Explanation of Terms
According to Southern California-based (401k) Enginuity (www.401kenginuity.com), twenty-year veteran in developing and running 401(k) administration and 401(k) software and recordkeeping systems, the Internet will be the primary delivery system for 401(k)s by 2007. Many web-based 401(k) plans will run on administration and recordkeeping platforms that plan providers will outsource to 401k specialists and 401k Application Service Providers (ASP).
- The term participant means, any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit. See Section 3(7) of the Employee Retirement Income Security Act (ERISA) .
The availability of material for inspection to a plan participant pursuant to this paragraph does not constitute a determination by the Service that such person is a plan participant for any purpose other than the disclosure of documents.
- The term plan participant includes, but is not limited to:
- a current plan participant;
- former employees, such as certain retired and terminated employees who have a nonforfeitable right to benefits under the plan;
- a beneficiary of a deceased former employee who is receiving benefits or entitled to receive future benefits under the plan; and
- an administrator, executor, or trustee, or trustee of the estate of a deceased participant.
- The term authorized representative means the representative of a plan participant designated by the plan participant in a written authorization to inspect material described in IRC 6104(a)(1)(B). The written authorization should specify that the representative is authorized to inspect the material.
- The term application for a determination letter includes the documents which the applicant files with respect to the qualification of a pension, profit-sharing, or stock bonus plan under IRC 401(a) or 403(a), and individual retirement accounts and annuities under IRC 408(a), (b) and (c). This includes only applications for determination letters filed with the Service after September 2, 1974.
- A supporting document is any statement or document submitted in support of an application for a determination letter which is not specifically required by the application form or the Service.
The advantages of web-based online 401(k) plans are obvious to today's workers, and include use conveniences, real-time monitoring and reporting, and instant re-allocation of their retirement assets. The internet has also dramatically reduce the cost of 401(k) plan administration, saving plan sponsor 50% or more in ongoing fees and costs when compared to the older traditional labor-intensive plans. Outsourcing of 401(k) functions by plan providers will extend the trend towards lower cost, high-quality 401(k) products.
401(k) plan providers of all types, financial institutions including banks, insurance companies, brokerages, mutual fund companies, credit unions, and third-party administrators, are now actively outsourcing 401(k) administration and recordkeeping tasks to 401(k) ASPs --- vendors such as 401k Enginuity, whose sole function is to maintain, updated and supervise software-based 401(k) administration and recordkeeping systems on behalf of plan providers. 401(k) ASP vendors are responsible for all routine day-to-day 401(k) recordkeeping and administration functions, thus allowing the plan providers to reduce internal staff, eliminate the expense and complications of licensing, housing and running hardware and 401(k) administration software in-house. Plan providers can refocus and concentrate their efforts on to the needs of their plan sponsors and plan participants, and rely upon the outsourced ASP 401(k) vendor for the recordkeeping and technical "backbone" supporting providers' Internet-based plans. It is inevitable that some of this 401(k) outsourcing to ASPs will include secondary outsourcing of certain non-critical low-level routine day-to-day tasks to non-US locations, where labor costs are less yet the expertise is abundant.
Documents That May Be Inspected
- Generally, material open to public inspection under IRC 6104(a)(1)(B) includes the application for a determination letter filed after September 2, 1974, (if the plan has 26 or more participants) and supporting documents and letters or documents issued by the Service after that date. However, information with regard to compensation (including deferred compensation) of any individual must be excised.
- Documents relating to plans with 25 or fewer participants are available to plan participants only.
- Letters or documents issued by the Service which are disclosable under IRC 6104(a)(1)(B)(iv) include, but are not limited to:
- determination letters relating to the qualification of a plan, account or annuity;
- technical advice memoranda relating to the issuance of such determination letters;
- technical advice memoranda relating to the continuing qualification of a plan, account or annuity previously determined to be qualified, or relating to the qualification of a plan, account or annuity for which no determination letter has been issued;
- letters or documents revoking or modifying any prior favorable determination letter or denying the qualification of a plan, account or annuity for which no determination letter has been issued;
- determination letters relating to the exemption from tax of a trust, or a custodial account described in section 401(f); or
- opinion letters or notification letters relating to the acceptability of the form of any master, prototype or other such plan or account or notification letters issued with respect to pattern plans.
- Generally, an administrative case file will be established for each complete determination letter application received under ERISA. This employee plan file will consist of the application, attached supporting documents, and other materials described in this section.
- The EP Specialist is responsible for properly arranging the material in the administrative file.
- The right side of the administrative file may contain the following disclosable documents open to public inspection:
- Form 4646C ( EP Determination Record );
- index of administrative case file, if applicable;
- most recent power of attorney, determination letter, application form and Alert Guidelines Worksheets submitted with the application;
- written final correspondence between the Service and the applicant with respect to the request for a determination and its qualification of the plan;
Only letters or documents representing final Service action should be open to inspection<
A letter only proposing revocation of a prior favorable determination letter is not open to public inspection.
- written comments and such related correspondence by interested parties such as the Department of Labor and the Pension Benefit Guaranty Corporation;
- amendments on initial qualification;
- plans, group annuity contracts, and trust instruments, if any;
- supplemental data supporting the application;
This includes statistical analyses such as turnover data, coverage or allocation schedules, balance sheets, and receipts and disbursements statements.
- miscellaneous materials and correspondence relating to the application, such as specimen copies of individual life insurance contracts and formal announcements to employees; and
- Form 5446 ( Public Inspection Record ), which is used to record the instances when members of the public have examined the case file, as permitted by the applicable disclosure regulations.
- See Exhibit 10-1 for a list of other employee plans documents open for inspection.
- The left side of the administrative file may contain the following documents not opened to public inspection under IRC 6104;
- Form(s) 5464, Case Chronology Record ;
- Form 5621, Technical Analysis Control Sheet ;
- Form 5302, Employee Census ;
Form 5302 is obsolete as of October 1993.
- a copy of the official report when the Service makes an investigation regarding the facts as submitted by the applicant or in comments submitted by interested parties;
- work papers prepared by the EP Specialist, including reviewers' memoranda and responses thereto, and any Alert Guidelines Worksheets (or locally developed supplemental worksheets);
- Form 5402, Appeals Transmittal Memorandum and Supporting Statement , along with any work papers prepared by Appeals;
Each category of material listed in paragraphs (a) through (f) that includes multiple items should be arranged chronologically.
- Examination and deduction referral information.
- Form 5530, Voucher Update Document. (Note: Form 5530 was obsoleted in April 1988.)
- application for qualification and related documents for plans which have 25 or fewer participants; and
- Form 5310, Schedule A, Distributable Benefits to Individual Participants;
- Form 6088, Distributable Benefits from Employee Benefit Plans ; and
Schedule A of Form 5310 and the participant data schedule on Form 6088 are not public information under IRC 6104.
- other miscellaneous materials not disclosable under disclosure regulations. (These materials include pertinent information from the Pre-ERISA plan file such as the determination letter, worksheets and application.)
Withholding Certain Information
Inspection by Plan Participants
- IRC 6104(a)(1)(C) provides that certain names and compensation shall not be open to public inspection.
- The Service will withhold from public inspection (including inspection by a plan participant or his authorized representative) information contained in any application/document, or other documents filed by the applicant or issued by the Service from which the compensation (including deferred compensation) of an individual can be ascertained. The compensation information may be excised.
- IRC 6104(a)(1)(D) provides that, upon the request of the organization submitting any supporting papers described in IRC 6104(a)(1)(B), the Service shall withhold from public inspection any information which it determines relates to any trade secret, patent, process, style of work or apparatus if the disclosure of such information would adversely affect the organization.
- A request to withhold information should be filed as a separate document with the same Service office where the application is or was filed. It should clearly identify the material desired to be withheld (the document, page, paragraph, and line) and the specific reasons why the information should not be open to public inspection.
- IRC 6104(a)(1)(D) also provides that the Service shall withhold from public inspection any information contained in supporting papers which the service determines would adversely affect the national defense.
Public Inspection of Documents
- In the case of a pension, profit-sharing or stock bonus plan (or an individual retirement arrangement) referred to in IRC 6104(a)(1)(B) with 25 or fewer participants, the application for a determination letter filed after September 2, 1974, supporting documents, and letters or documents issued by the Service after that date may only be inspected by a plan participant or his/her authorized representative.
- Information with regard to compensation (including deferred compensation) of any individual, as shown on Form 5302, must be deleted.
Form 5302 is obsoleted as of November 1993.
- When a plan with 25 or fewer plan participants files an application or annual return which shows that the number of participants has increased to 26 or more, all prior applications, or supporting documents, and other documents received or issued by the Service after September 2, 1974, will be open to public inspection regardless of the number of plan participants indicated on any prior application.
- When a plan with 26 or more plan participants files an application which shows that the number of participants has decreased to 25 or fewer, supporting documents relating to such application, and any other documents received or issued by the Service after the date of receipt of that application may only be inspected by a plan participant or his/her authorized representative.
Materials which were previously open to public inspection will remain open to public inspection.
- The application for a determination letter and supporting documents will be open to inspection by a plan participant or his/her authorized representative whether or not the application is withdrawn by the applicant and whether or not the Service determines that the plan is qualified.
- In dealing with questions from plan participants regarding the status of an application for termination of a plan, the participant may be advised that the application is pending. Upon completion of Service action, the participant may be advised as to whether or not the application has been approved.
- Questions relating to plan benefits of terminated plans should be directed to the plan administrator, who is responsible for notifying the participants of their benefits under the plan.
- The application for termination of a plan (Form 5310) and the determination letter issued by the Service is available for inspection by a plan participant or his/her authorized representative.
Contents of Written Request
The request, at a minimum, should contain:
- Any material open to inspection under IRC 6104(a)(1)(B) will be available for public inspection only upon written request.
In the case of a plan participant (or an authorized representative) desiring to inspect material with respect to a plan of 25 or fewer participants, the requester should include written evidence of identity and a statement that the requester is a plan participant.
- the name, address, Employer Identification Number (EIN) of the organization, and the plan number (if known), being inspected or copied; and
- the address for notification of the determination as to whether the request will be granted and/or where the copies should be sent.
Requests to inspect material with respect to a plan of not more than 25 participants made by authorized representatives should also include the written authorization.
Material requested for inspection should be described in reasonably sufficient detail so that Service personnel can locate it without the necessity of contacting the requester for further explanation or
if a requester desires to inspect the material at a particular District Director's office, it should be stated in the request. If not, it will be assumed that the inspection will take place at the office where the request was sent.
If an organization has more than one application for a determination letter open to public inspection under IRC 6104(a)(1)(B), only the most recent application and supporting documents will be open for inspection unless the request states otherwise.
If a requester only desires copies, it should be stated in the request.
The request for copies need not be in writing if made at the time of the inspection. Any copies furnished will be certified upon request.
Where to Send Requests
Inspection of Requested Documents
- Requests for IRC 6104(a)(1)(B) documents should be sent to the Key District Director (Attention: Disclosure Officer) who has jurisdiction of the filed application and related material.
- It is understandable that requesters may not know this. Therefore, a requester may send the request to any District Director. See section 10.7, Responsibility for Processing Requests , of this Chapter.
- A person requesting inspection will be notified when the material will be made available.
- Inspection will be allowed only in the presence of Service personnel and during regular business hours.
- The material will be made available at such times as not to interfere with its use by Service personnel or to exclude inspection by other people.
- Requesters may take notes of the material open for public inspection under IRC 6104(a)(1)(B).
- Copies may be made manually or, if the requester provides the equipment, photographically at the place of inspection.
Photographic copying is subject to reasonable supervision with regard to the facilities and equipment to be employed.
- There is no charge for inspection of IRC 6104(a)(1)(B) documents on the Service's premises.
- There will be a charge for copies furnished by the Service of $1.00 for the first page and $.15 for each additional page. See Chapters 5.6.3 and 7.8 of this Handbook.
- Any copies furnished will be certified upon request. See Chapter 6 of this Handbook.
Responsibility for Processing Requests
- Responsibility for IRC 6104(a)(1)(B) disclosures is vested in the district Disclosure Officers within the Key District Director offices. This responsibility may be shared with the Employee Plan personnel.
- Any receiving district Disclosure Officer will control all requests for IRC 6104(a)(1)(B) information and check the request for the purpose of perfecting it, e.g., as to whether IRC 6103(c) has been conformed to regarding the designation of the person or persons to whom the information is to be disclosed including a statement that requester is a "plan participant" if the requester advises that the plan has 25 or fewer participants; and the requested material is adequately described.
- Once a request is in good order, it should be forwarded to the Key District Director responsible for the employee plan. See Exhibits 10-2 and 10-3 for a list of Employee Plans Key Districts and Employee Plans Associate Districts, respectively.
- The district Disclosure Officer in the Key District Director's office will assemble the information and carry out the requester's instructions, i.e., mail copies or forward the material to the designated district office (or Headquarters) for inspection.
- The district Disclosure Officer should ensure that only that information which is open for public inspection described in IRC 6104(a)(1)(B) is made available to the requester.
- Requests for documents relating to the following subject matter should be directed to the Office of Governmental Liaison and Disclosure, Headquarters, for handling.
- Master and Prototype Plans sponsored by banks, insurance companies, trade or professional associations, or regulated investment companies;
- Master and Prototype Plans or Regional Prototype Plans submitted by mass submitters;
- Prototype Individual Retirement Accounts;
- Employer Sponsored Individual Retirement Accounts; or
- Non-Bank Trustee Files.
Public Inspection of Annual Information Returns
- The information required to be furnished by IRC 6058, together with the names and addresses of such organizations and trusts shall be made available to the public at such times and in such places as the Secretary of Treasury may prescribe.
- Returns in this category include:
- Form 990P, Annual Return of Fiduciary of Employer Pension or Profit-Sharing Trust (filed prior to 1975);
Form 990-P is obsoleted as of April 1988.
- Form 5500, Annual Return/Report of Employee Benefit Plan (with 100 or more participants);
- Form 5500 C, Annual Return/Report of Employee Benefit Plan (with fewer than 100 participants, none of whom is an owner- employee);
Forms 5500C and 5500R were merged into Form 5500C/R and Form 5500C is obsolete.
- Form 5500 K, Annual Return/Report of Employee Pension Benefit Plan for Sole Proprietorships and Partnerships (with fewer than 100 participants and at least one owner-employee participant;
This form is obsolete after the 1993 plan year.
- Form 5500 G, Annual Return/Report of Employee Benefit Plan (For Government and Certain Church Plans);
This form is obsolete for plan years beginning after 1981.
- Form 5500 Schedule A, Insurance Information ;>
- Form 5500 Schedule B, Actuarial Information (with respect to defined benefit plan).
Schedule B filed with Form 5500-EZ is not available to the public beginning with return year 1993.
- Form 5500 Schedule C, Service Provider and Trustee Information ;
- Form 5500 Schedule G, Financial Schedules ;
- Form 5500 C/R, Return Report of Employee Benefit Plan (with fewer than 100 participants);
- Form 5500 EZ, Annual Return of One-Participant (owners & their spouses) Pension Benefit Trust; and
- Form 5500 Schedule P, Annual Return of Fiduciary of Employee Benefit Trust ;
- Prior to 1975, Form 990P, Annual Return of Fiduciary of Employer Pension or Profit-Sharing Trust , was filed by qualified pension plan trusts. Copies of these returns should be requested by mail from the Philadelphia Service Center.
- As of 1975, the Form 5500 series of returns replaced the Form 990P and Forms 4848 and 4849 (which were not open for public inspection).
Forms 4848 and 4849 are obsolete.
- Pursuant to agreement between the Service and the Department of Labor (DOL), public inspection of all categories of Form 5500 (except Form 5500EZ, Schedule B which is not open for public inspection) is handled by DOL. The Service provides DOL with microfiche copies for this purpose. DOL does not receive copies of Form 5500EZ.
- Fees for Form 5500 series are established in accordance with DOL policies. Requests for copies of these returns should be sent to: Public Disclosure, Room N-5638
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, D.C. 20210
- Any requests received by district offices for copies of Form 5500 series which the Service has not yet turned over to DOL should be forwarded to the appropriate Service Center, Attention: Taxpayer Service, for processing.
- There will be a charge for copies furnished by the Service of $1.00 for the first page and $.15 cents for each additional page. See Chapter 5 of this Handbook for billing instructions. See Exhibit 10-3 for Service Center addresses.
- Forms 5500 filed with respect to employee welfare benefit plans are not governed by IRC 6104. These reports are required by section 104(a)(1) of Title I of ERISA and are open to public inspection under Section 106 of Title I. Requests for Forms 5500 should be sent to the Department of Labor address indicated in paragraph (6) above.
Disclosure of Returns and Return Information to the Department of Labor and Pension Benefit Guaranty Corporation
- In accordance with IRC 6103(l)(2) and 26 CFR 301.6103(l)(2), the Service may disclose certain returns and return information to the Department of Labor or the Pension Benefit Guaranty Corporation for purposes of the administration of Titles I or IV of the Employment Retirement Income Security Act of 1974 (ERISA).
- Returns and return information may also be disclosed to these agencies for the purpose of conducting research and studies authorized by ERISA. Instructions regarding such disclosures are described in section 29.5 of this Handbook.
- Nothing in this text shall be construed to deny officers and employees of the Department of Labor or the Pension Benefit Guaranty Corporation the right to inspect return information available to the public under IRC 6104.
Employee Plan Master File
- The Employee Plan Master File (EPMF) is the Service's working file of data from applications filed with respect to the qualification or the exemption from tax of a pension, profit-sharing, or stock bonus plan as well as from returns.
- The input is now mostly taken from the Annual Information Return (public inspection form) thus making more information obtainable by the public and with less scrutiny by disclosure officials.
- The elements contained on this file are found in IRM 7810, Employee Plans Master File Handbook . However, extracts are limited to only a certain portion of the data elements.
- To obtain an extract of the EPMF, a contract is entered into and a fee of $400.00 plus 2 cents per printed record or $400.00 plus 1.2 cents per tape record, per entity. See text 930 of IRM 7810 for availability of EPMF data.
- Requests from the public, State and local governments, Congress, etc., for information available on the EPMF should be forwarded to: Chief, EP/EO Field Systems Branch
CP:E:FS, Room 2213
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224
- The EP/EO Field Systems Branch will comply with the request subject to the provisions of IRC 6104.
Information Not Governed by IRC 6104
- In view of the provisions of IRC 6103(a), any information which the Service gathers, receives, or develops regarding an employer's plan or trust is confidential and may not be disclosed except as authorized by the Internal Revenue Code.
- Any information obtained or developed during an examination conducted by the Service with respect to documents of a pension plan and/or trust available for public inspection under IRC 6104 would not be available under that statute.
- This information would include such documents as work papers, correspondence, reports and informants' letters.
- If these documents contain information which should have been filed with the Service and would have been made available for public inspection if filed, then those specific portions of the documents may be disclosed.
- In connection with official duties, it may become necessary for Service personnel to contact an officer of the employer's plan and/or trust, their employees, or other third parties, or they may contact the Service. The disclosure of information in these situations will generally be governed by IRC 6103(c), (e), (h)(4) or (k)(6).
- With the exception of information available to the public under IRC 6104(a)(1)(B) and (b), the disclosure of information concerning employee plans may be governed by other provisions of the IRC (e.g., 6103 or 4424).
- The discussion in other Chapters of this Handbook concerning the disclosure of returns and return information also applies to the treatment of employee plans when outside of the purview of IRC 6104(a)(1)(B) and (b). Consult the Table of Contents for a description of the coverage of those Chapters.