2002007514

Thursday,
March 28, 2002

Part IV

Department of Labor
Pension and Welfare Benefits
Administration
29 CFR Parts 2560 and 2570
Delinquent Filer Voluntary Compliance
Program; Final Rule

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15052

Federal Register / Vol. 67, No. 60 / Thursday, March 28, 2002 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT:
Jennifer C. Warner or Scott C. Albert,
Office of the Chief Accountant, Pension
and Welfare Benefits Administration,
telephone (202) 693–8360. This is not a
toll-free number.
SUPPLEMENTARY INFORMATION:

DEPARTMENT OF LABOR
Pension and Welfare Benefits
Administration
29 CFR Parts 2560 and 2570
RIN 1210–AA86

Delinquent Filer Voluntary Compliance
Program
AGENCY: Pension and Welfare Benefits
Administration, Department of Labor.
ACTION: Notice, Delinquent Filer
Voluntary Compliance Program.
SUMMARY: This Notice modifies the
Delinquent Filer Voluntary Compliance
Program (‘‘DFVC Program’’ or
‘‘Program’’) announced by the
Department of Labor’s Pension and
Welfare Benefits Administration in
1995. The DFVC Program is intended to
encourage, through the assessment of
reduced civil penalties, delinquent plan
administrators to comply with their
annual reporting obligations under Title
I of the Employee Retirement Income
Security Act of 1974, as amended
(ERISA). Following a review of the
DFVC Program, as adopted in 1995, the
Department has determined to update
the Program and adjust the civil penalty
structure under the Program in an effort
to further encourage and facilitate
voluntary compliance by plan
administrators with ERISA’s annual
reporting requirements. Because the
modifications to the DFVC Program
include lower civil penalty assessments,
the modifications are being put into
effect upon publication of this notice in
the Federal Register. Nonetheless, the
Department is seeking comments from
the public on the modified Program.
DATES: Effective Date: March 28, 2002.
The modified Program adopted herein
supercedes and replaces, as of its
effective date, the DFVC Program as
adopted on April 27, 1995 (60 FR
20874).
Comment Date: Written comments
must be received by the Department no
later than May 28, 2002.
ADDRESSES: Interested persons are
invited to submit written comments on
the DFVC Program to: DFVC Comments,
Office of Regulations and
Interpretations, Room N–5669, Pension
and Welfare Benefits Administration,
U.S. Department of Labor, 200
Constitution Ave., NW., Washington,
DC 20210. All submissions will be open
to public inspection at the Public
Documents Room, Pension and Welfare
Benefits Administration, Room N–1513,
U.S. Department of Labor, 200
Constitution Ave., NW., Washington,
DC 20210.

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A. Background
The Secretary of Labor has the
authority under section 502(c)(2) of
ERISA to assess civil penalties of up to
$1,100 1 a day against plan
administrators who fail or refuse to file
complete and timely annual reports as
required under section 101(b) of ERISA
and the Secretary’s regulations.
Pursuant to 29 CFR 2560.502c–2 and 29
CFR 2570.60 et seq., the Pension and
Welfare Benefits Administration
(PWBA) has maintained a program for
the assessment of civil penalties for
noncompliance with ERISA’s annual
reporting requirements. Under this
program, plan administrators filing late
annual reports may be assessed $50 per
day for each day an annual report is
filed after the date on which the annual
report was required to be filed, without
regard to any extensions of time for
filing. Plan administrators who fail to
file an annual report may be assessed a
penalty of $300 per day, up to $30,000
per year, until a complete annual report
is filed. The Department may, in its
discretion, waive all or part of a civil
penalty assessed under section 502(c)(2)
upon a showing by the administrator
that there was reasonable cause for the
failure to file a complete and timely
annual report or that there was
reasonable cause why the penalty, as
calculated, should not be assessed.
In an effort to encourage delinquent
filers to voluntarily comply with the
annual reporting requirements under
Title I of ERISA, the Department
adopted, on April 27, 1995, the
Delinquent Filer Voluntary Compliance
(DFVC) Program (60 FR 20874). The
Program, as adopted in 1995, permitted
administrators otherwise subject to the
assessment of higher civil penalties for
failing to file a timely annual report to
pay reduced civil penalties for
voluntarily complying with the
requirement to file an annual report
under Title I of ERISA.
Under the 1995 DFVC Program, plan
administrators filing the Form 5500–C
(plans with fewer than 100 participants
at the beginning of the plan year or
1 In accordance with the requirements of the
Federal Civil Penalties Inflation Adjustment Act of
1990, as amended, the Department’s regulation at
29 CFR 2575.502c–2 increased the maximum civil
penalty from $1,000 a day as stated in section
502(c)(2) of ERISA to $1,100 a day for violations
occurring after July 29, 1997.

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plans filing the Form 5500–C pursuant
to the ‘‘80–120’’ participant rule in
§ 2520.103–1(d) (‘‘small plans’’)) were
subject to a civil penalty assessment of
$50 per day up to $1,000 when the
annual report was twelve months or less
late, and $2,000 when the annual report
was more than twelve months late.2
Plan administrators filing the Form 5500
(plans with 100 or more participants at
the beginning of the plan year other
than a plan filing pursuant to the ‘‘80–
120’’ participant rule (‘‘large plans’’))
were subject to a civil penalty
assessment of $50 per day up to $2,500
when the annual report was one year or
less late, and $5,000 when the annual
report was more than one year late. A
civil penalty assessment of $2,500
applied to late filings by plan
administrators for apprenticeship and
training plans described in § 2520.104–
22 and ‘‘top hat’’ plans described in
§ 2520.104–23(a). Under the terms of the
DFVC Program, the Department reserved
the right to modify or terminate the
Program upon publication of a notice in
the Federal Register.
B. Modifications to the DFVC Program
The Department is modifying the
DFVC Program in order to further
facilitate and encourage voluntary
compliance with the annual reporting
requirements. These modifications take
the form of reducing civil penalty
assessments, as well as simplifying and
updating the process governing
participation in the DFVC Program. A
discussion of the changes follows.
1. Applicable Penalty Amount
Since the adoption of the DFVC
Program in 1995, the Department has
received input from plan administrators,
as well as from accountants, third party
administrators, and other members of
the employee benefits community,
indicating that the civil penalty
assessments provided for under the
1995 Program, while less than the
otherwise applicable penalties,
nonetheless may be an impediment to
many delinquent filers, especially
administrators of small plans, because
of the absence of a per plan, rather than
a per annual report, based cap on the
penalty amount. For example, under the
1995 Program, the administrator of a
small pension plan with respect to
which no annual reports were filed for
plan years 1995—1999 would have to
pay a civil penalty assessment of $2,000
per report and, therefore, would be
required to pay a civil penalty
2 Plan administrators were not allowed to use the
Form 5500–R when filing annual reports under the
DFVC Program.

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Federal Register / Vol. 67, No. 60 / Thursday, March 28, 2002 / Rules and Regulations
assessment of $10,000 ($2,000 × five
plan years), a sizeable amount for many
small employers. Public input in this
area is consistent with the Department’s
finding that, although small employers
constitute about 80 percent of the Title
I of ERISA filers, the majority of plan
administrators electing to comply under
the DFVC Program are administrators of
large plans.
Accordingly, the Department, in an
effort to encourage voluntary
compliance with ERISA’s annual
reporting requirements, is modifying the
civil penalty structure under the DFVC
Program. Specifically, the per day late
filing penalty amount for plan
administrators taking part in the DFVC
Program has been reduced for large and
small plans from $50 per day to $10 per
day. In the case of a single late annual
report filing for a plan, the cumulative
daily penalty amount for a plan year is
capped at $750 for small plans and
$2,000 for large plans. The DFVC
Program, as modified, also contains a
new per plan cap on the penalty to
address the concerns about the
cumulative effect of the per annual
report penalties when a plan has annual
reporting delinquencies for multiple
plan years. The per plan cap is $1,500
for a small plan and $4,000 for a large
plan and applies on a submission-bysubmission basis. Thus, in the case of
the previous example where the plan
administrator for a small plan did not
file an annual report for a five-year
period, the applicable penalty amount
under the revised DFVC Program would
be $1,500 (rather than $10,000 under the
1995 DFVC Program) provided the plan
administrator included the annual
reports for all five plan years in the
same DFVC Program submission.3
The Department believes that this
approach to applying the caps will
encourage complete annual reporting
compliance reviews with respect to
specific plans, while facilitating
Program administration. Although there
is nothing in the DFVC Program that
precludes a plan administrator from
making separate or multiple
submissions under the Program, the per
plan cap on penalties starts over for
each separate submission for a plan that
is made under the DFVC Program.4
3 There is no ‘‘per administrator’’ or ‘‘per
sponsor’’ cap. Thus, if the same person is the
administrator of several plans required to file
annual reports under Title I of ERISA, the
administrator would need to calculate the
applicable penalty amount for each plan.
4 For purposes of determining whether there is
one or more submissions, the mere fact that a
submission is transmitted in multiple envelopes or
packages will not affect the submission’s status as
a single submission where there is evidence (e.g.,
an accompanying letter or note) indicating that

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The Department also is revising the
applicable penalty structure under the
DFVC Program for apprenticeship and
training plans and ‘‘top hat’’ plans, as
well as adding another class of plans
that are eligible to pay special reduced
penalties under the Program. In lieu of
the $2,500 penalty amount for
apprenticeship and training plans and
‘‘top-hat’’ plans, the applicable penalty
amount under the modified DFVC
Program for such plans is $750. As was
the case under the 1995 Program, the
applicable penalty will be applied
without regard to the number of
apprenticeship and training or ‘‘top hat’’
plans maintained by the same plan
sponsor and without regard to the
number of plan participants covered
under such plan or plans. In addition,
the Department is establishing a
maximum $750 per plan penalty cap for
administrators of small plans sponsored
by Internal Revenue Code (Code) section
501(c)(3) organizations (including small
Code section 403(b) plans). This special
penalty amount, however, will not be
available if, as of the date the plan files
under the DFVC Program, there is a
delinquent or late annual report due for
a plan year during which the plan was
a large plan. The Department is
establishing this reduced penalty for
administrators of such small plans in
recognition of the special character of
these organizations, and in light of the
fact that the administrators/sponsors of
such plans may receive most or all of
their funding from government
programs and other charitable,
educational, or scientific grants, and, in
the case of Code section 403(b) plans
that are required to file annual reports
under ERISA, because the information
that is required to be filed annually is
similar to the registration-type
information required to be filed by
apprenticeship and training plans and
‘‘top hat’’ plans under §§ 2520.104–22
and 2520.104–23.
2. Simplification of Process
As noted above, the Department is
simplifying the procedures governing
participation in the DFVC Program.
These changes are intended to make the
Program easier for plan administrators
to use and to conform the Program to
the recent streamlining of the annual
report and the implementation of the
computerized ERISA Filing Acceptance
System (EFAST).
As with the 1995 DFVC Program, the
Program adopted herein conditions
relief on the filing of a complete annual
submission has been transmitted
contemporaneously in multiple envelopes or
packages.

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15053

report, including all required statements
and schedules, for each plan year for
which relief is sought under the
Program. Under the Program, this
requirement can be satisfied by the
administrator filing an annual report for
each plan year for which relief is sought
using either: (1) The annual return/
report form issued for the plan year(s)
for which relief is sought; or (2) the
most current annual return/report form
available at the time the administrator
elects to participate in the Program. By
affording this option, administrators can
choose to file the Form which is most
efficient, and least burdensome, for their
particular plan and circumstance.
Also, as with the 1995 Program, the
modified Program provides that penalty
amount payments must be accompanied
by a paper copy of the filed annual
return/report (excluding any required
statements or schedules).5 Unlike the
1995 Program, however, the forms and
penalty payment no longer have to be
annotated in bold red print identifying
the filing as a DFVC filing.
3. Scope of Program
As with the 1995 DFVC Program, the
modified Program only applies to the
correction of reporting violations under
Title I of ERISA.6 Filings that are not
required under Title I of ERISA, such as
Form 5500–EZ filings, are not eligible
for the DFVC Program. Annual reports
filed under the DFVC Program may be
subjected to the usual edit tests and
plan administrators have an opportunity
to correct identified deficiencies in
accordance with the procedures
described in § 2560.502c–2. The failure
to correct deficiencies in accordance
with these procedures may result in the
assessment of further penalties, and the
payment of DFVC Program penalties do
not serve to reduce the additional civil
penalties that may be assessed for the
filing of a deficient annual report.
Request for Comments, Effective Date
and Requests for Refunds
Although the Department is not
required to seek public comments on an
enforcement policy, the Department
5 While electronic filing of DFVC submissions
and deposit of penalty amounts is not currently
available, the Department will be evaluating this
area for possible future improvements.
6 Although this Notice does not provide relief
from late filing penalties under the Code or Title IV
of ERISA, both the IRS and PBGC have agreed to
provide certain penalty relief under the Code and
Title IV of ERISA. Sections 5.02 and 5.03 of this
Notice include information furnished to the
Department by the Internal Revenue Service (IRS)
and the Pension Benefit Guaranty Corporation
(PBGC) regarding the penalty relief they are
providing for delinquent Form 5500 Annual
Returns/Reports filed for Title I plans when the
condition of the DFVC Program have been satisfied.

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solicits comments from the public on all
aspects of this Program, including
whether the reduced penalty amounts
being adopted are set at appropriate
levels and whether additional classes of
filers should be provided special
reduced penalty amounts. At the same
time, the Department has determined
that the relief afforded by this Program
should be made available during and
after the comment period. Delaying
implementation of the revisions to the
DFVC Program until after the end of the
comment period would only deprive
plan administrators of the ability to pay
reduced penalties during the comment
period. Accordingly, the DFVC Program
adopted herein will be effective upon
publication in the Federal Register.
In general, the Department will
consider requests for refunds under the
DFVC Program only when it is
determined, upon review, that there was
no reporting violation (e.g., the plan was
not required to file an annual report or
the report was filed timely) or the
penalty assessment was otherwise
improper. In this regard, the Department
will not make refunds with respect to
any DFVC filings merely because they
were submitted prior to the effective
date of the Program adopted herein. In
the Department’s view such filers
received the relief with respect to which
the paid penalty related. With regard to
DFVC filings received on or after the
effective date of the Program adopted
herein and with respect to which the
plan administrator incorrectly
determined the penalty amount by
referring to the superceded 1995
Program, the Department intends to
return the DFVC Program submission
(but not the annual report filing that is
submitted to EFAST) to afford the filer
the opportunity to make a DFVC
submission in accordance with the
modified program.
Summary of Economic Impact of the
Amended DFVC Program
This amendment to the DFVC
Program is intended to increase
compliance with reporting requirements
by increasing Program participation,
especially among small plans. Under the
existing Program, administrators of
small plans, which are likely to
represent a large majority of delinquent
filers, have made up only a minority of
Program participants. This amendment
will reduce Program penalties for many
participants, especially for
administrators of small plans that have
failed to file reports for many years,
thereby encouraging more delinquent
plan administrators to participate.
By increasing compliance with
reporting requirements, the amended

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Program will yield economic benefits.
Greater compliance will improve the
quality and availability of information
on plans. Plans’ annual reports are the
principal source of information about
the operation, funding and investments
of employee benefit plans. Information
derived from these reports is integral to
PWBA’s enforcement, research and
policy development programs, and is
widely used by other Federal agencies,
Congress and the private sector in
assessing employee benefit, tax, and
economic trends and policies. Plans’
reports also serve as the primary means
by which participants, beneficiaries and
the general public can monitor plan
operations. For all of these reasons,
better information will serve to improve
the security of plan assets and benefits
and to promote sound employee
benefits policy. Plans that comply with
reporting requirements also tend to stay
in compliance with reporting
requirements, redoubling the benefit of
bringing plans into compliance at the
earliest opportunity. Finally,
participating plan administrators will
benefit insofar as they will be relieved
of the risk of incurring larger penalties
outside the Program, and insofar as the
penalties that many must pay in order
to participate in the Program will be
reduced.
The Department believes that the
benefits of the amended Program will
exceed its costs. Participating plan
administrators will incur a cost in
connection with the payment of
penalties. Participation in the Program
is voluntary, however, so it is
reasonable to conclude that
participating plans derive an economic
benefit equal to or greater than this cost.
The Department also notes that the
payment of such penalties constitutes a
transfer from plan administrators to the
U.S. Treasury, thereby benefiting
taxpayers at large. The only potentially
meaningful economic cost of the
Program is the potential for the loss of
income to the U.S. Treasury from
reduced penalties. This loss of income
will be partly or fully offset by penalties
paid by plan administrators that would
not have participated at the existing
Program’s higher penalty levels.
Moreover, any loss of Treasury revenue
will be nominal and more than offset by
the benefits of fuller reporting outlined
above.
Because the amended program will
substantially reduce Program penalties
for many participating plan
administrators, the Department expects
that participation in the Program will
grow. The Department lacks an
empirical basis on which to estimate the
amount by which it will grow, however.

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In order to assess potential growth, the
Department adopted conservative
assumptions regarding responsiveness
to decreases in Program penalties. On
that basis, it is projected that
participation by plan administrators in
the amended Program will increase to
about 2,500 plans per year, up from
1,400 plans under the current Program,
an increase of about 75 percent.
Participation by administrators of large
plans will increase by more than 50
percent to reach about 1,300, while
participation by administrators of small
plans will grow by more than 100
percent to about 1,100. Total penalties
paid under the Program are projected to
fall by about one-half, however, from
about $9.3 million annually to about
$4.7 million. The Department believes
that these estimates are highly
conservative, and that participation
might increase more, while penalties
paid might decrease less or even
increase. The derivation of these
estimates and basis for the Department’s
conclusion that they are conservative is
detailed below.
Executive Order 12866
Under Executive Order 12866, the
Department must determine whether a
regulatory action is ‘‘significant’’ and
therefore subject to the requirements of
the Executive Order and subject to
review by the Office of Management and
Budget (OMB). Under section 3(f), the
order defines a ‘‘significant regulatory
action’’ as an action that is likely to
result in a rule (1) having an annual
effect on the economy of $100 million
or more, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
Pursuant to the terms of the Executive
Order, it has been determined that this
action is ‘‘significant’’ and subject to
OMB review under section 3(f)(4) of the
Executive Order because it offers a
novel method for encouraging
compliance while reducing regulatory
burden.
As described earlier in this preamble,
PWBA introduced the DFVC Program in

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April of 1995 in an effort to encourage
compliance with annual reporting
requirements, which are met generally
by filing the Form 5500 Annual Return/
Report of Employee Benefit Plan. This
amendment to the Program is intended
to increase compliance with reporting
requirements by increasing Program
participation, especially among
administrators of small plans. Under the
existing Program, small plan
administrators, which are likely to
represent a large majority of delinquent
filers, have made up only a minority of
Program participants. (Among the
approximately 1 million plans expected
to file annual reports normally this year,
about 750,000 are expected to be small
plans.) This amendment will reduce
Program penalties for many Program
participants, especially for small plan
administrators that have failed to file
reports for many years (whose penalties
will be capped at $1,500 per plan),
thereby encouraging more delinquent
administrators to participate and come
into compliance with reporting
requirements.
To date under the existing Program,
17,545 separate filings have been made
by 8,634 separate plans, involving total
penalties to plan administrators in
excess of $50 million. This amounts to
approximately 1,400 participating plans
filing about 2,900 annual reports each
year, and the administrators of those
plans paying penalties of about $9
million. Of the 17,545 filings, 10,082
were for large plans, and 6,781 were for
small plans. In addition, there were 672
‘‘top hat’’ filers and 10 apprenticeship
and training plan filers.
About 70 percent of both large and
small plan DFVC Program filings were
made twelve or more months after they
were otherwise due. About 63 percent of
participating plan administrators filed
for one plan year, about 16 percent filed
for two plan years, and 21 percent filed
for three or more plan years. The
average was approximately two plan
years. As a result, most DFVC Program
participants paid the applicable
maximum for each filing based on the
size of the plan and the filing’s original
due date. Participating plan
administrators filing two or more years’
reports paid such maximum penalties
separately for each report filed.
In developing the amended Program,
the Department endeavored to select
penalty levels that will maximize
reporting compliance, especially among
small plans. Maximizing compliance
means maximizing Program
participation, and with it the prompt
submission of now delinquent filings,
while at the same time maximizing ontime submission of future filings. The

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amended Program’s penalties are
therefore calibrated to be at once low
enough so that delinquent plan
administrators will not be dissuaded
from participating, and high enough to
hold plan administrators appropriately
accountable for filing on time.
This amendment to the DFVC
Program generally will reduce the
penalties owed by participating plan
administrators. For example, the penalty
owed by small and large plan
administrators submitting single filings
more than 12 months late will be
reduced from $2,000 and $5,000,
respectively, to $750 and $2,000. The
penalty owed by administrators of small
and large plans submitting five years’
worth of filings all more than 12 months
late will be reduced from $10,000 and
$25,000 to $1,500 and $4,000.
To gauge the potential impact of the
interaction of the new per plan caps for
delinquencies involving multiple plan
years, which are $1,500 for small plans
and $4,000 for large plans, with the
single plan year maximum penalties of
$750 and $2,000, we computed the
penalties that would have been paid by
the past DFVC filers under the amended
structure, assuming no changes in
Program participant characteristics or
increase in participation in response to
the reduced penalties. This simple
calculation of penalties under the prior
and amended structures shows a
reduction in total penalties paid of
about $39 million or 70 percent.
The amended Program will yield
economic benefits. Fuller compliance
will improve the quality and timeliness
of information on the operation and
assets of employee benefit plans, which
will help to secure plan benefits and
assets and promote sound public policy.
Participating plan administrators will
benefit from shedding the risk of
incurring larger penalties outside the
Program and from reductions in the
penalties they must pay under the
Program.
The amended Program’s benefits are
expected to exceed its costs. Because
participation in the Program is
voluntary, it is reasonable to conclude
that participating plan administrators
derive an economic benefit at least
equal to the cost of the penalty. The
payment of such penalties also enriches
the U.S. Treasury to the benefit of
taxpayers. Because the amended
Program imposes smaller penalties, total
penalties paid to the Treasury may fall.
The economic cost associated with such
a loss of Treasury revenue is expected
to be small and more than offset by the
benefits of fuller reporting.
The Department estimates that plan
participation in the amended Program

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15055

will increase to about 2,500 filings per
year, up from 1,400 under the current
Program. Total penalties paid by plan
administrators under the Program are
projected to fall by about one-half, from
about $9.3 million annually to about
$4.7 million. These estimates are highly
conservative; participation might
increase more, while penalties paid
might decrease less or even increase.
Basis for Estimate of Economic Impact
As noted above, under the existing
DFVC Program, 17,545 separate filings
have been made by 8,634 separate plans,
involving total penalties to plan
administrators in excess of $50 million.
This amounts to approximately 1,400
plans participating each year, paying
penalties of about $9 million. Based on
the discounts available under the
amended penalty structure, the
Department expects the number of plan
administrators participating annually to
increase to about 2,500, resulting in
annual penalties of about $4.7 million.
Assuming a plan administrator is
aware of a plan’s reporting obligations,
and of any failure to satisfy them, the
decision whether or not to participate in
the Program is essentially an economic
one. The plan administrator must weigh
the alternative of remaining out of
compliance—and the attendant risk of
becoming subject to larger penalties—
against the cost of paying reduced
penalties under the amended Program.
The penalty under the Program can be
thought of as a price the administrator
can pay to achieve compliance and be
relieved from the risk of larger penalties.
The size and risk of unreduced penalties
represents the value of such relief.
Reduced penalties under the Program
and potential full penalties will be
different for different plans, reflecting
their differing characteristics and
circumstances. All else equal, the
smaller the penalties under the Program
relative to the potential unreduced
penalties—that is, the lower the price of
participation relative to its value—the
larger the number of plan administrators
that will participate.
Assuming that the risk and potential
amount of full penalties are fixed, the
increase in participation in the amended
Program will depend on the number of
delinquent plans, the amount by which
penalties under the amended Program
are discounted relative to those under
the existing Program, and the
responsiveness of plan administrators to
this price reduction. Price
responsiveness is commonly expressed
in terms of ‘‘elasticity,’’ or the percent
increase in quantity demanded that will
result from a one percent decrease in
price. If administrators’ elasticity of

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demand for the Program is one, then a
one percent decrease in the penalty will
result in a one percent increase in the
number of administrators participating.
The Department has no empirical
basis on which to estimate the price
elasticity of demand for the Program.
Estimating elasticity generally requires
observation of demand at different price
levels. Casual observation reveals that
the number of plan administrators
participating in the existing Program
generally is higher at lower penalty
levels. In particular, relatively few
participating plan administrators—and
very few participating small plan
administrators—submitted several years
of delinquent filings and consequently
owed relatively large penalties. This
observation seems consistent with the
premise that lower penalties encourage
higher participation, but it falls short of
providing formal supporting evidence.
The Department lacks data on the
number and circumstances of
nonparticipating delinquent plan
administrators. Therefore, it is not
possible to determine whether
variations in the number of plans
participating at different penalty levels
under the existing Program reflects
responsiveness to those levels or the
numbers and circumstances (and
potential full penalties) of unobserved,
nonparticipating delinquent plan
administrators whose participation
would trigger penalties at those levels.
The Department also lacks any
longitudinal basis for estimating the
elasticity, because prior to this
amendment the penalty levels under the
Program had not been changed.
The Department nevertheless
attempted to assess the potential
magnitude of increased participation in
the amended DFVC Program. To do this,
the Department examined historical
data on participation in the Program,
relying on the general assumption that
the potential users of the amended
Program will resemble the past users of
the existing Program. Then, by adopting
assumptions regarding the elasticity of
demand for the Program and comparing
the penalties owed by past participants
in the existing Program with the
penalties they would owe under the
amended Program, the Department
projected participation in the amended
Program.
Lacking a basis for estimating plan
administrators’ true elasticities, the
Department adopted what it believes are
conservative assumptions (that is,
assumptions which are likely to be
lower then the true elasticities). In the
face of uncertainty, it is generally
appropriate to adopt conservative
assumptions, in order to avoid over

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estimating the potential benefits of the
Program.
The Department assumed that the
price elasticity of demand for the
Program among administrators of large
plans (those with 100 or more
participants) is one, and that among
administrators of small plans is two.
More precisely, it assumed that demand
is linear and that large and small plans’
price elasticities of demand at the
starting positions on their demand
curves (the equilibria under the current
Program) are equal to one and two,
respectively. A large decrease in price
will result in movement down the
demand curve into a region where
elasticity is less than at the starting
position. (As a result, total penalties
collected under the amended Program
are expected to be less than the assumed
starting-point elasticities alone would
imply.) The Department believes that
these assumptions conservatively
represent the likely price
responsiveness of nonparticipating
delinquent plan administrators.
First, the assumption of linear
demand (and attendant decreasing
elasticity) is inherently conservative in
connection with large price decreases. A
more plausible, nonlinear demand
function with constant elasticity would
suggest much larger increases in
Program participation.
For administrators of many plans, the
price decrease associated with
movement from the existing to the
amended Program will be large. This is
especially true of administrators that are
delinquent in connection with several
plan years’ filings, because the amended
Program caps penalties for such plans,
while the existing Program caps them
only for each separate filing by such
plans. For example, historical penalties
owed under the existing Program
equaled or exceeded $25,000 for 74
participating large plans each year.
These would include plan
administrators that submitted five or
more years’ reports, all 12 months or
more late, who would owe the
maximum $5,000 per filing. Historical
penalties equaled or exceeded $10,000
for 52 participating small plans
annually, which similarly would
include plan administrators owing the
maximum $2,000 penalty for each of
five or more years’ worth of filings.
Under the amended Program, similar
large plans’ penalties will be capped at
$4,000 per plan, small at $1,500,
representing price reductions of at least
84 percent and 70 percent, respectively.
Microeconomic theory suggests that
demand for most goods and services is
likely to be better represented by a
demand curve with constant elasticity

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than by a linear one, especially in
connection with large price changes.
Consider the administrator of a large
plans in this example. The Department,
assuming linear demand and a starting
elasticity of one, projects that an 84
percent fall in price results in an 84
percent increase in participation.
However, this implies that the elasticity
of demand at the new equilibrium
would be just 0.09—that is, an
additional one percent price decrease
would increase participation by less
than one-tenth of one percent. In the
case of a small plan administrator, and
assuming a starting elasticity of two,
elasticity at the new equilibrium would
be just 0.37. Under the potentially more
plausible assumption of constant
demand elasticities of one and two
respectively for large and small plans,
the 84 percent price decrease available
to the large plan administrator would
increase participation by 525 percent,
while small plan administrators’ price
decrease would increase their
participation by 1,011 percent. This
suggests that the Department’s
assumptions are highly conservative
and that the increase in participation,
particularly among small plans that are
many years delinquent, could be much
larger than projected.
Second, the increase in the Program
participation is unlikely to be
constrained by market saturation
anytime soon, and this is especially true
for administrators of small plans. Thus,
the premise that demand might exhibit
a constant elasticity (and that therefore
large price decreases could result in
very large participation increases) is
especially plausible for administrators
of small plans.
Participation by both large and small
plan administrators over the life of the
Program is ultimately constrained to no
more than the number of
nonparticipating delinquent plans that
exist. The Department has no way of
knowing this number. As yet, however,
there is no evidence that participation
in the Program is nearing this
constraint. Participation in the Program
has been quite consistent since its
inception, at about 2,900 filings per
year, with small plans representing
about 40 percent of each year’s total.
Small plans in particular are likely to
represent a large majority of
nonparticipating delinquent plans, just
as they represent a large majority of
plans that file annual reports on time.
For example, among the approximately
one million plans expected to file
reports this year, about 250,000 will be
large and about 750,000 will be small.
Consider again the above example of
plans that submitted five or more years’

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filings 12 or more months late under
current Program. Is it plausible that
demand could exhibit constant
elasticity and that participation
increases could therefore be very large?
If participation by large plan
administrators in similar circumstances
increased by 525 percent, the number
participating each year on average
would grow from about 74 plans to
about 463, which is equal to
approximately 0.2 percent of large plan
filers. A 1,011 percent increase in small
plan administrator participation would
mean that the number participating each
year would grow from about 52 plans to
about 578, which is equivalent to about
0.08 percent of small plan filers. Given
these relative magnitudes, even these
large increases in participation might be
viewed as plausible. This would seem to
confirm that the Department’s
assumptions of linear demand, with
starting elasticities for large and small
plans of one and two respectively, are
conservative.
The Department requests comments
on all aspects of this analysis, including
the penalty levels as they apply to large
and small plan administrators,
assumptions concerning price
responsiveness, and the characteristics
of future filers as compared with the
actual Program participants. The
Department is particularly interested in
information on existing rates and
reasons for non-compliance with
reporting requirements, and specific
factors that may influence the decision
whether or not to participate in the
DFVC Program in light of the penalty
reductions being implemented.
Paperwork Reduction Act
The Department, as part of its
continuing effort to reduce paperwork
and respondent burden, conducts a
preclearance consultation program to
provide the general public and Federal
agencies with an opportunity to
comment on proposed and continuing
collections of information in accordance
with the Paperwork Reduction Act of
1995 (PRA 95) (44 U.S.C. Chapter 35).
This helps to ensure that requested data
can be provided in the desired format,
reporting burden (time and financial
resources) is minimized, collection
instruments are clearly understood, and
the impact of collection requirements on
respondents can be properly assessed.
OMB clearance of the information
collection request (ICR) included in the
existing DFVC Program was scheduled
to expire prior to the implementation of
this modified Program. In order to
maintain OMB approval of the ICR,
PWBA published a preclearance notice
soliciting comments on the ICR (66 FR

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44159, August 22, 2001). OMB received
the submission for continued approval
of the ICR on December 21, 2001. OMB
approved the ICR on February 21, 2002.
This approval will continue through
February 28, 2005, unless the ICR is
substantively or materially changed.
Although the Department has updated
the Program and adjusted the penalty
structure in an effort to further facilitate
voluntary compliance, the information
collection provisions of the Program are
not substantively or materially changed.
Under both the existing and amended
DFVC Program, participating filers must
supply a photocopy of the Form 5500
(without schedules or attachments) as
filed along with their penalty check.
The Department has, however, adjusted
its burden estimates to reflect the
expectation of additional participation
in the Program due to the reduced
penalty incentive and the addition of a
penalty cap for small plans sponsored
by Code section 501(c)(3) organizations.
A summary of the effect of the
adjustment has been provided to OMB.
Requests for copies of the ICR may be
addressed to: Gerald B. Lindrew, Office
of Policy and Research, U.S. Department
of Labor, Pension and Welfare Benefits
Administration, 200 Constitution
Avenue, NW, Room N–5647,
Washington, DC 20210. Telephone:
(202) 693–8410; Fax: (202) 219–4745
(these are not toll-free numbers).
It is estimated that 2,500 filers will
avail themselves of the opportunity to
correct potential violations pursuant to
the DFVC Program annually. The
Department estimates that
approximately 30 minutes will be
required to read instructions, prepare a
check, photocopy the Form 5500, and
mail the package. It is further assumed
that 90 percent of plan administrators
sponsors will purchase services from a
professional (e.g., accountant or
attorney) to comply with the
requirements of the Program, and that
10 percent will use in-house staff. The
professional wage rate incorporated in
the burden cost estimates is $75 per
hour. Material and mailing costs are
estimated at $0.70 per mailing.
The time and mailing cost
assumptions have been increased from
what was used in the past (21 minutes
and $0.37) due principally to the change
in the penalty structure to incorporate a
penalty cap for multiple plan year
delinquencies. It is assumed that
multiple plan year delinquencies will be
filed together, requiring some additional
time and mailing cost. The method for
estimating the number of respondents
has also changed due to the change in
the penalty structure, with multiple
plan year filings now considered one

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15057

response. As a result, the total number
of respondents counted for PRA
purposes is reduced, despite the fact
that participation in the Program is
assumed to increase.
Agency: Pension and Welfare Benefits
Administration, Department of Labor.
Title: Delinquent Filer Voluntary
Compliance Program.
OMB Number: 1210–0089.
Affected Public: Individuals or
households; Business or other for-profit;
Not-for-profit institutions.
Frequency of Response: On occasion.
Total Respondents: 2,500.
Total Responses: 2,500.
Estimated Burden Hours: 125.
Estimated Annual Costs (Operating
and Maintenance): $86,000.
Persons are not required to respond to
the collection of information unless it
displays a currently valid OMB control
number.
Regulatory Flexibility Act
This document constitutes an
enforcement policy of the Department
and is not being issued as a general
notice of proposed rulemaking.
Therefore, the Regulatory Flexibility Act
(5 U.S.C. 601 et seq.) (RFA) does not
apply. However, PWBA has considered
the potential costs and benefits of this
action for administrators of small plans,
that is, plans with fewer than 100
participants, in connection with this
amendment to the DFVC Program. The
basis of the definition of a small plan is
found in section 104(a)(2) of ERISA,
which permits the Secretary of Labor to
prescribe simplified annual reports for
pension plans that cover fewer than 100
participants. Under section 104(a)(3),
the Secretary may also provide for
simplified annual reporting and
disclosure if the statutory requirements
of part 1 of Title I of ERISA would
otherwise be inappropriate for welfare
benefit plans.
Small plans represent approximately
75 percent of all annual report filers, but
have represented only about 35 percent
of DFVC Program filings, despite lower
scheduled maximum penalties for small
plans. Small plan participants in the
Program have represented an average of
0.4 percent of small Form 5500 filers,
while large plans have represented
about 2 percent of large filers. The
reasons for these differentials cannot be
known with certainty. The rate of
participation in the Program by small
plans has been relatively stable since its
inception at about 1,000 filings on
behalf of 520 plans per year. Historical
DFVC Program data also show that more
than 70 percent of both large and small
DFVC Program filers are more than 12
months late when the filing is

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completed, and small plan filers are
about as likely as large plan filers to be
required to make two or more filings at
the same time to bring the plan into
compliance with reporting
requirements. This suggests that the
penalty structure in effect prior to this
amendment, though lower for small
plan administrators on a per plan year
filing basis, might have discouraged
participation when multiple years were
involved. Informal comments received
by the Department have offered this
view.
Under PWBA’s program for the
assessment of civil penalties for
noncompliance with reporting
requirements, plan administrators filing
late annual reports may be assessed $50
per day for each day an annual report
is filed after the date on which the
annual report was required to be filed,
without regard to any extensions of time
for filing. Plan administrators who fail
to file an annual report may be assessed
a penalty of $300 per day, up to $30,000
per year, until a complete annual report
is filed. The distribution of actual DFVC
filers based on the ratio of their
voluntary penalty to the penalty that
would have been imposed by the
Department in penalty enforcement
under this program shows that 80
percent of small plan DFVC filers, as
compared with only 30 percent of large
plan filers, have paid less than 10
percent of the enforcement program
penalty. Forty percent of small plan
filers paid less than 5 percent of the
enforcement program penalty that
would otherwise have been imposed.
This also seems consistent with the
conclusion that a large penalty serves as
a significant disincentive for small plan
administrators.
The reduction in the participating
small plan administrators’ maximum
penalty for a single year’s filing from
$2,000 to $750 and the availability of
the $1,500 cap for multiple plan year
delinquencies is expected to
significantly reduce the penalties paid
by small DFVC filers. A comparison of
the penalties paid under the existing
DFVC structure with those that would
have been paid under the amended
structure by small plans shows a
reduction of about 72 percent, or
approximately $8 million, assuming no
change in behavior or characteristics of
the filers.
Based on the discounts available
under the amended penalty structure,
and assuming an elasticity of two, as
described earlier, the number of small
plans coming into compliance is
expected to increase by 561 plans, to
about 1,081 plans per year, with
penalties totaling $1.2 million. This

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expected outcome is consistent with the
stated purpose of the amendment.
The Department believes that the
DFVC Program as modified offers a
flexible and economically advantageous
method for administrators of small
plans to correct reporting delinquencies,
which recognizes the special
circumstances of small plans. The
Department invites comments on this
analysis and on alternatives that might
further reduce potential burdens for
small plans.

it is not likely to result in (1) An annual
effect on the economy of $100 million
or more; (2) a major increase in costs or
prices for consumers, individual
industries, or federal, State, or local
government agencies, or geographic
regions; or (3) significant adverse effects
on competition, employment,
investment, productivity, innovation, or
on the ability of the United States-based
enterprises to compete with foreignbased enterprises in domestic or export
markets.

Unfunded Mandates Reform Act
For purposes of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4), as well as Executive Order
12875, this regulatory action does not
include any Federal mandate that may
result in expenditures by State, local, or
tribal governments, and will not impose
an annual burden of $100 million or
more on the private sector.

Section 1—Delinquent Filer Voluntary
Compliance (DFVC) Program
The DFVC Program is intended to
afford eligible plan administrators
(described in Section 2 of this Notice)
the opportunity to avoid the assessment
of civil penalties otherwise applicable to
administrators who fail to file timely
annual reports for plan years beginning
on or after January 1, 1988. Eligible
administrators may avail themselves of
the DFVC Program by complying with
the filing requirements and paying the
civil penalties specified in Section 3 or
Section 4, as appropriate, of this Notice.

Federalism Statement
Executive Order 13132 outlines
fundamental principles of federalism
and requires the adherence to specific
criteria by federal agencies in the
process of their formulation and
implementation of policies that have
substantial direct effects on the States,
the relationship between the national
government and States, or on the
distribution of power and
responsibilities among the various
levels of government. This action does
not have federalism implications
because it has no substantial direct
effect on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government. Section
514 of ERISA provides, with certain
exceptions specifically enumerated, that
the provisions of Titles I and IV of
ERISA supercede any and all laws of the
States as they relate to any employee
benefit plan covered under ERISA. The
requirements implemented in this
enforcement policy do not alter the
fundamental reporting requirements or
penalty provisions of Title I of the
statute with respect to employee benefit
plans, and as such have no implications
for the States or the relationship or
distribution of power between the
national government and the States.
Congressional Review Act
The DFVC Program is subject to the
provisions of the Congressional Review
Act (5 U.S.C. 801 et seq.) and will be
transmitted to Congress and the
Controller General for review. The
Program is not a ‘‘major rule’’ as that
term is defined in 5 U.S.C. 804 because

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Section 2—Scope, Eligibility and
Effective Date
.01 Scope. The DFVC Program
described in this Notice provides relief
from assessment of civil penalties
otherwise applicable to plan
administrators who fail or refuse to file
timely annual reports. Relief under this
Program does not extend to penalties
that may be assessed for annual reports
that are determined by the Department
to be incomplete or otherwise deficient.
.02 Eligibility. The DFVC Program is
available only to a plan administrator
that complies with the requirements of
Section 3 or Section 4, as appropriate,
of this Notice prior to the date on which
the administrator is notified in writing
by the Department of a failure to file a
timely annual report under Title I of
ERISA.
.03 Effective date. The DFVC Program
described herein shall be effective
March 28, 2002. The Department
intends that this DFVC Program to be of
indefinite duration; however, the
Program may be modified from time to
time or terminated in the sole discretion
of the Department upon publication of
notice in the Federal Register.
Section 3—Plan Administrators Filing
Annual Reports
.01 General. A plan administrator
electing to file a late annual report
(Form 5500 Series Annual Return/
Report) under this DFVC Program must
comply with the requirements of this
Section 3.

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.02 Filing a Complete Annual Report.
(a) The plan administrator must file a
complete Form 5500 Series Annual
Return/Report, including all required
schedules and attachments, for each
plan year for which the plan
administrator is seeking relief under the
Program. This filing shall be sent to
PWBA at the appropriate EFAST
address listed in the instructions for the
most current Form 5500 Annual Return/
Report, or electronically in accordance
with the EFAST electronic filing
requirements. See the EFAST Internet
site at www.efast.dol.gov to view forms
and instructions.
Note: Do not forward the applicable
penalty amount described in Section 3.03 to
the EFAST addresses listed above.

(b) For purposes of subparagraph (a),
the plan administrator shall file either:
(1) The Form 5500 Series Annual
Return/Report form (but not a Form
5500–R) issued for each plan year for
which the relief is sought, or (2) the
most current Form 5500 Annual Return/
Report form issued (and, if necessary,
indicate in the appropriate space on the
first page of the Form 5500 the plan year
for which the annual return/report is
being filed). Forms may be obtained
from the IRS by calling 1–800–TAX–
FORM (1–800–829–3676). Forms for
certain pre-1999 plan years also are
available through the Internet sites for
PWBA and the Internal Revenue Service
(IRS) (www.dol.gov/dol/pwba,
www.irs.gov). For further information on
EFAST filing requirements, see the
EFAST Internet site (www.efast.dol.gov)
and the instructions for the most current
Form 5500.
.03 Payment of Applicable Penalty
Amount.
(a) The plan administrator shall pay
the applicable penalty amount by
submitting to the DFVC Program the
information described in subparagraph
(b) along with a check made payable to
the ‘‘U.S. Department of Labor’’ for the
applicable penalty amount determined
in accordance with subparagraph (c).
This separate submission shall be made
by mail to: DFVC Program, PWBA, P.O.
Box 530292, Atlanta, GA 30353–0292.
The annual returns/reports for multiple
plans may not be included in a single
DFVC Program submission. A separate
submission to the DFVC Program
(including a separate check for the
applicable penalty amount) must be
made for each plan.
Note: Personal or private delivery service
cannot be made to this address.

(b)(1) The administrator shall submit
to the DFVC Program, with the
applicable penalty amount, a paper
copy of the Form 5500 Annual Return/

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Report filed as described in paragraph
.02(a), without schedules and
attachments. In the event that the plan
administrator files as described in
paragraph .02(a) using a 1998 or prior
plan year form, a paper copy of only the
first page of the Form 5500 or Form
5500–C, as applicable, should be
submitted to the DFVC Program.
(2) In the case of a plan sponsored by
a Code section 501(c)(3) organization
described in paragraph .03(c)(4), the
administrator shall clearly note
‘‘501(c)(3) Plan’’ in the upper-right hand
corner of the first page of the Form 5500
Annual Return/Report submitted to the
DFVC Program (in Atlanta, Georgia).
This notation should not be included on
the annual report filed with PWBA
pursuant to paragraph .02 (in Lawrence,
Kansas) because it may interfere with
the proper processing of the required
report.
(c) The applicable penalty amount
shall be determined as follows:
(1) In the case of a plan with fewer
than 100 participants at the beginning of
the plan year (or a plan that would be
treated as such a plan under the ‘‘80–
120’’ participant rule described in 29
CFR 2520.103–1(d) for the subject plan
year) (hereinafter ‘‘small plan’’), the
applicable penalty amount is $10 per
day for each day the annual report is
filed after the date on which the annual
report was due (without regard to any
extensions), not to exceed the greater of:
$750 per annual report or, in the case
of a DFVC submission relating to more
than one delinquent annual report filing
for the plan, $1,500 per plan.
(2) In the case of a plan with 100 or
more participants at the beginning of the
plan year (other than a plan that is
eligible to use and uses the ‘‘80–120’’
participant rule) (hereinafter ‘‘large
plan’’), the applicable penalty amount is
$10 per day for each day the annual
report is filed after the date on which
the annual report was due (without
regard to any extensions), not to exceed
the greater of: $2,000 per annual report
or, in the case of a DFVC submission
relating to more than one delinquent
annual report filing for the plan, $4,000
per plan.
(3) In the case of a DFVC submission
relating to more than one delinquent
annual report filing for a plan, the
applicable penalty amount shall be
determined by reference to paragraph
(c)(2) if for any plan year for which the
submission is made the plan was a
‘‘large plan.’’
(4) In the case of a plan administrator
filing an annual report for a ‘‘small
plan’’ that is sponsored by a Code
section 501(c)(3) organization (including
a Code section 403(b) plan), the

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applicable penalty amount is $10 per
day for each day the annual report is
filed after the date on which the annual
report was due (without regard to any
extensions), not to exceed $750 per
DFVC submission, including DFVC
submissions that relate to more than one
delinquent annual report filing for the
plan. This paragraph (c)(4) shall not
apply if, as of the date the plan files
pursuant to this DFVC Program, there is
a delinquent or late annual report due
for a plan year for which the plan was
a ‘‘large plan.’’ See paragraph .03(b)(2)
for special instructions pertaining to
small plans sponsored by Code section
501(c)(3) organizations.
.04 Liability for Applicability Amount.
The plan administrator is personally
liable for the payment of civil penalties
assessed under section 502(c)(2) of
ERISA, therefore, civil penalties,
including amounts paid under this
DFVC Program, shall not be paid from
the assets of an employee benefit plan.
Section 4—Plan Administrators Filing
Notices for Apprenticeship and
Training Plans and Statements for ‘‘Top
Hat’’ Plans
.01 General. Administrators of
apprenticeship and training plans,
described in 29 CFR 2520.104–22, and
administrators of pension plans for a
select group of management or highly
compensated employees, described in
29 CFR 2520.104–23(a) (‘‘top hat
plans’’), who elect to file the applicable
notice and statement described in
sections 2520.104–22 and 2520.104–23,
respectively, as a condition of relief
from the annual reporting requirements
may, in lieu of filing any past due
annual report and paying otherwise
applicable civil penalties, comply with
the requirements of this Section 4.
Administrators who have complied with
the requirements of this Section 4 shall
be considered as having elected
compliance with the exemption(s) and/
or alternative method of compliance
prescribed in §§ 2520.104–22, or
2520.104–23, as appropriate, for all
subsequent plan years.
.02 Filing Applicable Notice or
Statement with the U.S. Department of
Labor.
The plan administrator must prepare
and file a notice or statement meeting
the requirements of §§ 2520.104–22, or
2520.104–23, as appropriate.
The apprenticeship and training plan
notice described in § 2520.104–22 shall
be sent by mail or by private delivery
service to: Apprenticeship and Training
Plan Exemption, Pension and Welfare
Benefits Administration, Room N–1513,
U.S. Department of Labor, 200

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Federal Register / Vol. 67, No. 60 / Thursday, March 28, 2002 / Rules and Regulations

Constitution Avenue NW., Washington,
DC 20210.
The ‘‘top hat’’ plan statement
described in § 2520.104–23 shall be sent
by mail or by private delivery service to:
Top Hat Plan Exemption, Pension and
Welfare Benefits Administration, Room
N–1513, U.S. Department of Labor, 200
Constitution Avenue NW., Washington,
DC 20210.
Note: A plan sponsor maintaining more
than one ‘‘top hat’’ plan is not required to file
a separate statement for each such plan. See
§ 2520.104–23(b).

.03 Payment of Applicable Penalty
Amount.
(a) The plan administrator shall pay
the applicable penalty amount by
submitting to the DFVC Program the
information described in subparagraph
(b) along with a check made payable to
the ‘‘U.S. Department of Labor’’ for the
applicable penalty amount determined
in accordance with subparagraph (c).
This submission shall be made by mail
to: DFVC Program, PWBA, P.O. Box
530292, Atlanta, GA 30353–0292.
Note: Personal or private delivery service
cannot be made to this address.

(b) The administrator shall submit to
the DFVC Program with the applicable
penalty amount the most current Form
5500 Annual Return/Report (without
schedules and attachments). For
purposes of this requirement, the plan
administrators must complete Form
5500 line items 1a–1b, 2a–2c, 3a–3c,
and use plan number 888 for all ‘‘top
hat’’ plans and plan number 999 for all
apprenticeship and training plans. In
the case of plan sponsors maintaining
more than one ‘‘top hat’’ plan and plan
sponsors maintaining more than one
apprenticeship and training plan
described in § 2520.104–22, the plan
administrator shall clearly identify each
such plan on the Form 5500 filed with

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the Department of Labor or on an
attachment thereto. The plan
administrator also must sign and date
the Form 5500.
(c) The applicable penalty amount is
$750 for each DFVC submission,
without regard to the number of plans
maintained by the same plan sponsor
for which notices and statements are
filed pursuant to Section 4 and without
regard to the number of plan
participants covered under such plan or
plans.
.04 Liability for Applicability Amount.
The plan administrator is personally
liable for the payment of civil penalties
assessed under section 502(c)(2) of
ERISA, therefore, civil penalties,
including amounts paid under this
DFVC Program, shall not be paid from
the assets of an employee benefit plan.
Section 5—Waiver of Right to Notice,
Abatement of Assessment and Plan
Status
.01 Payment of a penalty under the
terms of this DFVC Program constitutes,
with regard to the filings submitted
under the Program, a waiver of an
administrator’s right both to receive
notices of intent to assess a penalty
under § 2560.502c–2 from the
Department and to contest the
Department’s assessment of the penalty
amount.
.02 Although this Notice does not
provide relief from late filing penalties
under the Code, the Internal Revenue
Service (IRS) has provided the
Department with the following
information. The Code and the
regulations thereunder require
information to be filed on the Form
5500 Series Annual Return/Report and
provide the IRS with authority to
impose or assess penalties for failing to
timely file. The IRS has agreed to
provide certain penalty relief under the

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Code for delinquent Form 5500 Annual
Returns/Reports filed for Title I plans
where the conditions of this DFVC
Program have been satisfied. See IRS
Notice 2002–23.
.03 Although this Notice does not
provide relief from late filing penalties
under Title IV of ERISA, the Pension
Benefit Guaranty Corporation (PBGC)
has provided the Department with the
following information. Title IV of ERISA
and the regulations thereunder require
information to be filed on the Form
5500 Series Annual Return/Report and
provide the PBGC with authority to
assess penalties against a plan
administrator under ERISA § 4071 for
late filing of the Form 5500 Series
Annual Return/Report. The PBGC has
agreed that it will not assess a penalty
against a plan administrator under
ERISA § 4071 for late filing of a Form
5500 Series Annual Return/Report filed
for a Title I plan where the conditions
of this DFVC Program have been
satisfied.
.04 Acceptance by the Department of
a filing and penalty payment made
pursuant to this DFVC Program does not
represent a determination by the
Department of Labor as to the status of
the arrangement as a plan, the particular
type of plan under Title I or ERISA, the
status of the plan sponsor under the
Code, or a determination by the
Department of Labor that the provisions
of §§ 2520.104–22 or 2520.104–23 have
been satisfied.
Signed at Washington, DC, this 25th day of
March, 2002.
Ann L. Combs,
Assistant Secretary, Pension and Welfare
Benefits Administration, U.S. Department of
Labor.
[FR Doc. 02–7514 Filed 3–27–02; 8:45 am]
BILLING CODE 4510–29–P

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