the plan or the agent, broker or surety may be influenced by the "party in interest".

(c) The application of the principles discussed in this section is illustrated by the following examples:

Example (1). B, a broker, renders actuarial and consultant services to plan P. B has also procured a group life insurance policy for plan P. B may also place a bond for P with surety company S, provided that neither B nor P has any significant control or financial interest, direct or indirect, in S and provided that neither P nor any other "party in interest" in P, e.g., an officer of the plan, has any significant control or financial interest, direct or indirect, in B or S.

Example (2). I, a life insurance company, has provided a group life insurance policy for plan P. I is affiliated with S, a surety company, and has a significant financial interest or control in S. P is not prohibited from obtaining a bond from S since I's affiliation with S does not ordinarily, in and of itself, affect the objectivity of P in procuring the bond or the objectivity of S in bonding P's personnel. However, if any other "party in interest" as defined in Section 3(13) of the Act, such as the employer whose employees are covered by P, should have a significant financial interest or control in S, S could not write the bond for P, since the employer's interest affects the objectivity of P and S.

PART 486-GENERAL STATEMENT

CONCERNING THE RETENTION OF
RECORDS PROVISIONS OF THE
WELFARE AND PENSION PLANS
DISCLOSURE ACT

Sec. 486.1

486.2

Introductory statement.

Persons who must retain records. 486.3 Records to be retained. 486.4 Manner of keeping records. 486.5

Period records must be maintained. AUTHORITY: The provisions of this Part 486 issued pursuant to sec. 5, 72 Stat. 999, 76 Stat. 36, sec. 11, 76 Stat. 38; 29 U.S.C. 304, 308b; Secretary's Order 24-63 (28 F.R. 9172), and Secretary's Order 25-63 (28 F.R. 9173).

SOURCE: The provisions of this Part 486 appear at 28 F.R. 14413, Dec. 27, 1963, unless otherwise noted.

§ 486.1 Introductory statement.

(a) This part reflects interpretive positions of the Department of Labor with respect to several aspects of the record retention requirements of section 11 of the Welfare and Pension Plans Disclosure Act (72 Stat. 997, 76 Stat. 35; 29 U.S.C. 301, et seq.). This section provides that: "Every person required to file any description or report or to certify

any information therefor under this Act shall maintain records on the matters of which disclosure is required which will provide in sufficient detail the necessary basic information and data from which the documents thus required may be verified, explained, or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than five years after the filing of the documents based on the information which they contain."

(b) The provisions of section 11 of the Act are subject to the investigatory authority of the Director, Office of LaborManagement and Welfare-Pension Reports, embodied in section 9 of the Act. The correctness of an interpretation of these provisions can be determined finally and authoritatively only by the courts. It is necessary, however, for the Labor-Management Services Administrator (hereafter referred to as "the Administrator") to reach informed conclusions as to the meaning of the law to enable him to carry out his duties of administration and enforcement. The interpretations of the Administrator contained in this part, which are issued upon the advice of the Solicitor of Labor, indicate the construction of the law which will guide the Administrator in performing his duties unless and until he is directed otherwise by authoritative rulings of the courts or unless and until he subsequently decides that his prior interpretation is incorrect. Under section 12 of the Act, the interpretations contained in this part, if relied upon in good faith, will constitute a defense in any action or proceeding based on any act or omission in alleged violation of section 11 of the Act. The omission, however, to discuss a particular problem in this part, or in interpretations supplementing it, should not be taken to indicate the adoption of any position by the Administrator with respect to such problem or to constitute an administrative interpretation or practice. Interpretations of the Administrator with respect to section 11 are set forth in this part to provide those affected by the provisions of the Act with a "practical guide as to how the office representing the public interest in its enforcement will seek to apply it" (Skidmore v. Swift & Co., 323 U.S. 134, 138).

4

(c) To the extent that prior opinions and interpretations relating to section

(a) Section 11 of the Welfare and Pension Plans Disclosure Act applies to

(1) Any person or persons required to file any plan description or annual report under section 6 or section 7 of the Act;

(2) Any person or persons who may be required to publish a report upon request pursuant to section 7(a) of the Act; and

(3) Any insurance carrier or service or other organization required under section 7(g) of the Act to certify any information necessary for the preparation or filing of any such description or report.

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(b) The statutory duty on such persons to maintain records cannot be avoided by contract, delegation or otherwise. Thus, if the administrator of a plan arranges with an independent contractor (such as a corporate trustee or benefit plan consultant) to perform functions with respect to the plan and, pursuant to the arrangement, such independent contractor prepares or ceives the type of records contemplated by § 486.3 and keeps physical custody of such records, the statutory requirement to see that such records are retained for the required period remains with the administrator and he must make such agreements and arrangements with the independent contractor as are necessary to insure that they are so retained.

§ 486.3 Records to be retained.

(a) The records required to be retained are all documents which will provide in sufficient detail the necessary basic information and data from which the description and reports which are required or may be required under the Act may be verified, explained or clarified, and checked for accuracy and com.. pleteness.

(b) Such records include (but are not limited to) resolutions and matters relating to the plan for which a description or annual report is or may be required to be filed, journals, ledgers, checks, invoices, bank statements, contracts, agreements, vouchers, worksheets, receipts, claim records and payrolls of any party described in § 486.2 which

would tend to support information required in any report under the Act.

(c) Records maintained shall also include, where appropriate, information certified to the Administrator by an insurance carrier or service or other organization. Other records such as payrolls from contributing employers, which the reporting person, trustee, or organization, as described in § 486.2 obtains in the regular course of its operations, to the extent such records may be used for said verifying or checking shall also be retained.

§ 486.4

Manner of keeping records.

(a) Records must be kept in reasonable order, in a safe and accessible place and in such a manner that they may be readily inspected and examined by the Director, Office of Labor-Management and Welfare-Pension Reports or his duly authorized representative.

(b) The preservation of records on microfilm for the periods required by the Act will satisfy the requirements relating to the retention of records, provided that adequate projection or other viewing equipment is available for inspecting the microfilm and provided further that the microfilmed records are clear reproductions of the original records, and identifiable as to dates.

(c) Nothing in this section precludes the use of punch cards or magnetic tape for processing records; Provided, however, That where records of original entry or worksheets are converted to punch cards or tape, the original records and worksheets must be retained for the required period.

Persons described in § 486.2 are required to maintain the described records for a period of not less than five years after the filing of the documents based on the information which they contain. It should be noted that even though a plan administrator need not publish an annual report pursuant to section 7(a) of the Act (unless specifically required to do so), because such plan covers more than 25, but fewer than 100 participants, every person or organization described in § 486.2 must retain for a period of not less than five years after the date that an annual report would have been due (but for the exemption) the records described in § 486.3 which relate to information which would have been required in such report.