(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 an annual or terminal report. In addition, the administrator
of a plan exempted under this section--
(1) Is not required to furnish participants covered under the plan
and beneficiaries receiving benefits under the plan with statements of
the plan's assets and liabilities and receipts and disbursements and a
summary of the annual report required by section 104(b)(3) of the Act;
(2) Is not required to furnish upon written request of any
participant or beneficiary a copy of the annual report and any terminal
report, as required by section 104(b)(4) of the Act;
(3) Is not required to make copies of the annual report available
for examination by any participant or beneficiary in the principal
office of the administrator and such other places as may be necessary,
as required by section 104(b)(2) of the Act.
(b) Application. This exemption applies only to welfare benefit
plans--
(1) Which have fewer than 100 participants at the beginning of the
plan year;
(2)(i) For which benefits are paid as needed solely from the general
assets of the employer or employee organization maintaining the plan, or
(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 employees or members,
Provided, That contributions by participants are forwarded by the
employer or employee organization within three months of receipt, or
(iii) Both; and
(3) For which, in the case of an insured plan--
(i) Refunds, to which contributing participants are entitled, are
returned to them within three months of receipt by the employer or
employee organization, and
(ii) Contributing participants are informed upon entry into the plan
of the provisions of the plan concerning the allocation of refunds.
[[Page 417]]
(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)) and furnish certain documents to the
Secretary of Labor upon request (section 104(a)(6)), and which 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 75 participants at the
beginning of the plan year and 105 participants at the end of the plan
year. Plan benefits are fully insured and premiums are paid directly to
the insurance company by the employer pursuant to an insurance contract
purchased with premium payments derived half from the general assets of
the employer and half from employee contributions (which the employer
forwards within three months of receipt). 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 plan appoints the employer as its plan administrator. The employer,
as plan administrator, provides summary plan descriptions to
participants and beneficiaries. He also makes copies of certain plan
documents available at the plan's principal office and such other places
as necessary to give participants reasonable access to them. The
exemption provided by Sec. 2520.104-20 applies even though the plan has
more than 100 participants by the end of the plan year, because it had
fewer than 100 participants at the beginning of the plan year and
otherwise satisfied the conditions of the exemption.
(2) A welfare plan is established and maintained in the same way as
the plan described in example (1), except that a trade association which
sponsors the plan is the holder of the insurance contract. Since the
plan still sends the premium payments directly to the insurance company,
the exemption applies, as in example (1).
[43 FR 10148, Mar. 10, 1978, as amended at 46 FR 5884, Jan. 21, 1981; 67
FR 776, Jan. 7, 2002]
