OMB Number 1210-0091
Expiration Date: 05/31/2025
SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT 1995 SUBMISSIONS: SETTLEMENT AGREEMENTS BETWEEN A PLAN AND PARTY IN INTEREST
This ICR seeks approval for an extension of an existing control number.
Section 408(a) of the Employee Retirement Income Security Act of 1974 (ERISA) gives the Secretary of Labor the authority to "grant a conditional or unconditional exemption of any fiduciary or transaction, or class of fiduciaries or transactions, from all or part of the restrictions imposed by sections 406 and 407(a)." To grant an exemption under section 408, the Department of Labor (the Department) must determine that the exemption is:
administratively feasible;
in the interests of the plan and its participants and beneficiaries; and
protective of the rights of the participants and beneficiaries of such plan.
Reorganization Plan No. 4 of 19781 transferred authority to issue exemptions under section 4975 of the Internal Revenue Code (the Code), with certain enumerated exceptions, from the Secretary of the Treasury to the Secretary of Labor. As a result, the Secretary of Labor now possesses authority to issue individual and class exemptions from the prohibited transaction rules of ERISA and the Code under section 4975(c)(2) of the Code and 408(a) of ERISA.
This information collection request (ICR) covers two prohibited transaction class exemptions (PTEs) granted by the Department, both of which involve settlement agreements. These two exemptions are described below.
PTE 94-71. Granted on October 7, 1994, PTE 94-71 provides exemptive relief for transactions or activities that are authorized in advance by a settlement agreement to which the Department is a party. The purpose of the exemption is to facilitate voluntary settlements resulting from an investigation of an employee benefit plan conducted by the Department. The conditions for the PTE include the following information collections:
Written Notice. A party engaging in a transaction or activity authorized by a settlement agreement arising out of a Department investigation must provide written notice to the affected participants and beneficiaries of the plan at least 30 days prior to entry into the settlement agreement. The notice must contain an objective description of the transaction or activity, the approximate date on which the transaction will occur, the address of the regional or district office of the Department that negotiated the settlement agreement, and a statement informing participants and beneficiaries of their right to forward their comments to such office.
Pre-Approval. A copy of the notice and a description of the method of distribution must be approved in advance by the regional or district office of the Department which negotiated the settlement.
PTE 2003-39. Granted on December 31, 2003, and amended on June 15, 2010, PTE 2003-39 provides exemptive relief for transactions arising out of the settlement of actual or threatened litigation that involves:
the release by the plan or a plan fiduciary of legal or equitable claims against parties in interest in exchange for consideration, given by, or on behalf of, a party in interest to the plan in partial or complete settlement of the plan’s or the fiduciary’s claim;
an extension of credit by a plan to a party interest in connection with a settlement whereby the party in interest agrees to repay, over time, an amount owed to the plan in settlement of a legal or equitable claim by the plan or a plan fiduciary against the party in interest; and
the plan’s acquisition, holding, and disposition of employer securities received in settlement of litigation, including bankruptcy. Disposition of employer securities that are stock rights or warrants includes sale of these securities, as well as the exercise of the rights or warrants.
The relief is granted, provided certain conditions are met, including the following information collections:
Written Agreement. The terms of the settlement must be specifically described in a written agreement or consent decree.
Acknowledgement by Fiduciary. The authorizing fiduciary acting on behalf of the plan must acknowledge in writing that it is a fiduciary with respect to the settlement of the litigation on behalf of the plan.
Recordkeeping Requirement. The plan fiduciary must maintain records of the transaction for six years and must disclose the records on request to the Department and other interested persons.
The information collections are intended to protect the participants and beneficiaries in plans that engage in settlement agreements. The information collections of PTEs 94-71 and 2003-39 allow the Department to effectively enforce the terms of the exemption, ensure transactional compliance, and provide participants and beneficiaries with important information about transactions affecting their plan.
Regulations at 29 C.F.R. § 2520-107-1 established standards concerning the use of electronic media for maintenance and retention of records.
ERISA and the regulations thereunder provide general standards for the delivery of all information employee benefit plans must furnish to participants, beneficiaries, and other individuals under Title I of ERISA (29 C.F.R. § 2520.104b-1(b)). Plan administrators must use delivery methods reasonably calculated to ensure actual receipt of information by participants, beneficiaries, and other individuals (29 C.F.R. § 2520.104b-1(b)(1)). For example, in-hand delivery to an employee at his or her workplace is acceptable, as is material sent by first class mail. The Department amended ERISA’s delivery standards in 2002 by establishing a safe harbor for the use of electronic media to furnish disclosures (the 2002 safe harbor; 29 C.F.R. § 2520.104b-1(c)). The 2002 safe harbor was not and is not the exclusive means by which a plan administrator may use electronic media to satisfy the general standard. However, plan administrators who satisfy the conditions of the safe harbor are assured that the general delivery requirements have been satisfied.
In 2020, the Department issued a final regulation providing an additional safe harbor for plan administrators to use electronic media, as a default, to furnish disclosures to participants and beneficiaries of pension benefit plans subject to ERISA (29 C.F.R. § 2520.104b-31). The 2020 safe harbor allows plan administrators who satisfy specified conditions to provide participants and beneficiaries with a notice that certain disclosures will be made available on a website, or to furnish disclosures via email. Individuals who prefer to receive disclosures on paper can request paper copies of disclosures and opt out of electronic delivery entirely. The 2020 safe harbor does not supersede the 2002 safe harbor; the 2002 safe harbor remains in place as another option for plan administrators.
The Department assumes that 96.1 percent of required disclosures will be sent electronically,2 which the Department assumes will be distributed through means already used by respondents in the normal course of business. Thus, the Department assumes that the costs arising from electronic distribution will be negligible.
The information is not available elsewhere. If the required information collections are created for other purposes, they may be used to satisfy the requirements of these class exemptions.
Neither class exemption will have a significant economic impact on a substantial number of small entities. Participants and beneficiaries of small plans are entitled to receive information involving transactions based on a settlement agreement with the Department under PTE 94-71. Additionally, PTE 2003-39 requires written evidence of settlement transactions and fiduciary status. The information to be provided is readily available to plans in the documents provided by the parties during settlement agreement negotiations.
PTE 94-71. If PTE 94-71 did not contain notification requirements, affected participants and beneficiaries of the plan may not be aware of important information regarding the settlement agreement, such as an objective description of the transaction or activity, the approximate date on which the transaction will occur, the address of the regional or district office of the Department that negotiated the settlement agreement, and their right to forward their comments to such office.
PTE 2003-39. The written agreement and recordkeeping requirements in PTE 2003-39 will ensure that all settlements are memorialized in a written agreement that describes the transactions and that records necessary to enable certain persons (the Department, participants and beneficiaries) to determine whether the conditions of the exemption had been met are maintained and made available for inspection.
requiring respondents to report information to the agency more often than quarterly;
requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it;
requiring respondents to submit more than an original and two copies of any document;
requiring respondents to retain records, other than health, medical, government contract, grant-in-aid, or tax records for more than three years;
in connection with a statistical survey, that is not designed to produce valid and reliable results that can be generalized to the universe of study;
requiring the use of a statistical data classification that has not been reviewed and approved by OMB;
that includes a pledge of confidentiality that is not supported by authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use; or
requiring respondents to submit proprietary trade secret, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information's confidentiality to the extent permitted by law.
PTE 94-71. There are no special circumstances that would require the collection to be conducted in any manner described above.
PTE 2003-39. The exemption requires a plan fiduciary to maintain the records necessary to enable certain persons (the Department, participants and beneficiaries) to determine whether the conditions of the exemption had been met for a period of six years. The six-year recordkeeping requirement is consistent with the requirements in section 107 of ERISA, as well as general recordkeeping requirements for tax information under the Code.
Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.
Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years -- even if the collection of information activity is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.
The Department’s notice for the Federal Register as required by 5 CFR 1320.8(d) was published on July 9, 2024 (89 FR 56416) and solicited public comments on renewal of the ICR during a 60-day comment period. No comments were received.
No payments or gifts are provided to respondents.
There is no promise of confidentiality of the information. The class exemptions require that the information concerning the transactions be made available to interested parties.
There are no questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.
Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated. Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.
If this request for approval covers more than one form, provide separate hour burden estimates for each form.
Provide estimates of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.
The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14.
The Department expects that a combination of personnel would perform the tasks associated with the ICRs at an hourly labor cost of $69.41 for clerical personnel and $118.93 for accountants and auditors.3
PTE 94-71. A party that seeks to rely on the relief provided in the exemption must:
provide written notice to the affected participants and beneficiaries prior to entering into a settlement agreement that has been negotiated by the Department and the plan; and
obtain approval of the notice to participants and beneficiaries and the method by which it will be distributed from the regional or district office of the Department that negotiated the settlement. The notice, at a minimum, must include an objective description of the transaction or activity, the approximate date on which the transaction will occur, the address of the regional or district office of the Department that negotiated the settlement, and a statement informing participants and beneficiaries of their right to forward comments to such office.
Based on a review of EBSA investigations, the Department estimates that approximately three plans rely on PTE 94-71 each year.4 To estimate the number of participants receiving disclosures, the Department relies on the average number of participants in each pension plan, or 189 participants.5
The Department assumes that in-house staff of the entities involved will prepare the notice and that each notice will require one hour of labor from an accountant or auditor and 30 minutes of labor from clerical personnel.
For the 3.9 percent of notices assumed to be sent by mail, the preparation of each notice will require an additional two minutes of clerical personnel labor. The Department estimates that 22 notices will be mailed annually.6
The total hour burden and associated equivalent cost are shown in the table below.
TABLE 1.--Hour Burden and Equivalent Costs
|
Number |
Per Entity Hour Burden |
Hourly Labor Cost |
Total Hour Burden |
Equivalent Cost |
|
(A) |
(B) |
(C) |
(A × B) |
(A × B × C) |
Prepare Written Notice: Accountants and Auditors |
3 |
1 |
$118.93 |
3.00 |
$357 |
Prepare Written Notice: Clerical Personnel |
3 |
30/60 |
$69.41 |
1.50 |
$104 |
Distribute Written Notice: Clerical Personnel |
22 |
2/60 |
$69.41 |
44/60 |
$51 |
|
|
|
Total |
5 |
$512 |
PTE 2003-39. The exemption requires the terms of the settlement to be described in a written document. The exemption also requires the authorizing fiduciary acting on behalf of the plan to acknowledge in writing that it is a fiduciary with respect to the settlement of the litigation on behalf of the plan. Because these are usual and customary business practices, there is no additional hour burden attributed to this provision.
Summary
TABLE 2.--Estimated Annualized Respondent Cost and Hour Burden
Activity |
Number of Respondents |
Number of Responses per Respondent |
Total Responses |
Average Burden per Response |
Total Burden (Hours) |
Hourly Rate |
Equivalent Cost of Hour Burden |
PTE 94-71 |
|||||||
Prepare Written Notice: Accountants and Auditors |
3 |
1 |
3 |
1 |
3 |
$118.93 |
$357 |
Prepare Written Notice: Clerical Personnel |
3 |
1 |
3 |
30/60 |
1.50 |
$69.41 |
$104 |
Distribute Written Notice: Clerical Personnel |
3 |
7 |
22 |
2/60 |
44/60 |
$69.410 |
$51 |
Total |
3 |
|
567* |
|
5 |
- |
$512 |
*As previously discussed, the Department that approximately 3 plans with an average of 189 participants and beneficiaries use the exemption annually. Thus, the Department estimates that there are 567 responses (3 plans x 189 participants). |
|||||||
The cost estimate should be split into two components: (a) a total capital and start up cost component (annualized over its expected useful life); and (b) a total operation and maintenance and purchase of service component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start-up costs include, among other items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing equipment; and record storage facilities.
If cost estimates are expected to vary widely, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of purchasing or contracting out information collection services should be a part of this cost burden estimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60-day pre-OMB submission public comment process and use existing economic or regulatory impact analysis associated with the rulemaking containing the information collection, as appropriate.
Generally, estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons other than to provide information or keep records for the government, or (4) as part of customary and usual business or private practices.
As explained in the answer to question 12, the Department assumes that all work to prepare and distribute the notices will be performed in-house. The additional costs that will be paid by respondents to satisfy this information collection, which consist of printing and mailing costs, are described here.
This estimate assumes that 96.1 percent of the plan administrator’s notices will be provided to participants and beneficiaries electronically..7 Because the respondents will utilize existing electronic communications systems and integrated participant/beneficiary address databases, the Department assumes that the additional costs of distributing electronic notices will be de minimis.
For the remaining 3.9 percent of the notices, or 22 notices,8 the Department assumes a mailing cost of $0.78 per notice.9 The total cost burden is shown in the table below.
TABLE 3.--Cost Burden (Material and Postage Cost)
|
Number of Notices Sent by Mail |
Pages |
Paper and Print Costs |
Postage |
Equivalent Cost |
|
(A) |
(B) |
(C) |
(D) |
(A x B x C) |
Written Notice |
22 |
1 |
$0.05 |
$0.73 |
$17 |
|
|
|
|
Total |
$17 |
PTE 2003-39 does not require any action from the Department or impose any costs.
For PTE 94-71, the Department’s review of the notice may require some small additional time for the regional office of the Department involved in the settlement. However, the amount of additional time, over and above time otherwise devoted to the investigation, will be minimal, and the availability of exemptive relief under PTE 94-71 will not alter the basic nature of the Department’s course of conduct in its investigative activities. Thus, there should be no addition or reduction to program costs as a result of this exemption.
The burden estimates reflect a decrease in the number of participants in each plan, an increase in wage rates, an increase in postage rates, and an update to the estimated electronic disclosure rate. As a result, the number of responses has decreased by 243 responses, the hour burden has decreased by 11 hours, and the cost burden has decreased by $197.
There are no plans to publish the results of this collection of information.
information collection, explain the reasons that display would be inappropriate.
Not applicable.
There are no exceptions to the certification statement.
The use of statistical methods is not relevant to this collection of information.
1 43 FR 47713.
2 The Department estimates 96.1 percent of retirement investors receive disclosures electronically. This is the sum of the estimated share of retirement investors receiving electronic disclosures under the 2002 electronic disclosure safe harbor (58.3 percent) and the estimated share of retirement investors receiving electronic disclosures under the 2020 electronic disclosure safe harbor (37.8 percent).
3 Internal DOL calculation based on 2024 labor cost data. For a description of DOL’s methodology for calculating wage rates, see https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
4 Between 2019 and 2024, the Department identified 13 investigations that resulted in voluntary settlement agreements that either authorized or required future transaction that would otherwise be prohibited by ERISA section 406. This resulted in an annual average of 2.2 instances of reliance on the exemption. For the purposes of this analysis, the Department uses a conservative estimate of three instances.
5 Employee Benefits Security Administration, Private Pension Plan Bulletin: Abstract of 2022 Form 5500 Annual Reports, Table A1, (July 2024), https://www.dol.gov/sites/dolgov/files/ebsa/researchers/statistics/retirement-bulletins/private-pension-plan-bulletins-abstract-2022.pdf.
6 (3 plans × (189 participants per plan × 3.9 percent)) = 22 notices.
7 The Department estimates 96.1 percent of retirement investors receive disclosures electronically. This is the sum of the estimated share of retirement investors receiving electronic disclosures under the 2002 electronic disclosure safe harbor (58.3 percent) and the estimated share of retirement investors receiving electronic disclosures under the 2020 electronic disclosure safe harbor (37.8 percent).
8 (3 plans × (189 participants per plan × 3.9 percent)) = 22 notices.
9 $0.73 for first-class postage + $0.05 for material and printing costs of a one-page disclosure = $0.78.
| File Type | application/vnd.openxmlformats-officedocument.wordprocessingml.document |
| File Title | SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT 1995 SUBMISSIONS |
| Author | KellyC |
| File Modified | 0000-00-00 |
| File Created | 2025-05-19 |