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Federal Register / Vol. 61, No.

46 / Thursday, March 7, 1996 / Notices 9203

Written Comments and Hearing (c) The conditions set forth in VI. Procedure for Establishing Council and
Requests paragraphs (2) through (6) of the Working Group Meeting Dates
Program are met. VII. Statements from the General Public
All interested persons are invited to VIII. Adjourn
submit written comments or requests for II. Definitions: For purposes of this
a public hearing on the proposed proposed exemption: Members of the public are encouraged
exemption to the address above and (a) The term ‘‘plan’’ means an to file a written statement pertaining to
within the time period set forth above. employee pension benefit plan any topic concerning ERISA by
Comments received will be made part of described in section 3(2) of ERISA. submitting 20 copiers on or before
the record and will be available for (b) The term ‘‘person’’ means a person March 25, 1996 to Sharon Morrissey,
public inspection at the above address. as that term is defined in section 3(9) of Acting Executive Secretary, ERISA
ERISA. Advisory Council, U.S. Department of
Proposed Exemption Labor, Suite N–5677, 200 Constitution
(c) The term ‘‘Program’’ means the
The Department has under Pension Payback Program published by Avenue, NW., Washington, DC 20210.
consideration the granting of the the Department on March 7, 1996. Individuals or representatives of
following class exemption, under the organizations wishing to address the
III. Effective Date: If granted, the
authority of section 408(a) of ERISA and Advisory Council should forward their
proposed exemption provides
section 4975(c)(2) of the Code, and in request to the Acting Executive
retroactive and prospective relief for
accordance with the procedures set Secretary or telephone (202) 219–8753.
those transactions involving participant
forth in 29 CFR 2570, subpart B (55 FR Oral presentations will be limited to ten
contributions and earnings that are
32836, August 10, 1990). minutes, but an extended statement may
restored to pension plans no later than
I. The restrictions of sections 406(a)(1) be submitted for the record. Individuals
September 7, 1996. Such restorative
(A) through (D), 406(b)(1) and 406(b)(2) with disabilities, who need special
payments must relate to amounts paid
of ERISA and the sanctions resulting accommodations, should contact Sharon
to, or withheld by, an employer for
from the application of section 4975(a) Morrissey by March 25 at the address
contribution to a plan no later than
and (b) of the Code, by reason of section indicated.
April 5, 1996. Organizations or individuals may also
4975(c)(1) (A) through (E) of the Code,
shall not apply to transactions that Signed at Washington, D.C. this 4th day of submit statements for the record
result from a person’s failure to transmit March, 1996. without testifying. Twenty (20) copies of
participant contributions to a pension Alan D. Lebowitz, such statements should be sent to the
plan within the time frames required by Deputy Assistant Secretary for Program Acting Executive Secretary of the
the plan asset—participant contribution Operations, Department of Labor, Pension Advisory Council at the above address.
regulation (29 CFR 2510.3–102), and Welfare Benefits Administration. Papers will be accepted and included in
provided that the following conditions [FR Doc. 96–5392 Filed 3–6–96; 8:45 am] the record of the meeting if received on
are met: BILLING CODE 4510–29–P or before March 25, 1996.
(a) All delinquent participant Signed at Washington, DC, this 1st day of
contributions are restored to the pension March, 1996.
plan plus the greater of: Advisory Council on Employee Welfare
Olena Berg,
(1) The amount that otherwise would and Pension Benefits Plan; Notice of
Assistant Secretary, Pension and Welfare
have been earned on the participant Meeting Benefits Administration.
contributions from the date on which
Pursuant to the authority contained in [FR Doc. 96–5408 Filed 3–6–96; 8:45 am]
such contributions were paid to, or
withheld by, the employer until such Section 512 of the Employee Retirement BILLING CODE 4510–29–M

money is fully restored to the plan, had Income Security Act of 1974 (ERISA), 29
such contributions been invested in U.S.C. 1142, a public meeting of the
Advisory Council on Employee Welfare Pension Payback Program
accordance with applicable plan
provisions, or and Pension Benefit Plans will be held AGENCY: Pension and Welfare Benefits
(2) The amount the participant would on April 8, 1996, in Room S2508, U.S. Administration, Labor.
have earned on the participant Department of Labor Building, Third ACTION: Notice of adoption of voluntary
contributions during such period using and Constitution Avenue, NW., compliance program for restoration of
an interest rate equal to the Washington, DC 20210. delinquent participant contributions.
underpayment rate defined in section The purpose of the meeting, which
6621(a)(2) of the Code from the date on will begin at 9:30 a.m. and end at SUMMARY: This document announces the
which such contributions were paid to, approximately noon, is to consider the adoption of a voluntary compliance
or withheld by, the employer until such items listed below and to invite public program which will allow certain
money is fully restored to the plan. comment on any aspect of the persons to avoid potential Employment
(b) The total of all outstanding administration of ERISA. Retirement Income Security Act civil
delinquent participant contributions on I. Welcome and Introduction of New Council actions initiated by the Department of
March 7, 1996, excluding earnings, does Members Labor, the assessment of civil penalties
not exceed the aggregate amount of II. Assistant Secretary’s Report under section 502(l) of ERISA and
participant contributions that were paid A. PWBA Priorities for 1996 Federal criminal prosecutions arising
to, or withheld by, the employer for B. Report to Congress from their failure to timely remit
contribution to the plan for calendar C. Miscellaneous Issues participant contributions and the failure
year 1995. Provided that the preceding D. Announcement of Council Chairperson to disclose such non-remittance. The
limitation is met, the proposed and Vice Chairperson program also includes relief from
III. Introduction of PWBA Senior Staff and
exemption shall apply without limit to Orientation of New Members
certain prohibited transaction liability.
the restoration of any earnings on IV. Report of Advisory Council Working The program is designed to benefit
delinquent participant contributions Groups (1994/1995 Term) workers by encouraging employers to
that have been restored to the plan prior V. Determination of Council Working Groups restore delinquent participant
to the effective date of the Program. for 1996 contributions to employee pension
9204 Federal Register / Vol. 61, No. 46 / Thursday, March 7, 1996 / Notices

benefit plans covered by Title I of ERISA’s fiduciary responsibility activities, which focused on participant
ERISA. provisions apply to the management of contributions, indicate a significantly
DATES: The program applies to certain plan assets. Among other things, these higher frequency of violations for such
delinquent participant contributions provisions make clear that the assets of investigations than the Department
that are restored to pension plans no a plan may not inure to the benefit of encounters in general.3
later than September 7, 1996. any employer and shall be held for the
In addition, the Department, in
Restorative payments must relate to exclusive purpose of providing benefits
to participants in the plan and their responding to requests for technical
amounts paid by participants or
beneficiaries, and defraying reasonable assistance from employers and
withheld by an employer from
participants’ wages for contribution to a expenses of administering the plan. participants, has received information
pension plan on or before April 5, 1996. ERISA §§ 403–404, 29 U.S.C. 1103– that many employers who receive
Written notification of intention to 1104. They also prohibit a broad array participant contributions are under the
participate in the program must be of transactions involving plan assets. misimpression that the current
received by the Department no later ERISA §§ 406–408, 29 U.S.C. 1106– regulation permits a delay of up to 90
than September 7, 1996. 1108. days in segregating such contributions,
ADDRESSES: Notification of intention to Employers who fail to transmit even if the participant contributions can
participate in the program must be sent promptly participant contributions, and reasonably be segregated much sooner.
in writing to: Pension Payback Program plan fiduciaries who fail to make The Department has also received
Pension and Welfare Benefits diligent efforts to collect those amounts similar information from a variety of
Administration, U.S. Department of in a timely manner, will violate the other sources. Such delays deprive
Labor, P.O. Box 77235, Washington, DC requirement that plan assets be held in participants of earnings on their
20013–7235. trust; in addition, such employers and contributions and increase the risk to
fiduciaries may be engaging in participants and their beneficiaries that
FOR FURTHER INFORMATION CONTACT:
Jeffrey Monhart, Pension Investigator, prohibited transactions.
their contributions will be lost due to
As was noted in the preamble to the
Office of Enforcement, Pension and the employer’s insolvency or
final regulation published in 1988, the
Welfare Benefits Administration, U.S. misappropriation by the employer.
Department of Justice takes the position
Department of Labor, Washington, DC
that, under 18 U.S.C. 664, the In order to better protect the security
(202) 219–4377. (This is not a toll-free
embezzlement, conversion, abstraction, of participant contributions to employee
number).
or stealing of ‘‘any of the moneys, funds, benefit plans, on December 20, 1995, the
SUPPLEMENTARY INFORMATION: Under a
securities, premiums, credits, property, Department of Labor published in the
current regulation, issued by the or other assets of any employee welfare
Department of Labor in 1988, assets of Federal Register a notice of proposed
benefit plan or employee pension rulemaking to revise the regulation at 29
an employee benefit plan include benefit plan, or any fund connected
amounts (other than union dues) that a CFR 2510.3–102 (60 FR 66036). The
therewith’’ is a criminal offense, and Department’s proposal would change
participant or beneficiary pays to an
that under such language, criminal the maximum period during which
employer, or amounts that a participant
prosecution may go forward in participant contributions to an
has withheld from his or her wages by
situations in which the participant employee benefit plan may be treated as
an employer, for contribution to the
contribution is not a plan asset for other than ‘‘plan assets’’ to the same
plan as of the earliest date on which
purposes of Title I of ERISA. 53 FR
such contributions can reasonably be number of days as the period in which
17628 (May 17, 1988). The final
segregated from the employer’s general the employer is required to deposit
regulation defined when participant
assets, but in no event to exceed 90 days withheld income taxes and employment
contributions become ‘‘plan assets’’ only
from the date on which such amounts taxes under rules promulgated by the
are received by the employer (in the for the purposes of Title I of ERISA and
the related prohibited transaction excise Internal Revenue Service (IRS). The
case of amounts that a participant or proposed regulation also solicited
beneficiary pays to an employer) or 90 tax provisions of the Code. The
Department reiterates that this comments on the advisability of other
days from the date on which such measures that the Department might
amounts would otherwise have been regulation may not be relied upon to bar
criminal prosecutions pursuant to 18 consider to address the problem of
payable to the participant in cash (in the delays in transmitting participant
case of amounts withheld by an U.S.C. 664.
Recent investigations conducted by contributions to plans. The comment
employer from a participant’s wages). 29
the Department have revealed numerous period for this proposal expired on
CFR 2510.3–102.
Except as provided in ERISA § 403(b), violations related to employers’ delay in February 5, 1996. The Department held
plan assets are required to be held in transmitting or failing to transmit to a public hearing on the proposal on
trust by one or more trustees.1 ERISA employee benefit plans amounts that a February 22 and 23, 1996, in
§ 403(a), 29 U.S.C. 1103(a). In addition, participant or beneficiary pays to an Washington, DC.
employer, or amounts that employers
1 ERISA § 403(b) contains a number of exceptions withhold from participants’ wages, for employee benefit plans and in particular in 401(k)
to the trust requirement for certain types of assets, contribution to the plans. Although the plans. As of October 31, 1995 there were 417
including assets which consist of insurance Department believes that in the vast employee contribution investigations open and 130
contracts, and for certain types of plans. In cases were closed during the year. More than $3,7
majority of contributory employee million has been recovered through voluntary
addition, the Secretary has issued a technical
release, T.V. 92–01, which provides that, with benefit plans, participant contributions compliance in situations where employee
respect to certain welfare plans (e.g., cafeteria are handled with integrity, evidence contributions were not placed in trust for
plans), the Department will not assert a violation of uncovered in ongoing investigations participants.
the trust or certain reporting requirements in any indicates that such delays are not
3 Of the 130 closed employee contribution cases,

enforcement proceeding, or assess a civil penalty 44, or 33.8 percent of closed cases, resulted in
for certain reporting violations, involving such uncommon.2 The recent enforcement findings of violations of ERISA’s fiduciary
plans solely because of a failure to hold participant provisions. This compares to a finding of fiduciary
contributions in trust. 57 FR 23272 (June 2, 1992), 2 In the Spring of 1995 PWBA began a project to violations in 12 percent of all other closed cases in
58 45359 (Aug. 27, 1993). investigate misuse of employee contributions to FY 95.
Federal Register / Vol. 61, No. 46 / Thursday, March 7, 1996 / Notices 9205

The Pension Payback Program from being available to persons involved person’s failure to transmit participant
in particularly serious delinquencies. contributions to pension plans in
In order to encourage persons who The program applies only to accordance with the time frames
have been delinquent in remitting delinquent participant contributions described in the participant
participant contributions to pension that are restored to pension plans no contribution regulation at 29 CFR
plans, the Department has determined later than September 7, 1996. 2510.3–102. The Program does not
to announce a voluntary compliance Restorative payments must relate to apply to criminal prosecutions brought
program to be known as the Pension amounts paid by participants or by State governments, although the
Payback Program. The program applies withheld by an employer from Department has determined not to
only to the restoration of participant participants’ wages for contribution to a affirmatively refer information to the
contributions and lost earnings to pension plan on or before April 5, 1996. States for criminal prosecution
employee pension benefit plans as Written notification of intention to concerning persons who voluntarily
defined in section 3(2) of ERISA. As participate in the Program must be restore participant contributions in
described in the following notice, the received by the Department no later accordance with the terms of the
Pension Payback Program contains two than September 7, 1996. Program.
principal elements. Under the proposed exemption, all
1. The Program will permit certain delinquent participant contributions Notice of Adoption of Voluntary
persons who are delinquent in the must be restored to the pension plan Compliance Program for Restoration of
remittance of participant contributions plus earnings from the date on which Delinquent Participant Contributions
to pension plans to avoid civil actions such contributions were paid to, or Pension Payback Program
brought by the Department of Labor and withheld by, the employer until such
money is restored to the plan. The The Department of Labor (the
Federal criminal prosecutions for such
earnings are calculated at the greater of: Department) today announced adoption
delinquencies if the conditions of the
(1) The amount that would have earned of the Pension Payback Program which
Program are met.
on the participant contributions during is designed to benefit workers by
2. A final class exemption under encouraging employers to restore
section 408(a) of ERISA that is being such period if applicable plan
provisions had been followed, or (2) the delinquent participant contributions
published in proposed form today will plus lost earnings to pension plans. This
govern these transactions. However, amount that would have earned on the
participant contributions during such program is targeted at ‘‘persons’’, as that
persons who participate in the Program term is defined at section 3(9) of the
transaction. However, persons who period using an interest rate equal to the
underpayment rate defined in section Employee Retirement Income Security
participate in the Program may rely on Act (ERISA), who failed to transfer
6621(a)(2) of the Internal Revenue Code
the proposed exemption participant contributions to pension
during such period. In the Department’s
notwithstanding any subsequent plans defined under section 3(2) of
view, this condition requires that the
modifications made in issuing the final ERISA, including section 401(k) plans,
earnings be calculated on an account by
exemption. Thus, on a temporary basis, in accordance with the time frames
account basis in order to mirror the
pending promulgation by the described by the Department’s
earnings the participants would have
Department of the final class exemption regulations, and thus violated Title I of
otherwise accrued. The underpayment
setting forth the condition for ERISA.
rate defined in section 6621(a)(2) is
retroactive relief, the Department will The conditional compliance program
based on the Federal short-term rate
not pursue enforcement against persons is available to certain persons who
determined quarterly by the Secretary of
who comply with the conditions of the the Treasury and is designed to reflect voluntarily restore delinquent
Program with respect to any prohibited market rates of interest rather than serve participant contributions to pension
transaction liability which may have a as a penalty. Courts have applied rates plans. Those who comply with the
risen as a result of a delay in forwarding determined under section 6621 in terms of the Program will avoid
participant contributions. The Internal awarding prejudgment interest in cases potential ERISA civil actions initiated
Revenue Service has advised the under Title I of ERISA. Martin v. by the department, the assessment of
Department of Labor that it will not seek Harline, No. 87–NC–115J (D. Utah Mar. civil penalties under section 502(l) of
to impose the Internal Revenue Code 31, 1992) 15 Emp. Ben. Cases (BNA) ERISA and Federal criminal
section 4975 (a) and (b) sanctions with 1138, 1153; Whitfield v. Cohen, 686 F. prosecutions arising from their failure to
respect to any prohibited transaction Supp. 188, 193 (E.D.N.Y. 1988); timely remit such contributions and
that is covered by the proposed class Whitfield v. Tomasso, 682 F. Supp. non-disclosure of the non-remittance.
exemption notwithstanding any 1287, 1306 (E.D.N.Y. 1988). The Department of Justice has indicated
subsequent changes to the proposed Except as provided in the final class its support for the Program. The
exemption when it is finalized, exemption, the Program does not afford Department of Labor will not pursue
provided that all the requirements of the relief from civil actions that may be enforcement against persons who
proposed class exemption are met. filed by persons other than the comply with the conditions of the
The conditions for each of the two Departments of Labor and Justice, and Program with respect to any prohibited
elements are the same and are set forth the Internal Revenue Service. Upon transaction liability which may have
in the following notice. In particular, finalization of the class exemption, arisen as a result of the person’s delay
the Program is available to a person only persons who have complied with its in forwarding the participant
if the delinquent participant conditions will not be subject to the contributions until promulgation by the
contributions withheld or received by restrictions of sections 406(a)(1) (A) Department of a final class exemption
an employer, excluding earnings, do not through (D), 406(b)(1) and 406(b)(2) of setting forth the conditions for
exceed the aggregate amount of ERISA and the sanctions resulting from retroactive exemptive relief. A notice of
participant contributions that were the application of section 4975 (a) and proposed exemption is being published
received by the employer for the (b) of the Code, by reason of section today in the Federal Register.
calendar year 1995. The purpose of this 4975(c)(1) (A) through (E) of the Code, Participation in the Program will be
limitation is to prevent the Program for transactions that result from such available to persons who rely on the
9206 Federal Register / Vol. 61, No. 46 / Thursday, March 7, 1996 / Notices

proposed exemption notwithstanding by, the employer until such money is (b) Has been convicted of a criminal
any subsequent modifications to the fully restored to the plan, offense involving employee benefit
final exemption. The Department has provided that the total of all outstanding plans at any time or any other offense
further determined not to affirmatively delinquent contributions on the involving financial misconduct which
refer information to the states for effective date of the Program, excluding was punishable by imprisonment
criminal prosecution concerning those earnings, does not exceed the aggregate exceeding one year for which sentence
persons who voluntarily restore amount of participant contributions that was imposed during the preceding
participant contributions in accordance were received or withheld from the thirteen years or which resulted in
with the Program. The Internal Revenue employees’ wages for calendar year actual imprisonment ending within the
Service has advised the Department of 1995. last thirteen years, nor has such person
Labor that it will not seek to impose (2) The Department is notified in entered into a consent decree with the
Internal Revenue Code section 4975 (a) writing no later than September 7, 1996 Department or been found by a court of
and (b) sanctions with respect to any of the person’s decision to participate in competent jurisdiction to have violated
prohibited transaction that is covered by the Program and provided with: (a) any fiduciary responsibility provisions
the proposed class exemption Copies of cancelled checks or other of ERISA during such period; or
notwithstanding any subsequent written evidence demonstrating that all (c) Has sought to assist or conceal the
changes to the proposed class participant contributions and earnings non-remittance of participant
exemption when it is finalized, have been restored to the employee contributions by means of bribery, graft
provided that all the requirements benefit plan; (b) the certification payments to persons with responsibility
specified in the proposed class described in paragraph (6) below; and for ensuring remittance of plan
exemption are met. (c) evidence of such bond as may be contributions or with the knowing
The Program only applies to certain required under section 412 of ERISA. assistance of persons engaged in
delinquent participant contributions (3) The person informs the affected ongoing criminal activity.
plus earnings that are restored to participants within 90 days following Signed at Washington, D.C., this 4th day of
pension plans no later than September the notification of the Department March 1996.
7, 1996. Such restorative payments must described in paragraph (2) above, that Olena Berg,
relate to amounts paid by participants or prior delinquent contributions and lost
withheld by an employer from Assistant Secretary for Pension and Welfare
earnings have been restored to their Benefits, U.S. Department of Labor.
participants’ wages for contribution to a accounts pursuant to the person’s
plan on or before thirty days following [FR Doc. 96–5391 Filed 3–6–96; 8:45 am]
participation in the Program and,
the date of this announcement. thereafter, provides a copy of such BILLING CODE 6510–29–M

Specifically, the Program applies to notification to the Department. If a


delinquent participant contributions statement of account or other scheduled
plus earnings, provided that the communication between the plan or its MISSISSIPPI RIVER COMMISSION
delinquent contributions outstanding on sponsor and the participants is
the effective date of the Program, Sunshine Act Meeting
scheduled to occur within this time
excluding earnings, do not exceed the period, such statement may include the TIME AND DATE: 8:30 a.m., March 25,
aggregate amount of participant notification required by this paragraph. 1996.
contributions that were received or (4) The person has complied with all PLACE: On board MISSISSIPPI V at the
withheld from the employees’ wages for conditions set forth in an exemption Foot of Eight Street, Cairo, IL.
calendar year 1995. Provided that the proposed by the Department today. STATUS: Open to the public.
contribution limitation described in the (5) At the time that the Department is
previous sentence is not exceeded, the MATTERS TO BE CONSIDERED: (1) Report
notified of the person’s determination to
Program will also apply, without limit, on general conditions of the Mississippi
participate in the Program, neither the
to the restoration of any earnings on River and Tributaries Project and major
Department nor any other Federal
delinquent participant contributions accomplishments since the last meeting;
agency has informed such person of an
that have been restored to the plan prior (2) Views and suggestions from
intention to investigate or examine the
to the effective date of this members of the public on any matters
plan or otherwise made inquiry with
announcement. pertaining to the Flood Control,
respect to the status of participant
The Program is available only if the Mississippi River and Tributaries
contributions under the plan.
following conditions are met: (6) Each person who applies for relief Project; and (3) District Commander’s
(1) All delinquent participant under the Program shall certify in report on the Mississippi River and
contributions are restored to the writing, under oath and pain of perjury, Tributaries Project in Memphis District.
employee benefit plan plus the greater that it is in compliance with all terms * * * * *
of (a) or (b) below. and conditions of the Program and, to TIME AND DATE: 8:30 a.m., March 26,
(a) The amount that otherwise would its knowledge, neither it nor any person 1996.
have been earned on the participant acting under its supervision or control PLACE: On board MISSISSIPPI V at City
contributions from the date on which with respect to the operation of an Front, Memphis, TN.
such contributions were paid to, or ERISA covered employee benefit plan: STATUS: Open to the public.
withheld by, the employer until such (a) Is the subject of any criminal MATTERS TO BE CONSIDERED: (1) Report
money is fully restored to the plan had investigation or prosecution involving on general conditions of the Mississippi
such contributions been invested during any offense against the United States; 4 River and Tributaries Project and major
such period in accordance with accomplishments since the last meeting;
applicable plan provisions, or 4 For purposes of this paragraph, an ‘‘offense’’
and (2) Views and suggestions from
(b) Interest at a rate equal to the includes criminal activity for which the Department
of Justice may seek civil injunctive relief under the members of the public on any matters
underpayment rate defined in section
Racketeer Influenced and Corrupt Organizations
6621(a)(2) of the Internal Revenue Code statute (18 U.S.C. 1964(b)). A ‘‘subject’’ is any a Federal investigator(s) who is authorized to
from the date on which such individual or entity whose conduct is within the investigate criminal offenses against the United
contributions were paid to, or withheld scope of any ongoing inquiry being conducted by States.

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