President Trump’s Executive Order has three specific directives – and some specific timetables for action on those directives.
The Executive Order begins by stating, “It shall be the policy of the Federal Government to expand access to workplace retirement plans for American workers.”
The much-anticipated executive order – signed in Charlotte, NC on Aug. 31 – cites expanding access to multiple employer plans (MEPs) as “an efficient way to reduce administrative costs of retirement plan establishment and maintenance” that “would encourage more plan formation and broader availability of workplace retirement plans, especially among small employers.”
The EO notes that it “shall, therefore, be the policy of the Federal Government to address these problems and promote retirement security for America’s workers,” and that accordingly, the Secretary of Labor shall examine policies that would “clarify and expand the circumstances under which United States employers, especially small and mid-sized businesses, may sponsor or adopt a MEP as a workplace retirement option for their employees, subject to appropriate safeguards” and also look to “increase retirement security for part-time workers, sole proprietors, working owners, and other entrepreneurial workers with non-traditional employer-employee relationships by expanding their access to workplace retirement plans, including MEPs.”
The Secretary of Labor is directed “within 180 days of the date of this order” to consider whether to issue a notice of proposed rulemaking, other guidance, or both, that would clarify when a group or association of employers or other appropriate business or organization could be an “employer” within the meaning of section 3(5) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1002(5), and by the same point in time, “consider proposing amendments to regulations or other guidance, consistent with applicable law and the policy set forth in section 1 of this order, regarding the circumstances under which a MEP may satisfy the tax qualification requirements set forth in the Internal Revenue Code of 1986, including the consequences if one or more employers that sponsored or adopted the plan fails to take one or more actions necessary to meet those requirements.”
Additionally, the Secretary of the Treasury is directed to consult with the Secretary of Labor in advance of issuing any such proposed guidance, while the Secretary of Labor is directed to “take steps to facilitate the implementation of any guidance, as appropriate and consistent with applicable law.”
On a longer term basis, while the EO notes that “reducing the number and complexity of employee benefit plan notices and disclosures currently required would ease regulatory burdens,” and that the “costs and potential liabilities for employers and plan fiduciaries of complying with existing disclosure requirements may discourage plan formation or maintenance,” the Secretary of Labor is, within a year of the date of the order, directed to “complete a review of actions that could be taken through regulation or guidance, or both, to make retirement plan disclosures required under ERISA and the Internal Revenue Code of 1986 more understandable and useful for participants and beneficiaries, while also reducing the costs and burdens they impose on employers and other plan fiduciaries responsible for their production and distribution.” The EO states that this review is to include an exploration of the potential for broader use of electronic delivery as a way to improve the effectiveness of disclosures and to reduce their associated costs and burdens. Should the Secretary of Labor determine that actions should be taken, they are directed – in consultation with the Secretary of the Treasury – to consider proposing appropriate regulations or guidance, consistent with applicable law and the policy set forth in the EO.
Finally, the EO notes that “outdated” distribution mandates may also reduce plan effectiveness by “forcing retirees to make excessively large withdrawals from their accounts – potentially leaving them with insufficient savings in their later years.” In response, the EO says that within 180 days of the date of this order, the Secretary of the Treasury shall “examine the life expectancy and distribution period tables in the regulations on required minimum distributions from retirement plans (67 Fed. Reg. 18988) and determine whether they should be updated to reflect current mortality data and whether such updates should be made annually or on another periodic basis.”
Time will tell…