Form T-1, originally proposed in 2002, and rescinded in 2010, has been re-proposed. The public comment period ends on July 29, 2019. The current proposal looks very similar to the final version of the previously proposed Form T-1.
Form T-1 is less complicated than a Form LM-2 but still involves significant reporting burdens on organizations considered trusts under the proposal. If finalized, the Form T-1 would become effective not less than 30 days after its publication release in the Federal Register and the first Form would be due no sooner than 15 months thereafter.
This proposed rule requires that only labor organizations with total annual receipts of $250,000 or more be required to file Form T-1 for each “trust where the labor organization is interested” as defined by section 3(l) of the Labor-Management Reporting and Disclosure Act (LMRDA). A “trust in which a labor organization is interested” is defined as a trust or other organization that the labor organization created or established, or selects or appoints one or more members of governance AND a primary purpose is to provide benefits for the members of the labor organization or their beneficiaries. Not all reported “trusts” would require a Form T-1.
The proposed Form T-1 rule would be required for any “trust” that meets one of the two following filing tests deemed as indicating either management or financial control. The labor organization, alone or with other labor organizations, either:
The proposed rule provides exemptions to the Form T-1 filing requirements exceptions:
Audit Exception, a partial exemption for any trust for which an independent audit has been conducted, in accordance with the standards set forth in the rule which includes filing the audit with a completed Form T-1 page 1 (Items 1-15 and Items 26 and 27) along with a copy of the audit. The audit must include notes to the financial statements that disclose for the preceding twelve-month period:
The audit must also be accompanied by schedules that disclose for the preceding twelve-month period:
Form T-1, due 90 days after the labor organization’s year-end, covers the trust’s most recent fiscal year ending on or before the closing date of the labor organization own fiscal year; and is proposed to require the following:
Labor organizations are not required to separately identify any individual or entity on Schedule 1 from which the trust receives receipts of $10,000 or more, individually or in the aggregate, during the reporting period, if the receipts are derived from pension, health, or other benefit contributions that are provided pursuant to a collective bargaining agreement covering such contributions.
The Form T-1 includes a requirement to disclose the names of all officers of the trust, all employees of the trust who receive $10,000 or more during a reporting period and all direct or indirect disbursements to each of these officers and employees similar to LM reporting including credit card transactions.
The proposal provides explicit recognition that payments related to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) are confidential information not to be reported. Consistent with Form LM, sensitive or confidential information about organizing strategy, negotiation strategy or like information may be treated as confidential and may be reported in aggregate rather than itemized.
Form T-1 must be signed by the President and Treasurer of the labor organization and filed electronically. Trust recordkeeping is 5 years after the filing of Form T-1, consistent with the LMRDA.
In September 2008, the DOL provided the following information which is important to understand how this could impact Apprenticeship Plans specifically under this proposal:
Employee benefit plans that are required to file, and do file a complete and timely report, under 29 U.S.C. 1021 and 1024 are an exemption from Form T-1 reporting. This current proposal states that the DOL’s intent is to be consistent with the 2008 final rule regarding the Form 5500 filing exemption but other portions of the proposal and the proposed instructions have replaced “required to file Form 5500” with “who file a Form 5500” under 29 U.S.C. 1021 and 1024 are exempt. Favorably interpreted, this provides a filing option for Apprenticeship plans.
The Department’s Employee Benefits Security Administration (EBSA) advised that it would not consider a plan fiduciary to have violated ERISA’s fiduciary duty or prohibited transaction provisions by providing officials of a sponsoring labor organization with financial and other information from the plan’s books and records as needed to complete the Form T-1, provided the plan is reimbursed for any material costs incurred in collecting and providing the information to the labor organization officials.