§1101 Coverage

Summary

Applies to most employee benefit plans described in section 1003(a) unless they are exempt under section 1003(b). It does not cover unfunded plans kept mainly to give deferred pay to a select group of management or highly paid employees, or agreements under section 736 of title 26 that pay retired or deceased partners or their successors. If a plan owns a security issued by an investment company registered under the Investment Company Act of 1940, the plan includes that security but not the investment company’s own assets. If a plan holds a guaranteed benefit policy from an insurer, the plan includes the policy but not the insurer’s other assets. The Secretary must issue proposed rules by June 30, 1997, allow public comment until September 30, 1997, and issue final rules by December 31, 1997. Those rules apply only to policies issued on or before December 31, 1998, and take effect for those policies at the end of the 18-month period after the final rules are issued. The rules must be practical and protect plans and participants. For policies that are not guaranteed benefit policies, the rules must require an independent plan fiduciary to approve the purchase, require insurers to disclose how general-account income and expenses are allocated and the policy’s actual return in annual reports, disclose available separate-account options and transfer rights and explain differing risks, and require prudent management of insurer general-account assets. Following these rules counts as meeting sections 1104, 1106, and 1107. No one is liable under this part or section 4975 of title 26 for conduct before the 18-month period after the final rules, except to prevent avoidance or in enforcement actions the Secretary brings under section 1132(a)(2) or (5) for breaches that also violate Federal or State criminal law. Federal criminal law still applies. Insurer: an insurance company or similar organization qualified to do business in a State. Guaranteed benefit policy: an insurance policy or contract that guarantees the amount of benefits. Policy: includes a contract.