§1101 Coverage

Summary

Applies to most employee benefit plans covered by section 1003(a), except two kinds: unfunded plans kept mainly to give deferred pay to a small group of top managers or very highly paid workers, and partner-payment agreements described in section 736 of the tax code. When a plan buys a security from a registered investment company, the plan owns that security but not the investment company’s other assets. When a plan holds a guaranteed benefit insurance policy, the plan owns the policy but not the insurer’s other assets. "Insurer" means an insurance company that can do business in a State. A "guaranteed benefit policy" is a policy or contract that promises a fixed benefit amount; it includes any surplus in a separate account but not other parts of that separate account. A "policy" also means a contract. The Secretary must write rules to say when an insurer’s general account assets count as plan assets. Proposed rules had to be issued by June 30, 1997, be open for comment until September 30, 1997, and final rules had to be issued by December 31, 1997. Those rules only apply to policies issued on or before December 31, 1998, and they take effect 18 months after the rules are final for those policies. The rules must be practical and protect plans and people in the plans. For policies that are not guaranteed benefit policies, the rules must require an independent plan fiduciary to approve the purchase, require insurers to explain how income and costs are allocated and show actual returns in reports and policy documents, tell whether separate-account options exist and how they differ in risk, and require insurers to manage their general account assets with care and skill. Following these rules counts as following the law’s fiduciary duties for those general account assets. No one can be held liable under this part for conduct that happened before the 18-month period after the final rules, except to stop avoidance of the rules or in certain enforcement or criminal cases.