(a) General. (1) Under the authority of section 104(a)(3) of the
Act, the Secretary of Labor may exempt an employee welfare benefit plan
from any or all of the reporting and disclosure requirements of title I.
An employee welfare benefit plan which meets the requirements of
paragraph (b)(1) of this section is not required to comply with the
annual reporting requirements described in paragraph (c) of this
section.
(2) Under the authority of section 110 of the Act, an alternative
method of compliance is prescribed for certain employee pension benefit
plans subject to part 1, title I of the Act. An employee pension benefit
plan which meets the requirements of paragraph (b)(2) or (b)(3) of this
section is not required to comply with the annual reporting requirements
described in paragraph (c) of this section.
(b) Application. This section applies only to:
(1) An employee welfare benefit plan under the terms of which
benefits are to be paid--
(i) Solely from the general assets of the employer or employee
organization maintaining the plan;
(ii) The benefits of which are provided exclusively through
insurance contracts or policies issued by an insurance company or
similar organization which is qualified to do business in any State or
through a qualified health maintenance organization as defined in
section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C.
300e-9(d), the premiums for which are paid directly by the employer or
employee organization from its general assets or partly from its general
assets and partly from contributions by its
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employees or members, provided that any plan assets held by such an
insurance company are held solely in the general account of such company
or organization, contributions by participants are forwarded by the
employer or employee organization within three months of receipt and, in
the case of a plan that provides for the return of refunds to
contributing participants, such refunds are returned to them within
three months of receipt by the employer or employee organization, or
(iii) Partly in the manner specified in paragraph (b)(1)(i) of this
section and partly in the manner specified in paragraph (b)(1)(ii) of
this section;
(2) A pension benefit plan the benefits of which are provided
exclusively through allocated insurance contracts or policies which are
issued by, and pursuant to the specific terms of such contracts or
policies benefit payments are fully guaranteed by an insurance company
or similar organization which is qualified to do business in any State,
and the premiums for which are paid directly by the employer or employee
organization from its general assets or partly from its general assets
and partly from contributions by its employees or members: Provided,
That contributions by participants are forwarded by the employer or
employee organization to the insurance company or organization within
three months of receipt and, in the case of a plan that provides for the
return of refunds to contributing participants, such refunds are
returned to them within three months of receipt by the employer or
employee organization; and
(3) A pension plan using a tax deferred annuity arrangement under
section 403(b)(1) of the Internal Revenue Code (Title 26 of the United
States Code) and/or a custodial account for regulated investment company
stock under Code section 403(b)(7) as the sole funding vehicle for
providing pension benefits.
(c) Contents. An employee benefit plan described in paragraph (b) of
this section is exempt from complying with the following annual
reporting requirements:
(1) Completing certain items of the annual report relating to
financial information and transactions entered into by the plan as
described in the instructions to the Form 5500 ``Annual Return/Report of
Employee Benefit Plan'' and accompanying schedules;
(2) Engaging an independent qualified public accountant pursuant to
section 103(a)(3)(A) of the Act and Sec. 2520.103-1(b) to conduct an
examination of the financial statements and schedules of the plan; and
(3) Including in the annual report a report of an independent
qualified public accountant concerning the financial statements and
schedules required to be a part of the annual report pursuant to section
103(b) of the Act and Sec. 2520.103-1(b).
(d) Limitation. This section does not exempt any plan from filing an
annual report form with the Secretary in accordance with section
104(a)(1) of the Act and Sec. 2520.104a-5.
(e) Example. A welfare plan which is funded entirely with insurance
contracts and which meets all the requirements of exemption under Sec.
2520.104-20 except that it covers 100 or more participants at the
beginning of the plan year is not exempt from the annual reporting
requirements under Sec. 2520.104-20, but is exempt from certain
reporting requirements under Sec. 2520.104-44. Under the latter
section, such a welfare plan should file Form 5500, including Schedule A
``Insurance Information.'' However, the plan is not required to engage
an independent qualified public accountant and need not complete certain
items on form 5500.
[43 FR 10150, Mar. 10, 1978, as amended at 45 FR 51446, Aug. 1, 1980; 46
FR 5884, Jan. 21, 1981; 65 FR 21085, Apr. 19, 2000; 67 FR 777, Jan. 7,
2002] 
