Relationship With The IRS 1. Purpose. The purpose of this chapter is to provide guidance for implementing the agreement for coordination of investigations of employee benefit plans between DOL and IRS (Figure 1). 2. Background. The IRS established the Tax Exempt & Government Entities (TE/GE) Operating Division as part of the Internal Revenue Service’s reorganization that started in the late 1990s. TE/GE supervises IRS’s role in relation to employee pension benefit plans in order to ensure uniform tax treatment of pension plans. TE/GE also administers provisions of the Internal Revenue Code of 1986 (Code) relating to tax-exempt organizations and government entities. 3. National Office Organization. There are now four operating divisions in the new organizational structure. The operating divisions are Wage and Investment (W&I), Small Business and Self-Employed (SB/SE), Large and Mid-Size Business, and Tax Exempt and Government Entities (TE/GE). The Tax Exempt & Government Entities Division includes Employee Plans, Exempt Organizations, and Government Entities. Employee Plans and Exempt Organizations are each composed of a Customer Education and Outreach Branch, a Rulings & Agreements Branch, and an Examinations Branch. Government Entities is composed of a Federal, State, Local Entities Branch, an Indian Tribal Governments Branch, and a Tax Exempt Bonds Branch. 4. Employee Plans. Employee Plans is split into six geographic examination areas (the Central Mountain, Great Lakes, Gulf Coast, Mid-Atlantic, Northeast, and Pacific Coast Regions). These areas were developed based on customer locations, workforce size, and employee locations. EP Examinations and the six geographic examination areas are listed below:
5. EP Determinations. EP plan qualification groups are centralized in Cincinnati at the address listed below:
6. Minimum Standards Scope. Paragraphs 6-23 of this chapter cover part 2 of Title I of ERISA, which establishes minimum standards relating to participation, vesting, and benefit accrual for pension plans, and part 3 of Title I, which establishes minimum standards for funding pension plans. The summary of the provisions of parts 2 and 3 that follows is intended as a guide for use in identifying relevant statutory provisions to assist each Investigator/Auditor in completing the appropriate examination referral checksheets. It does not represent a comprehensive or exhaustive treatment of the statutory provisions and should not be used as a substitute for the statute itself. 7. Coverage of Parts 2 and 3 of Title I. Parts 2 and 3 do not apply to welfare plans and Title I of ERISA does not contain "minimum standards" (as opposed, for example, to fiduciary standards) applicable to welfare plans. Welfare plans are generally subject to the reporting and disclosure provisions of part I of Title I, the fiduciary responsibility provisions of part 4, and the enforcement provisions of part 5. Certain types of pension plans are not subject to parts 2 and 3. These types of plans, which are listed in sections 201 and 301, include among others, defined contribution plans and unfunded deferred compensation arrangements for management or highly compensated employees. These latter arrangements are also subject to an administrative reporting and disclosure exemption and a statutory fiduciary responsibility exemption. The Department has not issued regulations on the scope of these exemptions for unfunded high-level deferred compensation arrangements. In the absence of regulations, any statement about the scope of these exemptions (in particular, about the class of employees' plans to which the exemption applies) should be avoided. The question of whether any particular plan is exempt is determined on the basis of all facts and circumstances. 8. Application of Parts 2 and 3. Parts 2 and 3 of Title I of ERISA establish minimum standards to which certain plans must adhere; they do not establish standards for individual conduct. While fiduciaries of a plan are required, under section 404(a)(1)(D), to discharge their duties with respect to the plan in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of Title I, they are also obligated to discharge their duties solely in the interest of the participants and beneficiaries of the plan and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan. Therefore, if a plan does not comply with the provisions of parts 2 and 3, fiduciaries may have a duty to take appropriate steps to assure that the plan is brought into compliance. 9. Qualified Plans. Under the Code, certain types of retirement plans(1) may qualify for favorable tax treatment if they meet certain requirements which are set forth primarily in section 401(a) of the Code. These requirements include minimum participation, vesting, benefit accrual, and funding standards that are substantially the same as the standards in parts 2 and 3 of Title I of ERISA. In addition, the requirements for qualification under the Code include requirements generally designed to ensure that qualified plans cover a broad segment of an employer's work force and do not discriminate in favor of highly compensated employees in contributions or benefits. Title I of ERISA does not contain requirements that plans must cover a broad segment of an employer's work force and does not prohibit discrimination in benefits or contributions among employees. The minimum standards of parts 2 and 3 of Title I, however, apply both to qualified retirement plans and to non-qualified retirement plans if they meet the requirements for coverage in other respects. 10. Jurisdiction. Because most pension plans are qualified plans under the Code, the IRS has primary authority for the administration of the minimum standards provisions of ERISA. Thus, if the IRS determines that a plan meets the requirements for tax qualification, DOL is required, under section 3001(d) of ERISA, to accept the IRS determination as prima facie evidence of the plan's initial compliance with, among other things, parts 2 and 3 of Title I. Section 3002(a) of ERISA also provides that, in the case of a qualified plan, alleged violations of the participation and vesting standards should generally be referred to the Secretary of the Treasury, and section 101 of Reorganization Plan No. 4 of 1978 transferred most of DOL's responsibilities with respect to the interpretation of parts 2 and 3 to the Department of the Treasury (Figure 2). Since the IRS is the agency within the Treasury Department that is responsible for the administration of the Code, including the provisions dealing with qualified plans, most complaints concerning the minimum standards provisions should be referred to IRS. In some cases, however, it may be necessary for DOL to conduct an investigation or to take enforcement action. For example, such action would be appropriate when a pension plan which is not qualified under the Code may have violated a provision of parts 2 and 3 for which DOL has interpretive responsibility under Reorganization Plan No. 4 of 1978. Matters which appear to be in these categories should be referred through the RO to DFO. DOL has a continuing concern regarding special rules for multiple employer plans. These matters which arise under part 2 of Title I are discussed in paragraph 21 of this chapter. 11. Participation. Section 202 of ERISA establishes minimum standards for participation in a pension plan. Generally, such a pension plan must allow an employee to participate no later than the earliest date at which he has completed at least one year of service and is 21 years old. In addition, section 202 prohibits pension plans, with certain exceptions, from excluding employees who have attained a specified age that is not more than five years before the plan's normal retirement age. (Normal retirement age as defined in ERISA section 3(24) may not occur later than either the time a participant attains age 65, or the 5th anniversary of the date the participant commenced participation in the plan, but if a plan provides for an earlier "normal retirement age" that age will be controlling for such plan.) Different standards, however, apply to certain plans. The minimum participation standards relate only to the requirements regarding age and length of service that a plan may impose on employees as conditions for eligibility to participate. A plan may impose conditions for eligibility to participate based on other criteria, such as salaried employees only, hourly employees only, or members of a specific bargaining unit. 12. Vesting. Section 203 of ERISA establishes minimum vesting standards. These standards impose limits on the period of service a plan may require an employee to complete before the employee's accrued benefits become nonforfeitable (i.e., "vesting"). In general, a plan must provide that an employee's accrued benefit derived from employer contributions becomes vested in accordance with one of two vesting schedules set forth in section 203(a)(2). In addition, a plan must provide that an employee's normal retirement benefit "i.e., the accrued benefit payable at normal retirement age" becomes nonforfeitable if the employee reaches normal retirement age while still employed by the employer sponsoring the plan, to the extent that the accrued benefit has not yet become vested before that date. If a plan provides for employee contributions, the portion of an employee's accrued benefit that is derived from the employee's own contributions must be vested immediately (i.e., as soon as the employee contributions are made). Section 204(c) provides rules for separating the portion of an employee's accrued benefit that is derived from employee contributions from the portion derived from employer contributions. 13. Suspension of Benefits. Section 203 of ERISA provides that a plan may, without violating the vesting requirements, provide for the suspension of benefits after they have commenced for periods during which a participant is employed by an employer who maintains the plan, or, in the case of a multiemployer plan, during periods when the participant is employed in the same industry, trade, or craft, and in the same geographic area covered by the plan, as when the benefits commenced. DOL's authority to interpret this provision was not transferred to the Department of the Treasury pursuant to Reorganization Plan No. 4 of 1978 (Figure 2), and DOL has issued a regulation to define when benefit payments may be suspended. See 29 C.F.R. 2530.203-3 for interpretive guidance in this area. 14. Benefit Accrual. Section 204 of ERISA requires a defined benefit pension plan to meet one of three tests which are designed to ensure that benefits are accrued at a relatively uniform rate over a participant's entire career in order to prevent excessive "backloading," i.e., the pre-ERISA practice of deferring the accrual of all or most of an employee's benefits under a pension plan until the latter years of an employee's career. In general, these tests specify the accrued benefit with which an employee must be credited (if the employee leaves employment before reaching normal retirement age). Also, section 204 generally prohibits retroactive reductions in participants' accrued benefits. Finally, section 204 requires a separate accounting for each participant's accrued benefit under an individual account plan and separate accounting for the portion of each participant's accrued benefit derived from a participant's voluntary employee contributions under a defined benefit plan which permits such contributions. 15. Early Retirement Benefits. The minimum vesting standards set forth in section 203 and the benefit accrual requirements set forth in section 204 apply to an employee's accrued benefit commencing at normal retirement age. In general, a defined benefit plan may provide an early retirement benefit (i.e., a benefit that employees may begin to receive at an age earlier than normal retirement age) that does not become vested in accordance with the benefit accrual requirements, provided that the plan also provides for employees who do not begin to receive benefits before normal retirement age, a benefit that meets the statutory standards and that is not less than the early retirement benefit in terms of the dollar amount of annual benefit payments. Before ERISA, many plans contained rules regarding eligibility for benefits that did not meet the ERISA minimum standards, but provided for payment of benefits at an age earlier than the latest normal retirement age permitted under section 3(24) (age 65 in the case of employees who began participation in the plan at age 60 or earlier). Some of these plans were amended to comply with ERISA merely by adding a benefit subject to eligibility rules that meet the statutory requirements, without dropping the pre-ERISA benefit subject to the more restrictive eligibility rules. It should be noted that these plans do not necessarily violate the ERISA minimum standards because the pre-ERISA benefits can be characterized as early retirement benefits if they do not exceed the benefit which is subject to eligibility rules that meet the statutory standards. 16. Commencement of Benefits. Under section 206(a) of ERISA, a pension plan generally must provide for the commencement of benefits at the latest of the time the participant reaches age 65, the 10th anniversary of his/her participation in the plan, or the date of the participant's termination of service with his/her employer. However, a plan may provide for a normal retirement age which is less than 65, and may provide for an early retirement benefit, subject to certain conditions. 17. Assignment of Benefits. Under section 206(d) of ERISA, a pension plan must provide that benefits may not be assigned or alienated. However, certain voluntary assignments of an amount not exceeding 10 percent of a benefit payment, and most irrevocable assignments executed before the date of enactment of ERISA, are not required to be taken into account for purposes of that section. Further, a loan made by a plan to a participant or beneficiary under the circumstances described in section 408(b)(1) of ERISA, which is secured by the participant's accrued nonforfeitable benefit, may not be considered to be an assignment or alienation. IRS's regulations under section 401(a)(13) of the Code [26 C.F.R. 1.401(a)-13], which is essentially the same as section 206(d) of ERISA, describe what constitutes an alienation or assignment of benefits, and also describe certain arrangements which do not constitute such an assignment or alienation. Most significantly, these regulations provide that a participant's direction that the plan pay all, or any portion, of a benefit payment to a third party does not constitute an assignment or alienation if such direction is revocable at any time, and the recipient of the directed payments files a written acknowledgement with the plan administrator that he/she has no enforceable right to any benefit payment or portion thereof. 18. Joint and Survivor Annuity. Joint and survivor annuity benefits apply to all plans except certain defined contribution plans in limited circumstances. In the case of a participant with a vested benefit, a qualified joint and survivor annuity must be provided; in the case of a vested participant (irrespective of age) who dies before the annuity starting date (the first period for which an amount is received as an annuity, whether by reason of death or disability and who has a surviving spouse), a qualified preretirement survivor annuity shall be provided to the participant's surviving spouse. For defined benefit plans a qualified preretirement survivor annuity (QPSA) is defined as a survivor annuity for the life of the surviving spouse of the participant that meets the following requirements. The payments to the surviving spouse under the annuity must not be less than the amount which would be payable as a survivor annuity under the qualified joint and survivor annuity under the plan if (1) in the case of a participant who dies after the date on which the participant attained the plan's earliest retirement age, such participant has retired with an immediate qualified joint and survivor annuity on the day before the participant's date of death, or (2) the participant dies on or before the date on which he would have reached the plan's earliest retirement age, such participant had separated from service on the date of death, survived to the earliest retirement age, retired with an immediate qualified joint and survivor annuity at the earliest retirement age, and died on the day after the day on which such participant would have attained the earliest retirement age. For defined contribution plans a QPSA is defined as an annuity for the life of the surviving spouse, the actuarial equivalent of which is not less than 50% of the account balance of the participant as of the date of death. The joint and survivor annuity rules are subject to further qualifications which are spelled out in section 205 and in regulations issued by the IRS under section 401(a)(11) and section 417 of the Code, which are similar to section 205 of ERISA. 19. Recordkeeping and Reporting. Section 209 of ERISA generally requires employers to maintain records from which benefits due or to become due to participants under pension plans may be determined, and requires pension plan administrators to provide individual benefit reports to participants under certain circumstances. DOL's authority to interpret this provision was not transferred to the Department of the Treasury under Reorganization Plan No. 4 of 1978. 20. Funding. Part 3 of Title I of ERISA establishes minimum funding standards for defined benefit pension plans, money purchase pension plans, and target benefit plans. In the case of defined benefit pension plans, the minimum funding standards are generally designed to ensure that sufficient assets are accumulated during employees' working careers to pay their benefits when they retire. To this end, the statute requires defined benefit plans to be funded in accordance with appropriate actuarial techniques. Certain defined benefit plans funded exclusively through insurance contracts (generally annuity contracts) are exempt from the minimum funding standards, as long as all premium payments are made when due. In the case of a money purchase or target benefit plan, the minimum funding standards require only that employer contributions specified under the plan be made when due. 21. Special Rules for Multiple Employer Plans. Section 210 of ERISA provides rules for determining what service is required to be taken into account for purposes of participation, benefit accrual, and vesting in the case of multiple employer plans. Under this section and DOL's regulations, for purposes of determining eligibility for participation and vesting, all of an employee's service in a job classification covered by a multiple employer plan for an employer maintaining the plan and all "contiguous non-covered service" must be taken into account. Generally, contiguous non-covered service is service with an employer maintaining a multiple employer plan, while the employer is maintaining the plan, if such service is performed before or after a period of covered service and no quitting, discharge, or retirement occurs between the periods of covered and non-covered service. For example, if an employee is hired by an employer maintaining a multiple employer plan in a non-covered job classification without a termination of the employment relationship, service in the non-covered job classification is deemed "contiguous non-covered service" and must be taken into account for the purpose of determining the employee's eligibility to participate in the plan and for vesting. See paragraph 22 of this chapter for the rule regarding crediting of service for benefit accrual purposes when an employer fails to make required contributions. 22. Failure of Employer to Make Required Contributions to a Multiple Employer Plan. A multiple employer pension plan must grant an employee credit for purposes of benefit accrual, as well as for purposes of eligibility for participation and vesting, for service which is otherwise required to be credited, even if the employee's employer fails to make contributions to the plan which are required under a collective bargaining agreement. This rule is a matter of continuing concern to DOL because some multiple employer pension plans do not credit service for benefit accrual purposes under these circumstances. In some instances, denial of credit may represent a practice on the part of the plan administrator that is not contemplated by the terms of the plan. In other cases, however, the plan itself may provide for denial of credit if an employer fails to make required contributions and some of these plans may (by oversight) have obtained favorable tax qualification letters from IRS offices. Any report relating to violations of this nature should contain information regarding the plan's tax qualification status, including the dates of the plan's most recent submission of a determination request, and the IRS response, if any. The report should also indicate whether the plan's denial of benefits is based on express language in the plan's documents. 23. Controlled Groups. Under section 210, a plan maintained by a business entity which is under common control with one or more other business entities must generally credit all service with any of the entities for purposes of eligibility to participate and vesting, except that a multiemployer plan is not required to credit service with entities that are under common control with entities maintaining the plan but which are not themselves maintaining the plan. 24. General Coordination of Examination Programs
25. Examination Referral Program. IRS and DOL have developed checksheets for determining whether issues presented in an examination/investigation by one agency should be referred to the other agency. The checksheets can be three-part snapout forms or computer generated forms (respectively known as Checksheets A and B, or Forms 6212A and B). These checksheets can be viewed on IRS’ web site. See www.irs.gov/pub/irs-pdf/f6212a.pdf and www.irs.gov/pub/irs-pdf/f6212b.pdf. In every examination/investigation the referring agency will complete the appropriate checksheet on the basis of query or information readily available, and the following procedure shall apply.
26. IRS-Initiated Examinations.
27. EBSA-Initiated Investigations.
28. IRS Appeals Office Procedures. The following procedures apply to all cases received by IRS Appeals Offices involving examinations of employee benefit plans:
29. Notification of Litigation
30. Tracking/Feedback
31. Requesting Information from IRS
32. Examinations Pursuant to HIPAA. The Health Insurance Portability and Accountability Act of 1996 (HIPAA), was enacted on August 21, 1996. Titles I and IV of HIPAA amended the Internal Revenue Code, ERISA, and the Public Health Service Act to add provisions to improve access, portability, and continuity of health insurance coverage in the group and individual market. Section 104 of HIPAA directed the Secretary of Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to enter into an interagency memorandum of understanding to ensure that regulations, rulings, and interpretations relating to the changes made by HIPAA over which two or more Secretaries have responsibility (“shared provisions”) are administered so as to have the same effect at all times. Further, the agencies were required to coordinate policies relating to enforcing the shared provisions in order to avoid duplication of enforcement efforts and to assign priorities in enforcement. An Interim Memorandum of Understanding (Figure 3) to that end was entered into by the three agencies in December 1999. The terms of the Interim MOU also apply, to the extent appropriate, with regard to interpretations and enforcement of the Newborns’ and Mothers’ Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Woman’s Health and Cancer Rights Act of 1998. (Figure 1) Memorandum Of Understanding Internal Revenue Service/Department of Labor Coordination Agreement In order for the IRS and DOL to fulfill the mandates of the Employee Retirement Income Security Act of 1974 (ERISA) Sections 3003 and 3004 and in accordance with ERISA Section 506, the IRS and DOL have executed the Internal Revenue Service/Department of Labor Coordination Agreement (Agreement). The attached Agreement reflects changes resulting from the Modernization of the IRS, the change in name of the Department of Labor’s benefit plan regulatory agency from the Pension and Welfare Benefits Administration (PWBA) to the Employee Benefits Security Administration (EBSA), and other revisions identified from the agencies’ experiences under the prior Agreements. Although an essential component of the Agreement is timely coordination and emphasis on the need to eliminate duplicative investigative efforts, the agencies recognize there may be situations that require both agencies to become involved. The IRS and DOL agree to identify past situations where both agencies have had an examination/investigation on the same subject and to determine when it may be beneficial for the agencies and the public for examinations/investigations to be conducted jointly. In reviewing the Agencies’ experiences under the prior Agreements, it was determined that both agencies are devoting resources to the coordination of welfare plan investigations that appear to be unnecessary. In that regard, case opening notification (EBSA Form 205) and referral checksheet completion (IRS Form 6212-C) for welfare plans have been eliminated. DOL can make referrals to the IRS for tax matters outside EP jurisdiction in the form of a letter. DOL will continue to refer Checksheet A to IRS (Form 6212-A) to IRS for pension benefit plans in accordance with the requirements of Article II, D., of the Agreement. IRS will continue to make referrals to DOL on Checksheet B (Form 6212-B) in accordance with the requirements of Article II, C. of the Agreement. Both forms have been revised. See Appendices B and C. Under the Modernization of the IRS, Employee Plans and Exempt Organizations are separate units under the Tax Exempt/Government Entities Operating Division. The Employee Plans Examinations Headquarters is located in Baltimore. The Director, EP Examinations supervises six Area Managers located around the country and the Manager of EP Examinations, Programs and Review. The IRS Key District concept was eliminated. Referrals made by EBSA personnel are now made to the IRS through the Manager, EP Examinations Classification in Baltimore. In accordance with Article V.C of the Agreement, representatives of the IRS and DOL will meet quarterly.
(Figure 1) IRS/DOL Coordination Agreement Index
List of Appendices A. IRS / EBSA Office Referral Directory [Note: Some of the above listed appendices are not included in the current version of the Enforcement Manual.]
I. Notification of Examinations
II. Examination Referral Program
III. IRS Appeals Office Procedures The following procedures apply to all cases received by IRS Appeals Offices involving examinations of employee benefit plans within the meaning of section A.2. of Part II.
IV. Notification of Litigation
V. Tracking/Feedback
VI. EBSA Requests for Tax Return Information from the IRS
(Figure 2) Reorganization Plan No. 4 Of 1978 Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, August 10, 1978, pursuant to the provisions of Chapter 9 of Title 5 of the United States Code. Employee Retirement Income Security Act Transfers Section 101. Transfer to the Secretary of the Treasury Except as otherwise provided in Sections 104 and 106 of this plan, all authority of the Secretary of Labor to issue the following described documents pursuant to the statutes hereinafter specified is hereby transferred to the Secretary of the Treasury: (a) regulations, rulings, opinions, variances and waivers under Parts 2 and 3 of Subtitle B of Title I and subsection 1012(c) of Title II of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001) (hereinafter referred to as "ERISA"), Except for sections and subsections 201,203(a)(3)(B), 209, and 301(a) of ERISA; (b) such regulations, rulings, and opinions which are granted to the Secretary of Labor under Sections 404, 410, 411, 412, and 413 of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the "Code"), Except for subsections 411(a)(3)(B) of the Code and the definitions of "collectively bargained plan" and "collective bargaining agreement" contained in subsections 404(a)(1)(B) and (a)(1)(C), 410(b)(2)(A) and (b)(2)(B), and 413(a)(1) of the Code; and (c) regulations, rulings, and opinions under subsections 3(19), 3(22), 3(23), 3(24), 3(25), 3(27), 3(28), 3(29), 3(30), and 3(31) of Subtitle A of Title I of ERISA. Section 102. Transfers to the Secretary of Labor Except as otherwise provided in Section 105 of this Plan, all authority of the Secretary of the Treasury to issue the following described documents pursuant to the statutes hereinafter specified is hereby transferred to the Secretary of Labor: (a) regulations, rulings, opinions, and exemptions under section 4975 of the Code, Except for (i) subsections 4975(a), (b), (c)(3), (d)(3), (e)(1), and (e)(7) of the Code; (ii) to the extent necessary for the continued enforcement of subsections 4975(a) and (b) by the Secretary of the Treasury, subsections 4975(f)(1), (f)(2), (f)(4), (f)(5) and (f)(6) of the Code; and (iii) exemptions with respect to transactions that are exempt by subsection 404(c) of ERISA from the provisions of Part 4 of Subtitle B of Title I of ERISA; and (b) regulations, rulings, and opinions under subsection 2003(c) of ERISA, Except for subsection 2003(c)(1)(B). Section 103. Coordination Concerning Certain Fiduciary Actions In the case of fiduciary actions which are subject to Part 4 of Subtitle B of Title I of ERISA, the Secretary of the Treasury shall notify the Secretary of Labor prior to the time of commencing any proceedings to determine whether the action violates the exclusive benefit rule of subsection 401(a) of the Code, but not later than prior to issuing a preliminary notice of intent to disqualify under that rule, and the Secretary of the Treasury shall not issue a determination that a plan or trust does not satisfy the requirements of subsection 401(a) by reason of the exclusive benefit rule of subsection 401(a), unless within 90 days after the date on which the Secretary of the Treasury notifies the Secretary of Labor of pending action, the Secretary of Labor certifies that he has no objection to the disqualification or the Secretary of Labor fails to respond to the Secretary of the Treasury. The requirements of this paragraph do not apply to the case of any termination or jeopardy assessment under sections 6851 or 6861 of the Code that has been approved in advance by the Commissioner of Internal Revenue, or, as delegated, the Assistant Commissioner for Employee Plans and Exemption Organizations. Section 104. Enforcement by the Secretary of Labor The transfers provided for in Section 101 of this Plan shall not affect the ability of the Secretary of Labor, subject to the provisions of Title III of ERISA relating to jurisdiction, administration, and enforcement, to engage in enforcement under Section 502 of ERISA or to exercise the authority set forth under Title III of ERISA, including the ability to make interpretations necessary to engage in such enforcement or to exercise such authority. However, in bringing such actions and in exercising such authority with respect to Parts 2 and 3 of Subtitle B of Title I of ERISA and any definitions for which the authority of the Secretary of Labor is transferred to the Secretary of the Treasury as provided in Section 101 of this Plan, the Secretary of Labor shall be bound by the regulations, rulings, opinions, variances, and waivers issued by the Secretary of the Treasury. Section 105. Enforcement by the Secretary of the Treasury The transfers provided for in Section 102 of this Plan shall not affect the ability of the Secretary of the Treasury, subject to the provisions of Title III of ERISA relating to jurisdiction, administration, and enforcement, (a) to audit plans and employers and to enforce the excise tax provisions of subsections 4975(a) and 4975(b) of the Code, to exercise the authority set forth in subsections 502(b)(1) and 502(h) of ERISA, or to exercise the authority set forth in Title III of ERISA, including the ability to make interpretations necessary to audit, to enforce such taxes, and to exercise such authority; and (b) consistent with the coordination requirements under Section 103 of this Plan, to disqualify, under section 401 of the Code, a plan subject to Part 4 of Subtitle B of Title I of ERISA, including the ability to make the interpretations necessary to make such disqualification. However, in enforcing such excise taxes, and, to the extent applicable, in disqualifying such plans the Secretary of the Treasury shall be bound by the regulations, rulings, opinions, and exemptions issued by the Secretary of Labor pursuant to the authority transferred to the Secretary of Labor as provided in Section 102 of this Plan. Section 106. Coordination for Section 101 Transfers (a) The Secretary of the Treasury shall not exercise the functions transferred pursuant to Section 101 of this Plan to issue in proposed or final form any of the documents described in subsection (b) of this Section in any case in which such documents would significantly impact on or substantially affect collectively bargained plans unless, within 100 calendar days after the Secretary of the Treasury notifies the Secretary of Labor of such proposed action, the Secretary of Labor certifies that he has no objection or he fails to respond to the Secretary of the Treasury. The fact of such notification, except for such notification for documents described in subsection (b)(iv) of this Section, from the Secretary of the Treasury to the Secretary of Labor shall be announced by the Secretary of Labor to the public within ten days following the date of receipt of the notification by the Secretary of Labor. (b) The documents to which this Section applies are:
(c) For those documents described in subsections (b)(i), (b)(ii) and (b)(iii) of this Section, the Secretary of Labor may request the Secretary of the Treasury to initiate the actions described in this Section 106 of this Plan. Section 107. Evaluation On or before April 30, 1980, the President will submit to both Houses of the Congress an evaluation of the extent to which this Reorganization Plan has alleviated the problems associated with the present administrative structure under ERISA, accompanied by specific legislative recommendations for a long-term administrative structure under ERISA. Section 108. Incidental Transfers So much of the personnel, property, records, and unexpended balances of appropriations, allocations and other funds employed, used, held, available, or to be made available in connection with the functions transferred under this Plan, as the Director of the Office of Management and Budget shall determine, shall be transferred to the appropriate agency, or component at such time or times as the Director of the Office of Management and Budget shall provide, except that no such expended balances transferred shall be used for purposes other than those for which the appropriation was originally made. The Director of the Office of Management and Budget shall provide for terminating the affairs of any agencies abolished herein and for such further measures and dispositions as such Director deems necessary to effectuate the purpose of this Reorganization Plan. Section 109. Effective Date The provisions of this Reorganization Plan shall become effective at such time or times, on or before April 30, 1979, as the President shall specify, but not sooner than the earliest time allowable under Section 906 of Title 5, United States Code. (Figure 3) Memorandum Of Understanding Among The U.S. Department Of The Treasury, The U.S. Department Of Labor, And The U.S. Department Of Health And Human Services Article I Introduction and Purpose The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Pub. L. No. 104-191, was enacted on August 21, 1996. Titles I and IV of HIPAA amended the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, and the Public Health Service Act to add provisions to improve access, portability and continuity of health insurance coverage in the group and individual health insurance markets. Section 104 of HIPAA directs the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to enter into an interagency memorandum of understanding. Section 104 requires that the memorandum of understanding ensure that regulations, rulings, and interpretations relating to the changes made by Subtitle A of Title I and section 401 of Title IV of HIPAA over which two or more Secretaries have responsibility (“shared provisions”) are administered so as to have the same effect at all times. Section 104 also requires the coordination of policies relating to enforcing the shared provisions in order to avoid duplication of enforcement efforts and to assign priorities in enforcement. This memorandum of understanding (MOU) is adopted pursuant to section 104 of HIPAA. This MOU formally establishes an interagency agreement among the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to ensure coordination in the manner and for the purposes set forth in section 104 of HIPAA. The Departments also intend to follow the process set forth in this MOU, to the extent appropriate, with regard to interpretations and enforcement of the provisions of the Newborns’ and Mothers’ Health Protection Act of 1996, the Mental Health Parity Act of 1996, and Subsequent Legislation. In addition, the Departments of Labor and HHS agree to follow the process set forth in this MOU, to the extent appropriate, with regard to interpretations and enforcement of the provisions of the Women’s Health and Cancer Rights Act of 1998. Article II Authority This MOU is entered pursuant to the authority set forth in section 104 of HIPAA, Pub. L. No. 104-191. Article III Definitions
Article IV Background Subtitle A of Title I and section 401 of Title IV of HIPAA are intended to improve the availability of private health insurance by increasing portability, access and renewability in the group market. HIPAA establishes limits on the imposition of preexisting condition exclusions and generally prohibits group health plans and health insurance issuers from discriminating against individuals based on health status when determining eligibility to enroll in a group health plan or to obtain related insurance or in deciding the amount of premium to be charged to similarly situated individuals. Employers may not be denied continued access to multiemployer plans, or multiple employer welfare arrangements, except for certain reasons set forth in HIPAA. HIPAA and Related Acts amended three federal statutes: the Code, administered by the Treasury through IRS; ERISA, administered by DOL through PWBA; and the PHS Act, administered by HHS through HCFA. Under the Code, as amended by HIPAA and Related Acts, the Treasury has authority over group health plans (including church plans) and their sponsors, and IRS enforced the requirements of HIPAA and Related Acts through the imposition of an excise tax. Under ERISA, as amended by HIPAA and Related Acts, DOL has increased authority over group health plans that are subject to Part 7 of subtitle B of Title I of ERISA. Health insurance issuers offering health insurance coverage in connection with such plans are also subject to Part 7. However, in accordance with the provisions of HIPAA, only participants and beneficiaries (and not DOL) may bring an enforcement action against health insurance issuers under Part 7. Under the PHA Act, as amended by HIPAA and Related Acts, HCFA has authority over health insurance issuers and nonfederal governmental plans. If a State fails to substantially enforce Parts A and B of Title XXVII of the PHS Act, or requests that HCFA enforce the provisions or requirements, HCFA enforces the group and individual market requirements by imposing a civil monetary penalty on issuers that fail to comply with HIPAA’s requirements in that State. There are differences in some of the amendments that HIPAA and Related Acts made to the three statutes. In some instances, changes were made to only one of the federal statutes with no counterpart in the other two statutes. Section 104 of HIPAA requires the Secretaries of the Treasury, Labor and HHS to coordinate in the areas of parallel responsibility relating to the share provisions of HIPAA. Article V Scope of Work The Departments agree to assign representatives to work closely to ensure that all Interpretations, Regulations and enforcement strategies relating to shared provisions of Subtitle A of Title I and section 401 of Title IV of HIPAA and Related Acts will be developed and implemented in a coordinated manner. All such Interpretations, Regulations and enforcement strategies will be administered in a manner that promotes consistency in effect, that avoids duplication of enforcement efforts, and that reflects consideration of the appropriate priorities in enforcement. In this regard, the Departments will continue to work together closely through regular joint meetings and frequent consultation, consistent with the process (i.e., by mutual consent) that has been used in developing existing Regulations and Interpretations under HIPAA and Related Acts. Similarly, DOL and HHS will continue to work together closely through regular joint meetings and frequent consultation to develop Regulations and Interpretations under WHCRA. In order to further effectuate this coordination, the Treasury, IRS, DOL, and HHS each will name a “Department Designee” to serve on a Coordinating Committee. The Committee’s task will be to ensure the identification and coordination of policies involving areas of shared responsibility under HIPAA and Related Acts to maintain consistency in the application of these provisions that amend the Code, ERISA, and the PHS Act. The Committee also will take steps to maximize the efficiency of Agency enforcement efforts, including developing the terms of further agreement(s), as necessary. The Committee members shall meet, quarterly, or at such times as they may agree, to review and discuss relevant pending Regulations and Interpretations to evaluate whether the position(s) set forth therein reflect a coordinated position. Committee meetings will be held at locations agreed to by the Committee members. Upon agreement of the Committee members, such meetings may be held by conference call. Each Department will assume the costs associated with the participation of its respective Committee members. Timely and prompt consensus will be sought in the development and administration of all Interpretations affected by this MOU. Any Department Designee can bring any matter subject to the MOU before the Committee. The Department Designees serving on the Committee will attempt to reach consensus on issues within 45 days (except in unusual circumstances) after such issues have been formally presented (including a written summary) at a meeting of the Committee. If consensus on particular issues is reached by the members of the Committee, appropriate clearance will be initiated within each Department. Article VI Coordinated Enforcement Strategy Generally, the Departments intend to continue the current informal arrangements that have developed for cooperation and collaboration in the handling of inquiries arising under HIPAA, MHPA, NMHPA, and WHCRA. In addition, pursuant to Section 104(2) of HIPAA and this MOU, the Committee, and any appropriate individuals designated by the Agencies or Departments, shall develop a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns priorities in enforcement. The Agencies or Departments shall first designate, within six months of the execution of this MOU, individuals who are to work with the Committee in developing the enforcement strategy. This group shall also devise a written operational agreement for the sharing of information that is related to enforcement cases among the Departments. Moreover, the operational agreement may address procedures for the referral of cases, the development of audit checklists and training materials, and the coordination of public affairs information. The operational agreement may also describe the individuals within each Department who are responsible for implementing the sharing of information. Subject to applicable legal restrictions (including section 6103 of the Code), the Departments agree, absent exigent circumstances, to notify each other in writing (through the Department Designee) prior to the commencement of any administrative or judicial proceeding on matters within the scope of this MOU and to inform each other of the final action resulting from such proceeding. Nothing in this section shall be construed to affect the enforcement authority that HIPAA or Related Acts confers on any Department, including enforcement concerning a matter as to which a Department has given or received the information or notice described herein, nor shall this paragraph be construed to preclude the Departments from agreeing to different arrangements on a case by case basis. Article VII Confidentiality of Information The Departments agree that any information shared or disclosed pursuant to this MOU will be held in strict confidence and may be used only for purposes consistent with this MOU or as otherwise permitted by law. All requests by parties other than the Departments for disclosure of information shall be coordinated with the Agency that initially compiled or collected the information, provided that no Agency shall disclose information initially compiled by another Agency to the public without the approval of the appropriate Agency or Department unless the Agency is required by law to do so (e.g., Freedom of Information Act (FOIA), 5 U.S.C. 552; Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2), in which event it will notify the appropriate Department or Agency in writing of its intent to disclose such information. Nothing in this MOU shall be deemed to confer rights on any party other than the Departments as a result of any act or omission by any Agency or Department with respect to its obligations under this MOU. Article VIII Duration of Agreement This MOU will become effective upon the date of the final signature and may be amended by written agreement of the undersigned. It will remain in effect until amended by the parties, or until terminated by any of the parties upon 30 days written notice to the other parties and, upon the agreement of the Departments, shall apply to Subsequent Legislation. Article IX Officials Responsible for MOU The appropriate Departmental officials will appoint their respective Department Designees to the Committee within 30 days after the signing of this MOU and will appoint any successors in a timely manner. We, the undersigned, do hereby agree to the foregoing provisions of this MOU. Dated: April 8, 1999. We, the undersigned, do hereby agree to the foregoing provisions of this MOU. Dated: April 21, 1999. We, the undersigned, do hereby agree to the foregoing provisions of this MOU. Dated: March 17, 1999. We, the undersigned, do hereby agree to the foregoing provisions of this MOU. Dated: March 30, 1999.
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