The bill continues the authority of the Secretary of Labor (1) to waive the reporting requirements for particular categories of plans for which the Secretary believes such a waiver is appropriate, and (2) to prescribe different annual report forms for different kinds of plans.

The bill also provides that the Secretary of Labor may require employee benefit plans to furnish to, or to make available for inspection by, plan participants and beneficiaries copies or summaries of reports and other information required to be filed with the Secretary.

The committee expects that, in implementing these reporting and disclosure rules, the Secretary of Labor will consider carefully both the need of plan participants and beneficiaries for accurate and timely information and the adverse effect unduly burdensome requirements will have on sponsors and administrators of employee benefit plans. The bill deletes the requirements of present law (1) that a copy of the summary plan description of a plan be filed with the Secretary of Labor at the time it is furnished to plan participants and beneficiaries, and (2) that any material modification or change either in a plan or in information required to be included in its summary plan description be filed with the Secretary of Labor within 60 days after the modification or change is adopted or occurs, as the case may be.

The bill does not affect the present law requirements that plan participants and beneficiaries be furnished with summary plan descriptions and with information respecting any material modification or change either in the terms of a plan or in the material included in its summary plan description.

D. Interdepartmental Cooperation

(Sec. 5 of the Bill, and Secs. 3001, 3002, and 3004 of ERISA)

Because the bill concentrates administration of the participation, etc., standards of ERISA (see IV. General Explanation, A. Transfer of Labor Department's Jurisdiction Over Participation, Vesting, and Funding to Treasury Department) in the Treasury Department and administration of the fiduciary responsibility and prohibited self-dealing standards in the Labor Department, many of the provisions of ERISA requiring coordination between the Secretary of the Treasury and the Secretary of Labor become unnecessary and are deleted. Under the bill, the Secretary of the Treasury no longer will be obligated to require an applicant for an advance determination with respect to the tax-qualified status of a plan or trust to furnish additional information as requested by the Secretary of Labor. Also, the Secretary of the Treasury no longer will be obligated to give the Pension Benefit Guaranty Corporation or the Secretary of Labor an opportunity to comment with respect to an application for determination that a plan or

trust qualifies. Additionally, the bill deletes the responsibility of the Secretary of Labor to comment on an application for a determination as to the tax-qualified status of a plan or trust at the request of interested parties.

The bill deletes the authority of the Pension Benefit Guaranty Corporation to intervene in the Tax Court in a declaratory judgment action relating to a determination by the Secretary of the Treasury regarding the tax-qualified status of a plan or trust. Also, under the bill, the Secretary of the Treasury no longer will be required to notify the Secretary of Labor when the Secretary of the Treasury issues a notice of intent to disqualify a plan or trust or commences a proceeding relating to the tax-qualified status of a plan or trust.

The right of an interested party to comment on an application for a determination by the Internal Revenue Service that a plan or trust is qualified under the tax law, or to bring an action in the Tax Court for a declaratory judgment as to the qualified status of a plan or trust, is not affected by the bill.

Under the bill, the Secretary of the Treasury no longer will be required to notify the Secretary of Labor before a notice of deficiency is issued with respect to the tax for failure to meet minimum funding standards or with respect to the tax on prohibited self-dealing. Also, the bill ends the authority of the Secretary of Labor and of the PBGC to request that the Secretary of the Treasury investigate whether the funding tax or the self-dealing tax should be imposed in particular instances. In addition, the provision of ERISA giving the Secretary of the Treasury the right to intervene and to review briefs of the Secretary of Labor and of the Pension Benefit Guaranty Corporation in suits relating to participation, vesting, and funding has been deleted as unnecessary in light of other changes made by the bill. Under the bill, the Secretary of Labor no longer will be required to transmit to the Secretary of the Treasury information obtained regarding the occurrence of prohibited self-dealing.

Under the bill, except in the case of an ESOP, the Secretary of the Treasury is to notify the Attorney General and the Secretary of Labor if the Secretary of the Treasury knows (or believes) that prohibited self-dealing has occurred.

The bill requires that, not later than 60 days after its enactment, the Secretary of the Treasury and the Secretary of Labor jointly prescribe a single form and a single annual filing date for each employee benefit plan that will satisfy the reporting requirements of ERISA.

The committee is concerned that frequent changes in the forms required to be filed with respect to employee benefit plans may increase the expense of complying with the reporting requirements. Where new categories of information are required, new accounting systems may be needed to provide that information. Also, frequent form changes can increase the cost of compliance by requiring the retraining of personnel and possibly the preparation of forms by professionals. Consequently, your committee expects that the Secretary of Labor and the Secretary of the Treasury will consider carefully the impact frequent form changes in the future would have upon the ability of employee benefit plans to comply with filing requirements.

E. Effective Date

(Sec. 6 of the Bill)

The amendments made by the bill take effect 90 days after the date of enactment of the bill.

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V. Costs of Carrying Out the Bill and Vote of the Committee in Reporting S. [ ]

Budgetary Impact of the Bill

In compliance with sections 308 and 403 of the Congressional Budget Act of 1974 and section 252 of the Legislative Reorganization Act of 1970, the following statement is made relative to the budgetary impact of the bill as reported by the Committee on Finance.

Inasmuch as the bill reassigns administrative jurisdiction over ERISA but does not make substantive changes, the committee believes the bill will have no material impact on the Federal budget. The committee's estimate of budgetary impact is based primarily on estimates submitted by the Congressional Budget Office, the Department of Labor, and the Internal Revenue Service indicating that the bill will have no material impact on the Federal budget.

Revenue Effect of the Bill

The committee expects the bill to have no revenue impact.

Tax Expenditures

In compliance with section 308 (a) (2) of the Budget Act with respect to tax expenditures, and after consultation with the Director of the Congressional Budget Office, the committee makes the following statement.

Inasmuch as the bill reassigns jurisdiction over ERISA but does not make substantive changes, the committee believes the bill will not involve new or increased tax expenditures.

Vote of the Committee

In compliance with section 133 of the Legislative Reorganization Act of 1946, the following statement is made relative to the vote by the committee on the motion to report the bill. The bill was ordered favorably reported by voice vote.

(21)

VI. Regulatory Impact of the Bill

In compliance with paragraph (5) of rule XXIX of the Standing Rules of the Senate, the committee makes the following statement concerning the regulatory impact that might be incurred in carrying out the provisions of S. [ ].

Impact on personal privacy.-The provisions of this bill make no material changes in those provisions of Federal law affecting the personal privacy of taxpayers.

Determination of the amount of paperwork.—The committee believes that the bill will reduce the amount of paperwork from that presently required under ERISA. The Commission on Federal Paperwork has estimated that the changes made by the bill could save the Government $1 million over a 5-year period and could save business approximately $12 million annually as well as $7.2 million over a 5year period. (22)