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Graff, Rutledge Outline Future Legislative, Regulatory Action

Conferences and Events

At the April 7 opening general session of the 2019 NAPA 401(k) Summit in Las Vegas, Preston Rutledge, head of the DOL’s Employee Benefit Security Administration, and NAPA Executive Director Brian Graff reported respectively on what EBSA and NAPA are anticipating in the coming year.

Retirement plan administration is “a large universe for a small agency,” said Rutledge. He noted that while EBSA has a little more than 800 employees nationwide, including 375 investigators, there are more than 150 million participants and retirees served by plans that collectively account for $9.8 trillion. 

Future Action Steps

A key EBSA priority is addressing the problem of coverage, Rutledge said, telling attendees, “We need to give plan sponsors more choices.” Rutledge also said that EBSA seeks to clarify and expand the circumstances under which employees may participate in a multiple employer plan (MEP) and make disclosures more understandable and useful. 

But MEPS can only be more readily available if Congress acts, Graff noted. And, he said, “Believe it or not, we’re making some progress.” He cited bipartisan, bicameral legislation before Congress that would expand access to retirement plans and options. And while some of those legislative provisions would take effect in 2020 if they are enacted, the MEP provisions would not take effect until 2021, he noted.

The PEW Charitable Trust found recently that 37% of employers that don’t offer a plan don’t do so because of the attendant costs – including the expense of making disclosures, Rutledge told attendees. EBSA is looking at how to make it less difficult and less expensive to make them, he said. The DOL is “taking a hard look at electronic disclosures,” Rutledge noted, adding that “we want your ideas on how to make electronic disclosures more effective and useful.” 

Rutledge and Graff both addressed developments concerning fiduciary rules in the wake of the DOL fiduciary rule’s demise. Rutledge did not comment on the DOL fiduciary rule; however, he called the Securities and Exchange Commission’s proposed rule “a very welcome development” and he added that the DOL’s goal “is to align our rule with the SEC’s rule.” And Graff noted that states are now taking action, and called it “unacceptable” that compliance with both state and federal rules could be required. “This is something that we’re following very closely,” he said. 

Also on the DOL’s radar: lifetime income. Rutledge reported that the DOL is considering to what extent it can or should amend the Section 404(c) rules on lifetime income. “We still have a lifetime income on the agenda,” he said. 

Addressing the problem of missing participants is another DOL priority. Rutledge told attendees that the DOL is holding meetings with stakeholders and wants to understand the best practices employers and the department have developed over the years. The DOL effort on missing participants ultimately is an effort to serve participants, Rutledge indicated. “One of the most basic duties is to operate a plan for the purpose of paying benefits,” he said, adding that if one ends up not knowing where to send the check, “that’s an outcome that nobody wants.” And the DOL’s long-term goal is to make sure participants don’t go missing in the first place, Rutledge added. 

Recovering funds is another part of that service to participants, for whom the DOL recovered $1.6 billion in the last year, Rutledge said. He remarked that EBSA’s benefits advisors seek to work with participants, TPAs and the public to informally resolve complaints and issues.

Rutledge also hailed the efforts of NAPA and its members. “We recognize the important work that you do” on behalf of retirement plans and participants, he told attendees. 

Political Pendulum Swings

Graff noted that the political pendulum has shifted, and that the divide in Washington is in even sharper relief. “We see how different each side is from the other,” he said, citing President Trump and freshman Rep. Alexandria Ocasio-Cortez (D-NY) as an example. “These two couldn’t be more different,” he said, adding that “they reflect completely different points of view.” And, he added, “The progressive point of view isn’t going away anytime soon.” 

Graff remarked that the ideas progressives are discussing “are being talked about as if they are not radical,” and that “it was only a matter of time before one of these proposals affected us.” 

Graff called that proposal, the Wall Street Tax Act, a “progressive unicorn” but noted that it enjoys the support of powerful and well-established Democratic members of both congressional chambers. He told attendees that it would affect “not Wall Street fat cats, but the American worker – folks like the ones you serve every day at home.” 

“The gateway to a comfortable retirement is to have a workplace retirement plan,” Graff said. “This thing works.”

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