Removal of Definition of “Plan Assets”-Insurance Company General Accounts

<RULE> DEPARTMENT OF LABOR <SUBAGY>Employee Benefits Security Administration</SUBAGY> <CFR>29 CFR Part 2550</CFR> <RIN>RIN 1210-AC34</RIN> <SUBJECT>Removal of Definition of “Plan Assets”—Insurance Company General Accounts</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Employee Benefits Security Administration, Department of Labor. <HD SOURCE="HED">ACTION:</HD> Direct final rule (DFR); request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This DFR removes 29 CFR 2550.401c-1 from the Code of Federal Regulations, which the Department of Labor (DOL) believes is obsolete. The regulation applies only to certain insurance policies or contracts issued to (or on behalf of) employee benefit plans on or before December 31, 1998. Given the unlikelihood that any of these policies or contracts remain in effect, the DOL believes the regulation is no longer needed and, if left on the books, could add confusion and unnecessary complexity. Removing obsolete regulations eliminates the burden on the public of having to determine whether they need to comply with the regulations. This action is being taken pursuant to Executive Order 14192, titled Unleashing Prosperity Through Deregulation. <SU>1</SU> <FTREF/> This action improves the daily lives of the American people by reducing unnecessary, burdensome, and costly Federal regulations. <FTNT> <SU>1</SU>  90 FR 9065 (Feb. 6, 2025). </FTNT> </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> The final rule is effective September 2, 2025, unless significant adverse comments are received by July 31, 2025. Significant adverse comments are ones which oppose the rule and raise, alone or in combination, a serious enough issue related to each of the independent grounds for the rule that a substantive response is required. If significant adverse comments are received, notification will be published in the <E T="04">Federal Register</E> before the effective date either withdrawing the rule or issuing a new final rule which responds to significant adverse comments. </DATES> <HD SOURCE="HED">ADDRESSES:</HD> The Employee Benefits Security Administration (EBSA) encourages interested persons to submit their comments on this request for information online. You may submit comments, identified by RIN 1210-AC34, by either of the following methods: <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. <E T="03">Mail:</E> Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5461, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attn: Removal of 2550.401c-1, Definition of “plan assets”—insurance company general accounts RIN 1210-AC34. <E T="03">Instructions:</E> All submissions must include the agency name and Regulatory Identifier Number RIN 1210-AC34 for this request. If you submit comments online, do not submit paper copies. All comments received will be posted without change on <E T="03">https://www.regulations.gov</E> and <E T="03">https://www.dol.gov/agencies/ebsa</E> and will be made available for public inspection at the Public Disclosure Room, N-1513, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210. <E T="03">Warning:</E> Do not include any personally identifiable or confidential business information that you do not want publicly disclosed. Comments are public records that are posted online as received and can be retrieved by most internet search engines. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Susan Wilker, Office of Exemption Determinations, Employee Benefits Security Administration, (202) 693-8540. This is not a toll-free number. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background and Discussion</HD> Under section 401(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA), if an insurance company issues a “guaranteed benefit policy” to a plan, the assets of the plan are deemed to include the policy, but do not, solely by reason of the issuance of the policy, include any of the assets of the insurance company. On December 13, 1993, the Supreme Court held in <E T="03">Harris Trust</E>   <SU>2</SU> <FTREF/> that a contract qualifies as a guaranteed benefit policy only to the extent it allocates investment risk to the insurer. Therefore, under the Supreme Court's decision, an insurer's general account includes plan assets to the extent it contains funds which are attributable to any nonguaranteed components of contracts with employee benefit plans. <FTNT> <SU>2</SU>   <E T="03">John Hancock Mutual Life Insurance Co.</E> v. <E T="03">Harris Trust & Savings Bank,</E> 510 U.S. 86 (1993) (Harris Trust). </FTNT> In response to the Supreme Court decision in <E T="03">Harris Trust,</E> Congress amended ERISA section 401 by adding new subsection 401(c). Among other things, this new subsection required the Department to issue regulations that provide guidance for the purpose of determining which assets held by an insurer (other than plan assets held in its separate accounts) constitute assets of the plan. The subsection also required the Department to issue regulations providing guidance with respect to the application of Title I of ERISA to the general account assets of insurers. The statute specifies that the regulations will only apply to general account policies issued by an insurer on or before December 31, 1998. The regulations were finalized on January 5, 2000. The regulations provide that, generally, when a plan has acquired a “Transition Policy,” the plan's assets include the Transition Policy, but do not include any of the underlying assets of the insurer's general account, if the insurer satisfies certain requirements. The regulation defines “Transition Policy” as, among other things, a policy or contract of insurance (other than a guaranteed benefit policy) issued by an insurer to, or on behalf of, an employee benefit plan on or before December 31, 1998, and which is supported by the assets of the insurer's general account. Because the regulation is limited to Transition Policies issued on or before December 31, 1998, it is not likely that any Transition Policies remain in effect. The Department is therefore removing this regulation from the Code of Federal Regulations, as it no longer serves any useful purpose, and allowing the regulation to remain on the books only wastes time and resources that could be more productively employed. The rule removes the regulation prospectively as of the effective date and has no effect on its legal effectiveness prior to that date. Members of the public are invited to provide comments on whether any Transition Policies remain in effect, and on the Department's reasoning and decision to remove the regulation from the Code of Federal Regulations. <HD SOURCE="HD1">II. Procedural Issues and Regulatory Review</HD> <HD SOURCE="HD2">A. Review Under Executive Orders 12866</HD> Executive Order (E.O.) 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits; (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to OIRA for review. OIRA has determined that this direct final rule does not constitute a “significant regulatory action” under section 3(f) of E.O. 12866. Accordingly, this direct final rule was not submitted to OIRA for review under E.O. 12866. <HD SOURCE="HD2">B. Review Under the Regulatory Flexibility Act</HD> The Regulatory Flexibility Act (5 U.S.C. 601 <E T="03">et seq.</E> ) requires preparation of an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. DOL reviewed this rescission under the provisions of the Regulatory Flexibility Act. This rule eliminates an obsolete regulation and the burden associated with imposing the obligation to determine obsolescence on the public. Therefore, DOL has concluded that the impacts of the rule would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of an FRFA is not warranted. DOL will transmit this certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b). <HD SOURCE="HD2">C. Review Under the Paperwork Reduction Act</HD> This rule imposes no new information or record-keeping requirements. Accordingly, OMB clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 3501 <E T="03">et seq.</E> ). <HD SOURCE="HD2">D. Review Under Executive Order 13132</HD> E ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 18k characters. 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