§1103 — Title 29 Labor | U.S. Code

Summary

Plan money must be kept in trust and managed by one or more trustees. The trustees must be named in the trust or plan documents or picked by a named fiduciary. Once they accept the job, the trustees have sole power to manage the plan’s assets, unless the plan says a named fiduciary (who is not a trustee) can give directions that follow the plan, or unless the plan legally gives investment duties to one or more investment managers. The rule to use a trustee does not apply in certain cases, such as insurance contracts or assets held by an insurance company, plans made up of individual retirement accounts, some small-employee or employee-owned plans, certain exempt plans, 403(b) custodial accounts, and a specific unfunded arrangement where an employer owned entirely by employees promises to make up benefits people lost from a former employer’s pension before that pension became covered by this law. Plan assets must never be used to benefit the employer. They must only pay benefits to workers and their beneficiaries and cover reasonable plan expenses. There are limited exceptions that allow returning money to an employer when a contribution or withdrawal payment was made by mistake (returns allowed within one year for ordinary plans and within 6 months for multiemployer plans after the plan administrator finds the mistake), or when contributions are tied to tax qualification or deductibility (returns allowed within one year after an adverse qualification or disallowance of a deduction), and for overpaid withdrawal liability (returnable within 6 months after the overpayment is found). When a pension plan ends, its assets are allocated under the rules for terminating plans. When a welfare plan ends, assets are distributed according to the plan’s terms, unless the Secretary’s rules say otherwise.

Title 29, §1103

Labor — Source: USLM XML via OLRC

(a)Except as provided in subsection (b), all assets of an employee benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall be either named in the trust instrument or in the plan instrument described in section 1102(a) of this title or appointed by a person who is a named fiduciary, and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that—

(1)the plan expressly provides that the trustee or trustees are subject to the direction of a named fiduciary who is not a trustee, in which case the trustees shall be subject to proper directions of such fiduciary which are made in accordance with the terms of the plan and which are not contrary to this chapter, or

(2)authority to manage, acquire, or dispose of assets of the plan is delegated to one or more investment managers pursuant to section 1102(c)(3) of this title.

(b)The requirements of subsection (a) of this section shall not apply—

(1)to any assets of a plan which consist of insurance contracts or policies issued by an insurance company qualified to do business in a State;

(2)to any assets of such an insurance company or any assets of a plan which are held by such an insurance company;

(3)to a plan—

(A)some or all of the participants of which are employees described in section 401(c)(1) of title 26; or

(B)which consists of one or more individual retirement accounts described in section 408 of title 26;

(4)to a plan which the Secretary exempts from the requirement of subsection (a) and which is not subject to any of the following provisions of this chapter—

(A)part 2 of this subtitle,

(B)part 3 of this subtitle, or

(C)subchapter III of this chapter; or

(5)to a contract established and maintained under section 403(b) of title 26 to the extent that the assets of the contract are held in one or more custodial accounts pursuant to section 403(b)(7) of title 26.

(6)Any plan, fund or program under which an employer, all of whose stock is directly or indirectly owned by employees, former employees or their beneficiaries, proposes through an unfunded arrangement to compensate retired employees for benefits which were forfeited by such employees under a pension plan maintained by a former employer prior to the date such pension plan became subject to this chapter.

(c)(1)Except as provided in paragraph (2), (3), or (4) 11 See References in Text note below. or subsection (d), or under section 1342 and 1344 of this title (relating to termination of insured plans), or under section 420 of title 26 (as in effect on December 29, 2022), the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.

(2)(A)In the case of a contribution, or a payment of withdrawal liability under part 1 of subtitle E of subchapter III—

(i)if such contribution or payment is made by an employer to a plan (other than a multiemployer plan) by a mistake of fact, paragraph (1) shall not prohibit the return of such contribution to the employer within one year after the payment of the contribution, and

(ii)if such contribution or payment is made by an employer to a multiemployer plan by a mistake of fact or law (other than a mistake relating to whether the plan is described in section 401(a) of title 26 or the trust which is part of such plan is exempt from taxation under section 501(a) of title 26), paragraph (1) shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake.

(B)If a contribution is conditioned on initial qualification of the plan under section 401 or 403(a) of title 26, and if the plan receives an adverse determination with respect to its initial qualification, then paragraph (1) shall not prohibit the return of such contribution to the employer within one year after such determination, but only if the application for the determination is made by the time prescribed by law for filing the employer’s return for the taxable year in which such plan was adopted, or such later date as the Secretary of the Treasury may prescribe.

(C)If a contribution is conditioned upon the deductibility of the contribution under section 404 of title 26, then, to the extent the deduction is disallowed, paragraph (1) shall not prohibit the return to the employer of such contribution (to the extent disallowed) within one year after the disallowance of the deduction.

(3)In the case of a withdrawal liability payment which has been determined to be an overpayment, paragraph (1) shall not prohibit the return of such payment to the employer within 6 months after the date of such determination.

(d)(1)Upon termination of a pension plan to which section 1321 of this title does not apply at the time of termination and to which this part applies (other than a plan to which no employer contributions have been made) the assets of the plan shall be allocated in accordance with the provisions of section 1344 of this title, except as otherwise provided in regulations of the Secretary.

(2)The assets of a welfare plan which terminates shall be distributed in accordance with the terms of the plan, except as otherwise provided in regulations of the Secretary.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsecs. (a)(1) and (b)(4), (6), was in the original “this Act”, meaning Pub. L. 93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of this Act to the Code, see

Short Title

note set out under section 1001 of this title and Tables. Paragraph (2), (3), or (4), referred to in subsec. (c)(1), probably should be a reference only to par. (2) or (3) of subsec. (c), as par. (3) was struck out, and par. (4) was redesignated as (3), by Pub. L. 101–239, title VII, § 7881(k), Dec. 19, 1989, 103 Stat. 2443.

Amendments

2022—Subsec. (c)(1). Pub. L. 117–328 substituted “(as in effect on

December 29, 2022)” for “(as in effect on

July 31, 2015)”. 2015—Subsec. (c)(1). Pub. L. 114–41 substituted “

July 31, 2015” for “

July 6, 2012”. Amendment was executed to reflect the probable intent of Congress notwithstanding an extra closing quotation mark in the directory language. 2012—Subsec. (c)(1). Pub. L. 112–141 substituted “

July 6, 2012” for “

August 17, 2006”. 2006—Subsec. (c)(1). Pub. L. 109–280 substituted “

August 17, 2006” for “

October 22, 2004”. 2004—Subsec. (c)(1). Pub. L. 108–357 substituted “

October 22, 2004” for “

April 10, 2004”. Pub. L. 108–218 substituted “

April 10, 2004” for “

December 17, 1999”. 1999—Subsec. (c)(1). Pub. L. 106–170 substituted “

December 17, 1999” for “

January 1, 1995”. 1994—Subsec. (c)(1). Pub. L. 103–465 substituted “1995” for “1991”. 1990—Subsec. (c)(1). Pub. L. 101–508 inserted “, or under section 420 of title 26 (as in effect on

January 1, 1991)” after “insured plans”. 1989—Subsecs. (b)(3), (5), (c)(2)(A)(ii), (C). Pub. L. 101–239, § 7891(a)(1), substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text. Subsec. (b)(3). Pub. L. 101–239, § 7894(e)(3), redesignated cls. (i) and (ii) as subpars. (A) and (B), respectively, struck out “, to the extent that such plan’s assets are held in one or more custodial accounts which qualify under section 401(f) or 408(h) of title 26, whichever is applicable” before the semicolon in subpar. (B), and inserted concluding provision “to the extent that such plan’s assets are held in one or more custodial accounts which qualify under section 401(f) or 408(h) of title 26, whichever is applicable.” Subsec. (c)(2)(A). Pub. L. 101–239, § 7894(e)(1)(A), in introductory provisions, made technical amendment to reference to part 1 of subtitle E of subchapter III of this chapter to correct reference to corresponding part of original Act, requiring no change in text, and in cls. (i) and (ii), inserted “if such contribution or payment is” before “made by an employer”. Subsec. (c)(3), (4). Pub. L. 101–239, § 7881(k), redesignated par. (4) as (3) and struck out former par. (3) which read as follows: “In the case of a contribution which would otherwise be an excess contribution (as defined in section 4979(c) of title 26) paragraph (1) shall not prohibit a correcting distribution with respect to such contribution from the plan to the employer to the extent permitted in such section to avoid payment of an excise tax on excess contributions under such section.” 1987—Subsec. (c)(2)(B). Pub. L. 100–203, § 9343(c)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “If a contribution is conditioned on qualification of the plan under section 401, 403(a), or 405(a) of title 26, and if the plan does not qualify, then paragraph (1) shall not prohibit the return of such contributions to the employer within one year after the date of denial of qualification of the plan.” Subsec. (c)(3). Pub. L. 100–203, § 9343(c)(2), substituted “section 4979(c) of title 26” for “section 4972(b) of title 26”. 1980—Subsec. (a)(1). Pub. L. 96–364, § 402(b)(2), substituted “chapter” for “subchapter”. Subsec. (b)(6). Pub. L. 96–364, § 411(c), added par. (6). Subsec. (c)(1). Pub. L. 96–364, § 310(1), inserted reference to par. (4). Subsec. (c)(2)(A). Pub. L. 96–364, § 410(a), substituted provisions relating to contributions or payments of withdrawal liability under part 1 of subtitle E of subchapter III of this chapter made by an employer to a plan by a mistake of fact, and by an employer to a multiemployer plan by a mistake of fact or law, for provisions relating to contributions made by an employer by a mistake of fact. Subsec. (c)(4). Pub. L. 96–364, § 310(2), added par. (4).

Statutory Notes and Related Subsidiaries

Effective Date

of 2022 AmendmentAmendment by Pub. L. 117–328 applicable to transfers made after Dec. 29, 2022, see section 606(c) of Pub. L. 117–328, set out as a note under section 420 of Title 26, Internal Revenue Code.

Effective Date

of 2006 AmendmentAmendment by Pub. L. 109–280 applicable to plan years beginning after 2007, see section 108(e) of Pub. L. 109–280, set out as a note under section 1021 of this title.

Effective Date

of 1999 AmendmentAmendment by Pub. L. 106–170 applicable to qualified transfers occurring after Dec. 17, 1999, see section 535(c)(1) of Pub. L. 106–170, set out as a note under section 420 of Title 26, Internal Revenue Code.

Effective Date

of 1990 AmendmentAmendment by Pub. L. 101–508 applicable to qualified transfers under section 420 of title 26 made after Nov. 5, 1990, see section 12012(e) of Pub. L. 101–508, set out as a note under section 1021 of this title.

Effective Date

of 1989 AmendmentAmendment by section 7881(k) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Pension Protection Act, Pub. L. 100–203, §§ 9302–9346, to which such amendment relates, see section 7882 of Pub. L. 101–239, set out as a note under section 401 of Title 26, Internal Revenue Code. Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7891(f) of Pub. L. 101–239, set out as a note under section 1002 of this title. section 7894(e)(1)(B) of Pub. L. 101–239 provided that: “The

Amendments

made by subparagraph (A) [amending this section] shall take effect as if included in section 410 of the Multiemployer Pension Plan

Amendments

Act of 1980 [Pub. L. 96–364].” Amendment by section 7894(e)(3) of Pub. L. 101–239 effective, except as otherwise provided, as if originally included in the provision of the Employee Retirement Income Security Act of 1974, Pub. L. 93–406, to which such amendment relates, see section 7894(i) of Pub. L. 101–239, set out as a note under section 1002 of this title.

Effective Date

of 1980 AmendmentAmendment by Pub. L. 96–364 effective Sept. 26, 1980, except as specifically provided, see section 1461(e) of this title. Amendment by section 410(a) of Pub. L. 96–364 effective Jan. 1, 1975, except with respect to contributions received by a collectively bargained plan maintained by more than one employer before Sept. 26, 1980, see section 410(c) of Pub. L. 96–364, set out as a note under section 401 of Title 26, Internal Revenue Code.

Regulations

Secretary authorized, effective Sept. 2, 1974, to promulgate

Regulations

wherever provisions of this part call for the promulgation of

Regulations

, see section 1031 and 1114 of this title. Applicability of

Amendments

by Subtitles A and B of Title I of Pub. L. 109–280For special rules on applicability of

Amendments

by subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub. L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see section 104, 105, and 106 of Pub. L. 109–280, set out as notes under section 401 of Title 26, Internal Revenue Code.

§1103 Establishment of Trust

Summary

Title 29, §1103

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