The Department of Labor (DOL) has issued a Request for Information (RFI) to gather public input in relation to simplifying and consolidating retirement plan reporting and disclosure forms, as directed by the SECURE 2.0 Act.
More specifically, the 38-page, 31-question RFI was published by the DOL’s Employee Benefits Security Administration (EBSA) to solicit public feedback and begin developing a record for various provisions contained in SECURE 2.0 that impact the reporting and disclosure framework of ERISA.
Several sections of the legislation establish new—or revise existing—ERISA reporting and disclosure requirements, in some cases also requiring that the DOL undertake a review of existing or new requirements and submit reports to Congress on its findings.
“The Department believes that it will be helpful to initiate several of these actions, given their commonality in affecting reporting of information to the Department and the disclosure of information to retirement plan participants and beneficiaries,” the RFI states. The release of an RFI is typically one of the first steps in the regulatory rulemaking process.
This new RFI includes questions about several SECURE 2.0 provisions, including:
- pooled employer plans (PEPs);
- emergency savings accounts linked to individual account plans;
- performance benchmarks for asset allocation funds;
- defined contribution (DC) plan fee disclosure improvements;
- eliminating unnecessary plan requirements related to unenrolled participants;
- requirement to provide paper statements in certain cases;
- consolidation of DC plan notices;
- information needed for financial options risk mitigation; and
- defined benefit annual funding notices.
Pooled employer plans. Concerning PEPs, Section 344 of SECURE 2.0 directs the DOL, not later than five years after enactment, and every five years thereafter, to submit a report to Congress, and make publicly available the department’s findings from a study of the PEP industry, including recommendations on how PEPs can be improved, through legislation, to serve and protect retirement plan participants.
DOL notes that it is in the preliminary stages of planning such a study and anticipates using data collected from the Form PR and the Form 5500 Annual Report to assist in preparing the report. As part of the RFI, the DOL is requesting ideas about how to construct such a study effectively in response to this directive and what additional information it should focus on to achieve the objectives of the study.
Emergency savings accounts. Concerning the establishment of “pension-linked emergency savings accounts” (PLESA) as part of an individual account plan, the DOL asks what guidance, if any, do plan administrators need to effectively implement the requirements of Section 127 of SECURE 2.0 and new Part 8 of ERISA.
“Because section 127 of SECURE 2.0 impacts many provisions under ERISA and the Code, commenters are encouraged to be as specific as possible with their responses, with clear citation to the specific statutory provision or provisions in question,” the RFI notes. In addition, if guidance is needed on multiple provisions, commenters are asked to prioritize the issues according to importance and offer a supporting rationale for the priority. The DOL also asks whether plan administrators that include PLESAs can benefit from a model notice for inclusion in the required notice under Section 801 of ERISA.
Performance benchmarks for asset allocation funds. Here, the DOL asks whether there are additional factors beyond the criteria in Section 318 of SECURE 2.0 that plan administrators should use to ensure they can “effectively select and monitor, and participants and beneficiaries can effectively understand and utilize, blended performance benchmarks for mixed asset class funds.”
The DOL encourages commenters to review its prior guidance on the use of blended performance benchmarks for purposes of the participant-level disclosure regulation, noting that the standards for use of a “reasonable” blended performance benchmark are similar, but not identical, to the four criteria in Section 318 of SECURE 2.0.
DC plan fee disclosure improvements. Section 340 of SECURE 2.0 requires the department to review the fiduciary requirements for disclosure in participant-directed individual account plans, including a review of how the contents and design of the disclosures can be improved to enhance participants’ understanding of DC plan fees and expenses. The DOL must submit a report of its findings to Congress within three years, including recommendations for legislative changes.
Among the questions are whether the regulation’s required information is “adequate or inadequate” in helping plan participants make informed investment decisions, and if inadequate, is there evidence that this is tied directly to the subject regulation, as opposed to other “exogenous factors.”
What’s Not Included
Note that the above highlights are just a sampling of the various questions asked by the DOL in initiating its review of ERISA’s reporting and disclosure regime. The DOL also notes that not all of the SECURE 2.0 provisions that affect reporting and disclosure are covered in this RFI, generally because the department has already started or intends to initiate separate rulemaking and guidance actions.
For example, the changes to ERISA’s audit requirements by Section 345 of SECURE 2.0 were implemented through a recent rulemaking relating to annual reporting requirements under ERISA. In addition, the DOL in February published a solicitation for comment on the effects of section 305 of SECURE 2.0 concerning the Voluntary Fiduciary Correction Program.
Another example of what’s not addressed in this RFI is Section 319 of SECURE 2.0, directing the DOL, in consultation with the Treasury Department and PBGC, to review each agency’s existing reporting and disclosure requirements for retirement plans. In this case, the DOL notes that, rather than dealing with the specific requirements under ERISA and the Internal Revenue Code, the Section 319 review is expansive in scope and calls for more generalized questions about how to best communicate information to the government and to workers of widely varying capabilities.
Comment Due Date
Finally, the DOL advises that commenters need not answer every question, but are encouraged to identify, by number, each question addressed. To be assured consideration, comments must be received within 60 days after publication in the Federal Register, scheduled for Aug. 11.
