Proposed Rule2023-17249
Request for Information-SECURE 2.0 Reporting and Disclosure
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 11, 2023
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
The Employee Benefits Security Administration of the U.S. Department of Labor (the Department) is publishing this Request for Information to solicit public feedback and to begin developing a public record for a number of provisions of Division T of the Consolidated Appropriations Act, 2023, (Dec. 29, 2022) (referred to as the SECURE 2.0 Act of 2022 or SECURE 2.0) that impact the reporting and disclosure framework of the Employee Retirement Income Security Act of 1974 (ERISA). Several sections of SECURE 2.0 establish new, or revise existing, ERISA reporting and disclosure requirements, in some cases also requiring that the Department undertake a review of existing or new requirements and submit reports to Congress on the Department's 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, in this Request for Information. Any later action by the Department on these SECURE 2.0 provisions, whether rulemaking or otherwise, will be better informed by responses to this Request for Information.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 154 (Friday, August 11, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 154 (Friday, August 11, 2023)]
[Proposed Rules]
[Pages 54511-54534]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17249]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2510, 2520, 2550
RIN 1210-AC23
Request for Information--SECURE 2.0 Reporting and Disclosure
AGENCY: Employee Benefits Security Administration, U.S. Department of
Labor.
ACTION: Request for information.
-----------------------------------------------------------------------
SUMMARY: The Employee Benefits Security Administration of the U.S.
Department of Labor (the Department) is publishing this Request for
Information to solicit public feedback and to begin developing a public
record for a number of provisions of Division T of the Consolidated
Appropriations Act, 2023, (Dec. 29, 2022) (referred to as the SECURE
2.0 Act of 2022 or SECURE 2.0) that impact the reporting and disclosure
framework of the Employee Retirement Income Security Act of 1974
(ERISA). Several sections of SECURE 2.0 establish new, or revise
existing, ERISA reporting and disclosure requirements, in some cases
also requiring that the Department undertake a review of existing or
new requirements and submit reports to Congress on the Department's
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, in this
Request for Information. Any later action by the Department on these
SECURE 2.0 provisions, whether rulemaking or otherwise, will be better
informed by responses to this Request for Information.
DATES: To be assured consideration, comments must be received at one of
the following addresses no later than October 10, 2023.
ADDRESSES: You may submit written comments to the Office of Regulations
and Interpretations, identified by RIN 1210-AC23, to one of the
following addresses:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow
the instructions for submitting comments.
<bullet> Mail: Office of Regulations and Interpretations, Employee
Benefits Security Administration, Room N-5655, U.S. Department of
Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention:
Request for Information--SECURE 2.0 Reporting and Disclosure.
Instructions: Persons submitting comments electronically are
encouraged not to submit paper copies. Comments will be available to
the public, without charge online at <a href="http://www.regulations.gov">www.regulations.gov</a>, at
<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>, and at the Public Disclosure Room, EBSA,
U.S. Department of Labor, Suite N-1513, 200 Constitution Avenue NW,
Washington, DC 20210.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records and can be retrieved by most internet search
engines.
FOR FURTHER INFORMATION CONTACT: Kristen Zarenko, Office of Regulations
and Interpretations, EBSA, Department of Labor, (202) 693-8500.
SUPPLEMENTARY INFORMATION:
Background
On December 29, 2022, the Consolidated Appropriations Act, 2023,
H.R. 2617 was enacted. Part of this Act, SECURE 2.0, includes
provisions amending ERISA and the Internal Revenue Code (the Code).
Some of the provisions in SECURE 2.0 require regulations or other
guidance for implementation. Other provisions direct the Department to
undertake a review of certain statutory and regulatory requirements and
submit reports to Congress on the Department's findings.
This Request for Information (RFI) focuses on certain SECURE 2.0
sections that principally impact, directly or indirectly, ERISA's
reporting and disclosure requirements. Not all of the SECURE 2.0
provisions that affect the reporting and disclosure framework of ERISA
are covered in this RFI, generally because the Department has already
started or intends to initiate separate notice and comment rulemaking,
actions, issue guidance, request additional information, or release
reports, as appropriate, to implement these other provisions. 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.\1\ In addition, the
Department published a solicitation for comment on the effects of
section 305 of SECURE 2.0 on the Department's Voluntary Fiduciary
Correction Program on February 14, 2023.\2\
---------------------------------------------------------------------------
\1\ 88 FR 11793 (Feb. 24, 2023).
\2\ 88 FR 9408 (Feb. 14, 2023).
---------------------------------------------------------------------------
Another example of a SECURE 2.0 provision that affects reporting
and disclosure but which is not addressed in this RFI is section 319 of
SECURE 2.0. This provision directs the Department, in consultation with
the Department of the Treasury (Treasury Department) and the Pension
Benefit Guaranty Corporation (PBGC), to review each agency's existing
reporting and disclosure requirements for retirement plans. After this
review, and in consultation with a balanced group of participant and
employer representatives, the agencies must report to Congress on the
effectiveness of these reporting and disclosure requirements, including
recommendations to consolidate, simplify, standardize, and improve such
requirements. Rather than dealing with the specific substance of
individual reporting and disclosure requirements under ERISA and the
Code, the section 319 review is expansive in scope and calls for more
generalized questions about how to best communicate information--
information that can be quite complex--to the government and to workers
of widely variable capabilities, enabling workers to obtain,
understand, and use information about their plans and retirement.
Further, these themes are to be explored in the context of a
significant number of reporting and disclosure requirements under the
jurisdiction of three different agencies. The Department currently
intends to move forward by formally soliciting public input on the
section 319 project, in coordination with the Treasury Department and
PBGC, but as part of a rulemaking initiative separate from this RFI.
Apart from these exceptions, the Department believes that it will
be helpful to initiate progress on the specific SECURE 2.0 items set
forth below in this RFI by expeditiously obtaining feedback from a
diverse set of stakeholders from the earliest stages of the process and
building an initial public record. This feedback will inform more
specific, detailed rulemaking or other guidance on such provisions in
the future, including completion of multiple reports to Congress, as
required by SECURE 2.0. Moving forward, as relevant, the Department
will continue to consult with other agencies,
[[Page 54512]]
including the Treasury Department and PBGC.
II. Request for Information--SECURE 2.0 Reporting and Disclosure
Provisions
The purpose of this RFI, as explained above, is to inform future
action by the Department on the following SECURE 2.0 mandates related
to ERISA's reporting and disclosure provisions. The Department invites
comments, including relevant data, if available, from all interested
stakeholders. The RFI includes questions about a number of distinct
SECURE 2.0 provisions. Commenters need not answer every question, but
are encouraged to identify, by number, each question addressed.
A. Pooled Employer Plans. Section 105 of SECURE 2.0 amended ERISA
section 3(43)(B)(ii), defining a ``pooled employer plan'' (PEP), to
provide that the terms of the plan must ``designate a named fiduciary
(other than an employer in the plan) to be responsible for collecting
contributions to the plan and require such fiduciary to implement
written contribution collection procedures that are reasonable,
diligent, and systematic[.]'' This clarification as to which persons
may be designated as a named fiduciary for this purpose is effective
for plan years beginning after December 31, 2022. The Department
intends to update the Form PR and Instructions (Registration for Pooled
Plan Provider), as necessary, to reflect this amendment for purposes of
reporting the designated named fiduciary.
Section 344 of SECURE 2.0 also directs Department action on the
topic of PEPs. Specifically, section 344 directs the Department, not
later than five years after enactment, and every five years thereafter,
to submit a report to Congress, and make publicly available on a
website, 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.\3\ The
Department 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 this report. As part of this RFI,
the Department is requesting commenters' ideas about how to construct
such a study effectively in response to this directive and whether, and
what, additional information the Department should focus on to help
achieve the stated objectives of the study to improve PEPs and
subsequent reports to Congress. In addition to general feedback on the
methodology and scope of the required study, the Department seeks input
on the specific issues set forth below.
---------------------------------------------------------------------------
\3\ The required study will focus on: the legal name and number
of pooled employer plans; the number of participants in such plans;
the range of investment options provided in such plans; the fees
assessed in such plans; the manner in which employers select and
monitor such plans; the disclosures provided to participants in such
plans; the number and nature of any enforcement actions by the
Department on such plans; the extent to which such plans have
increased retirement savings coverage in the United States; and any
additional information as the Department determines is necessary.
SECURE 2.0 section 344.
---------------------------------------------------------------------------
[ssquf] Question 1: What guidance, if any, for purposes of
reporting on Form PR or otherwise, do pooled plan providers,
fiduciaries, trustees, or other parties need to implement the revised
definition in ERISA section 3(43)(B)(ii) effectively?
[ssquf] Question 2: In addition to the Form PR and the Form 5500
Annual Report, what are other data sources the Department could use to
collect data on the topics enumerated in SECURE 2.0 section 344(1),
e.g., the fees assessed in such plans, or the range of investment
options provided in such plans?
[ssquf] Question 3: The Department interprets the language in
section 344(1)(C) of SECURE 2.0 requiring identification of ``the range
of investment options provided in such plans'' to mean the specific
investment options the responsible plan fiduciary has selected as
``designated investment alternatives'' under the plan.\4\ The
Department does not, for example, consider this language to require
examination of the potentially large range of investments available
through a brokerage window or similar arrangement, to the extent
offered in a PEP. What would be efficient and comprehensive methods for
the Department to determine the range of designated investment
alternatives for all PEPs?
---------------------------------------------------------------------------
\4\ 29 CFR 2550.404a-5(h)(4).
---------------------------------------------------------------------------
[ssquf] Question 4: Section 344(1)(E) of SECURE 2.0 requires the
study to focus on the ``manner in which employers select and monitor
such plans.'' How and by whom are PEPs most commonly marketed to
employers? Do marketing techniques differ based on the size of
employers? How often do employers rely on the advice of others when
selecting and monitoring a PEP? If so, who gives this advice to
employers, generally, e.g., consultants, financial advisors, brokers,
record keepers, others? In addition to this RFI, are there other
efficient and comprehensive methods for the Department to solicit
information on the steps employers take to select and monitor PEPs and
to decide to stay in the PEPs? For instance, should the Department
consider a public hearing, focus groups, questionnaires, online
polling, or other similar information gathering techniques? From whom
should the Department solicit this information (i.e., directly from
employers, pooled plan providers, or both), using these other
techniques?
[ssquf] Question 5: Section 344(1)(F) of SECURE 2.0 requires the
study to focus on the disclosures provided to participants in such
plans. What would be efficient and comprehensive methods for the
Department to collect examples of such disclosures or otherwise solicit
information from employers, PEPs, plan administrators, or other parties
on the disclosures provided to plan participants? Is there additional
or different information that should be disclosed to participants in
the context of PEPs, versus what is required to be disclosed under
ERISA to participants in other defined contribution plans? If so, why,
and what other additional disclosures should be required in the context
of PEPs?
[ssquf] Question 6: Section 344(1)(H) of SECURE 2.0 requires the
study to focus on the extent to which PEPs have ``increased retirement
savings coverage in the United States.'' How should the Department
measure ``increased retirement savings coverage'' and what information
would the Department need to make this assessment? For example, the
formation of new PEPs may suggest increased coverage, but if the
participating employers previously maintained a retirement plan, that
could indicate a transfer of coverage types, rather than an increase in
coverage. What are efficient and comprehensive methods for the
Department, depending on how ``increase retirement savings coverage''
is measured, to collect such information?
B. Emergency Savings Accounts Linked to Individual Account Plans.
Section 127 of SECURE 2.0 amended ERISA section 3 to add a new
definition, at section 3(45), for a ``pension-linked emergency savings
account'' (PLESA). A PLESA is a short-term savings account established
and maintained as part of an individual account plan. Section 127 of
SECURE 2.0 also added a new part 8 to subtitle B of title I of ERISA
that includes a comprehensive set of requirements for PLESAs. This
includes a requirement that plan administrators for individual account
plans that include PLESAs furnish to participants an initial and annual
notice as to: the purpose of PLESAs; limits on and tax treatment of,
contributions to a PLESA; any fees, expenses, restrictions, or
[[Page 54513]]
charges associated with PLESAs; procedures for electing to make or
opting out of PLESA contributions, changing contribution rates, and
making participant withdrawals; the amount of the PLESA account and the
amount or percentage of compensation a participant has contributed to
the PLESA; the designated investment option for PLESA contributions;
options for the PLESA account balance after termination of employment
or of the PLESA by the plan sponsor; and other information. Section 127
of SECURE 2.0 also amended section 110 of ERISA to grant the Department
authority to prescribe an alternative method for satisfying any
reporting and disclosure requirement under ERISA with respect to
PLESAs. Section 127 of SECURE 2.0 also amended section 404(c) of ERISA
with respect to specified default investment arrangements for PLESAs.
The amendments made to ERISA are applicable to plan years beginning
after December 31, 2023.
[ssquf] Question 7: 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. 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.
[ssquf] Question 8: Would administrators of plans that include
PLESAs benefit from a model notice or model language for inclusion in
the required notice under section 801 of ERISA? If so, commenters are
encouraged to submit suggested model language.
C. Performance Benchmarks for Asset Allocation Funds. Section 318
of SECURE 2.0 requires that the Department, not later than two years
after enactment, issue regulations under ERISA section 404 (Fiduciary
duties) providing that:
[I]n the case of a designated investment alternative that
contains a mix of asset classes, the administrator of a plan may,
but is not required to, use a benchmark that is a blend of different
broad-based securities market indices if--(1) the blend is
reasonably representative of the asset class holdings of the
designated investment alternative; (2) for purposes of determining
the blend's returns for 1-, 5-, and 10-calendar-year periods (or for
the life of the alternative, if shorter), the blend is modified at
least once per year if needed to reflect changes in the asset class
holdings of the designated investment alternative; (3) the blend is
furnished to participants and beneficiaries in a manner that is
reasonably calculated to be understood by the average plan
participant; and (4) each securities market index that is used for
an associated asset class would separately satisfy the requirements
of such regulation for such asset class.
[ssquf] Question 9: Are there 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? If so, why, and
what are the other factors the Department should consider when
developing regulations? Commenters are encouraged to review the
Department's prior guidance on the use of blended performance
benchmarks, albeit as secondary benchmarks, for purposes of the
participant-level disclosure regulation; the standards for use of a
``reasonable'' blended performance benchmark therein are similar, but
not identical, to the four criteria in section 318 of SECURE 2.0.\5\
---------------------------------------------------------------------------
\5\ See, e.g., Field Assistance Bulletin 2012-02R (July 30,
2012), Question 16; 75 FR 64910, 917 (Oct. 20, 2010).
---------------------------------------------------------------------------
[ssquf] Question 10: Section 318 of SECURE 2.0 also requires that
the Department, not later than three years after the applicability date
of such regulations, deliver a report to Congress regarding the
utilization, and participants' understanding of these benchmark
requirements. Comments are solicited on methods the Department might
use to assess whether, and the extent to which, participants understand
the type of benchmark described in section 318 of SECURE 2.0.
D. Defined Contribution Plan Fee Disclosure Improvements. Section
340 of SECURE 2.0 requires the Department to undertake a review of 29
CFR 2550.404a-5, relating to fiduciary requirements for disclosure in
participant-directed individual account plans. The review must explore
how the contents and design of the disclosures under this regulation
may be improved to enhance participants' understanding of defined
contribution plan fees and expenses, including the cumulative effect of
such fees on retirement savings over time. The Department must submit a
report of its findings to Congress within three years, including
recommendations for legislative changes. Although the Department may
take steps in addition to this RFI to conduct its review of the
regulation in question, the Department anticipates that responses to
the following questions will be a helpful start.
The regulation that is the subject of this required review was
published in 2010. The intent of the regulation was to increase fee
transparency and to provide America's workers with the information they
need to effectively manage and invest the money they contribute to
their 401(k)-type retirement plans. The regulation requires that plan
administrators use standard methodologies when calculating and
disclosing investment expense and historical return information to
achieve uniformity across the spectrum of investment options that exist
in 401(k)-type plans, facilitating ``apples-to-apples'' comparisons
among investment options. The regulation also requires that investment-
related information is furnished in a format that enables workers to
meaningfully compare the cost and historical performance of investment
options available in their plan.
[ssquf] Question 11: What information, including information
required by the subject regulation, is currently being provided to
participants in participant-directed individual account plans to
provide them with information about their plans' fees and expenses and
the cumulative effect of fees and expenses on their retirement savings
over time? How is the information adequate or inadequate in helping
plan participants make informed investment decisions? If inadequate, is
there evidence that this inadequacy is tied directly to the subject
regulation as opposed to other exogenous factors impacting financial
literacy?
[ssquf] Question 12: Is there evidence that the subject regulation
could or should be improved to help participants better understand the
fees and expenses related to their participant-directed individual
account plans? For instance, is there additional or different content,
not required under the current regulation, that could enhance
participants' understanding of the costs associated with participating
in their plan, including the costs of their available investment
options? In addition, are there additional or different design,
formatting, delivery, or other similar characteristics, not required
under the current regulation, that could improve the effectiveness of
these disclosures? If so, how should these improvements be incorporated
into the subject regulation?
[ssquf] Question 13: The subject regulation requires that
investment fee and performance information for each designated
investment alternative under
[[Page 54514]]
the plan must be furnished in a chart or similar format that is
designed to facilitate a comparison of such information.\6\ Is the
Department's model comparative chart, attached to this RFI as Appendix
A, helpful to participants in facilitating a meaningful comparative
analysis and selecting among investment options and for plan
administrators in satisfying their disclosure obligations under the
regulation? If not, how could the model be modified to enhance its
effectiveness? Are there examples of disclosures provided to satisfy
the subject regulation that use formats or designs that differ from the
Department's model comparative chart that have proven to be more
effective?
---------------------------------------------------------------------------
\6\ See 29 CFR 2550.404a-5(d)(2).
---------------------------------------------------------------------------
E. Eliminating Unnecessary Plan Requirements Related to Unenrolled
Participants. Section 320 of SECURE 2.0 amended ERISA by inserting a
new section 111, applicable for plan years beginning after December 31,
2022. Section 111 provides that, with respect to individual account
plans, no required disclosure, notice, or other plan document, must be
furnished to unenrolled participants, subject to two exceptions. Under
the first exception, the unenrolled participant must be furnished an
annual reminder notice of the participant's eligibility to participate
in the plan and any applicable election deadlines. Under the second
exception, the unenrolled participant must be furnished any document to
which they are otherwise entitled if the participant requests the
document. Section 111 defines an ``unenrolled participant'' for this
purpose as an employee who is eligible to participate in an individual
account plan; has been furnished a summary plan description and any
other ERISA or Code notices related to the participant's initial
eligibility to participate in the plan; is not participating in such
plan; and satisfies such other criteria as the Department, in
consultation with the Treasury Department, may determine appropriate.
Section 111 also defines an ``annual reminder notice'' for this purpose
as a notice provided in accordance with 29 CFR 2520.104b-1 that is
furnished in connection with the annual open season election period for
the plan or, if there is no such period, is furnished within a
reasonable period prior to the beginning of each plan year; and that
notifies the unenrolled participant of their eligibility to participate
in the plan, the key benefits and rights under the plan, with a focus
on employer contributions and vesting provisions; and provides such
information in a prominent manner calculated to be understood by the
average participant. Section 320 of SECURE 2.0 also makes amendments to
the Code that are parallel to the amendments to ERISA.
[ssquf] Question 14: Is there any guidance, regulatory or
otherwise, that plan administrators need or would find helpful to
implement ERISA section 111?
[ssquf] Question 15: Are there additional criteria that the
Department, in consultation with the Treasury Department, should
consider for determining who is an unenrolled participant?
[ssquf] Question 16: Is there additional information that the
Department, in consultation with the Treasury Department, should
consider for inclusion on the required ``annual reminder notice'' to
unenrolled participants?
[ssquf] Question 17: Would plan administrators benefit from a model
notice or model language for inclusion in the required ``annual
reminder notice'' to unenrolled participants? If so, commenters are
encouraged to submit suggested model language, specifically focusing on
the ``key benefits and rights under the plan, with a focus on employer
contributions and vesting provisions'' language. Considering that
different plans contain different ``benefits and rights,'' and a range
of plan-specific employer contribution rates and vesting provisions, is
it feasible for the Department to create model language?
[ssquf] Question 18: Is there a reliable source of data to estimate
the number of people that may be impacted by section 111 of ERISA?
F. Requirement to Provide Paper Statements in Certain Cases.
Section 338 of SECURE 2.0 amended ERISA section 105(a)(2) by adding a
new requirement, ``Provision of Paper Statements,'' effective for plan
years beginning after December 31, 2025, that at least one pension
benefit statement furnished for a calendar year for an individual
account plan, and at least one pension benefit statement furnished
every three years for a defined benefit plan, must be furnished on
paper in written form, with two general exceptions. First, if a plan
furnishes such statement in accordance with 29 CFR 2520.104b-1(c) (the
Department's 2002 electronic delivery safe harbor, or the 2002 safe
harbor), no paper statement must be furnished. Second, if a plan
permits participants and beneficiaries to request that pension benefit
statements be furnished by electronic delivery, no paper statement must
be furnished to individuals who request electronic delivery if the
statements are so delivered.\7\
---------------------------------------------------------------------------
\7\ Section 338 of SECURE 2.0 did not amend the alternative
notice provision in section 105(a)(3) of ERISA. ERISA section
105(a)(3)(A), in relevant part, provides that plan administrators of
defined benefit plans shall be treated as meeting the requirements
of ERISA section 105(a)(1)(B)(i) ``if at least once each year the
administrator provides to the participant notice of the availability
of the pension benefit statement and the ways in which the
participant may obtain such statement.''
---------------------------------------------------------------------------
Section 338 of SECURE 2.0 directs the Department to update the 2002
safe harbor to provide that, in addition to the other requirements of
the safe harbor, participants who first become eligible to participate
(and beneficiaries who first become eligible for benefits) after
December 31, 2025 must be furnished a one-time initial notice on paper
in written form, prior to the electronic delivery of any pension
benefit statement, their right to request that all documents be
furnished on paper in written form. Section 338 of SECURE 2.0 also
directs the Department, no later than December 31, 2024, to update
``applicable guidance governing electronic disclosure,'' except for the
2002 safe harbor, as necessary to ensure that (1) participants and
beneficiaries are permitted the opportunity to request that any
disclosure required to be delivered on paper under such guidance shall
be furnished electronically; (2) each paper statement furnished
pursuant to such updated guidance includes an explanation of how to
request that all such statements, and any other documents required to
be disclosed under ERISA, be furnished electronically and contact
information for the plan sponsor, including a telephone number; (3) the
plan may not charge any fee to a participant or beneficiary for
delivery of any paper statements; (4) each required document that is
furnished electronically by such plan shall include an explanation of
how to request that all such documents be furnished on paper in written
form; and (5) a plan is permitted to furnish a duplicate electronic
statement in any case when the plan furnishes a paper pension benefit
statement. The ``applicable guidance governing electronic disclosure''
referenced in section 338(b) of SECURE 2.0 refers to the Department's
second electronic delivery safe harbor regulation at 29 CFR 2520.104b-
31, titled ``Alternative method for disclosure through electronic
media--Notice-and-access'' (the 2020 electronic delivery safe harbor,
or the 2020 safe harbor).\8\ The Department intends, therefore, to
update
[[Page 54515]]
the 2020 safe harbor as necessary to reflect these updates.
---------------------------------------------------------------------------
\8\ 29 CFR 2520.104b-31; 85 FR 31884 (May 27, 2020).
---------------------------------------------------------------------------
[ssquf] Question 19: What modifications or updates to the 2002 safe
harbor are needed to implement section 338 of SECURE 2.0? Commenters
are encouraged to consider whether any additional information (other
than a statement of the right to request that all documents required to
be disclosed under ERISA be furnished on paper in written form) should
be included, and whether there are other standards that should apply to
the required one-time initial paper notice that must be furnished for
compliance with 29 CFR 2520.104b-1(c), the 2002 safe harbor? For
example, should the 2002 safe harbor be modified or updated to include
an initial paper notice that resembles the initial paper notice
required by paragraph (g) of the 2020 safe harbor regulation?
[ssquf] Question 20: What modifications or updates to the 2020 safe
harbor are needed to implement section 338 of SECURE 2.0? Commenters
are encouraged to consider and compare the contents of the initial
paper notification required under paragraph (g) of the 2020 safe harbor
with the content requirements of section 338(b)(2)(B) of SECURE 2.0. To
what extent should a statement under ERISA section 105(a)(2) contain
the content of the initial paper notification described in paragraph
(g) of the 2020 safe harbor, and why?
[ssquf] Question 21: Should both safe harbors be modified such that
their continued use by plans is conditioned on access in fact? Can plan
administrators (through their electronic delivery systems) reliably and
accurately ascertain whether an individual actually accessed or
downloaded an electronically furnished disclosure, or determine the
length of time the individual accessed the document? If so, should the
safe harbors contain a condition that plan administrators monitor
whether individuals actually visited the specified website or logged on
to the website, as a condition of treating website access as effective
disclosure? And, in the event that such monitoring reveals individuals
have not visited or logged on to the specified website (meaning that
effective disclosure was not achieved through website access), should
the safe harbors require that plan administrators revert to paper
disclosures or take some other action in the case of individuals whom
plan administrators know forsake such access?
G. Consolidation of Defined Contribution Plan Notices. Section 341
of SECURE 2.0 requires the Department and the Treasury Department, not
later than two years after enactment, to issue regulations providing
that plan administrators may, but are not required to, consolidate two
or more of the following notices into a single notice: (1) the
qualified default investment alternative notice, ERISA section
404(c)(5)(B); (2) the notice for preemption of automatic contribution
arrangements, ERISA section 514(e)(3); (3) the notice for alternative
methods of meeting nondiscrimination requirements, Code section
401(k)(12)(D); (4) the notice for alternative methods of meeting
nondiscrimination requirements for automatic contribution arrangements,
Code section 401(k)(13)(E); and (5) the notice for special rules for
certain withdrawals from eligible automatic contribution arrangements,
Code section 414(w)(4). The consolidated notice must include all
required content, clearly identify the matters addressed therein,
satisfy the timing and frequency requirements for each such notice, and
be presented in a manner that is reasonably calculated to be understood
by the average plan participant without obscuring, or failing to
highlight, the primary information for each notice.
[ssquf] Question 22: To what extent are regulations needed for plan
administrators to consolidate the notices described in section 341 of
SECURE 2.0? What are the perceived legal impediments to consolidation
under current law and regulations? What are the perceived
administrative or other practical impediments to consolidation? What
are the benefits and drawbacks to plans of consolidating the notices
described in section 341 of SECURE 2.0? Similarly, what are the
benefits and drawbacks to plan participants and beneficiaries of
consolidating these notices? Other than plans and plan participants,
are there other stakeholders that have an interest in this topic? If
so, who and what are their interests?
H. Information Needed for Financial Options Risk Mitigation.
Section 342 of SECURE 2.0 amended part 1 of ERISA by adding a new
section 113 that requires administrators of plans amended to provide a
period of time during which a participant or beneficiary may elect to
receive a lump sum to, among other things, provide participants and
beneficiaries with advance notice of the opportunity to elect a lump
sum payment in lieu of annuity payments for life from the pension plan.
The disclosure under section 113 would provide participants and
beneficiaries, as they consider what is best for their financial
futures, with important information to compare the other distribution
options available under the plan, such as monthly payments for life and
the life of their spouses, and the lump sum. In addition to explaining
the potential ramifications of accepting the lump sum, the disclosure
also would explain how the lump sum was calculated, including whether
the lump sum is based on the early retirement benefit and, for a
terminated vested participant, the relative values of the lump sum, the
single life annuity, and the qualified joint and survivor annuity. The
disclosure would also have to provide details about the election
period, and how to obtain additional information. Section 342 of SECURE
2.0 requires the Department to issue regulations implementing the
requirements under section 113 of ERISA not earlier than one year after
enactment. Further, these regulations must contain a model disclosure
reflecting the content requirements under section 113 that plan
administrators may use to discharge their statutory obligation.
[ssquf] Question 23: Is there a need for guidance with respect to
any of the specific content requirements in ERISA section 113(b)(1)(A)
through (H)? If so, please specify the particular content requirement
and explain the need for guidance.
[ssquf] Question 24: ERISA section 113(b)(1)(E) requires the notice
to specify, in a manner calculated to be understood by the average plan
participant, the ``potential ramifications of accepting the lump sum.''
Beyond the specific items set forth in ERISA section 113(b)(1)(E), what
other potential ramifications should the Department consider
incorporating into regulations under ERISA section 113, and why?
[ssquf] Question 25: Are transactional complexity, aging and
cognitive decline, and financial literacy relevant factors the
Department should consider when deciding to add to the list of
potential ramifications in making regulations under section 113 of
ERISA? Risk transfer transactions are by nature inherently complex
involving uncertainty. Some behavioral finance professionals suggest
that more and better information by itself is unlikely to ensure that
people, even with average financial literacy, make good choices in the
cognitively challenging task of choosing between an annuity and a lump-
sum payout. Despite such challenges, are there ways to structure and
present the notice that would increase the likelihood of better
decisions and retirement outcomes?
[ssquf] Question 26: Are there mandatory notices or disclosures
under the Code
[[Page 54516]]
that the Department should factor into the development of regulations
under section 113 of ERISA? If so, which notices and disclosures, and
how should they be factored into regulations under section 113 of
ERISA?
[ssquf] Question 27: The Department must issue a model notice for
plan administrators to use in discharging their new statutory
disclosure obligations under section 113 of ERISA. Commenters are
encouraged to submit for the Department's consideration exemplary
samples of notices that plan administrators have used in prior lump sum
offers that comprehensively explain the consequences of electing a lump
sum in lieu of annuity payments for life. Commenters should include a
concise explanation of why the commenter believes that the sample was
effective in conveying meaningful information to participants and
beneficiaries. The Department, in turn, offers for consideration by
commenters a model notice developed in 2015 by the ERISA Advisory
Council.\9\ The Council's model is the product of careful deliberation
following the receipt of extensive public input from a broad array of
stakeholders.\10\ The model is attached as Appendix B to this RFI.\11\
Should the Department consider using this model as the starting point
for the model required under section 113 of ERISA, and if not, why? If
so, to what extent could and should this model be improved, for
example, to conform to specific requirements under section 113 that
were not considered by the ERISA Advisory Council?
---------------------------------------------------------------------------
\9\ ERISA section 512 provides for the establishment of an
advisory council on employee pension and welfare plans, known as the
ERISA Advisory Council. The Council is comprised of fifteen members
representing different stakeholders, meets at least four times
annually, and advises the Department and submits recommendations on
the Department's functions under ERISA.
\10\ A list of witnesses providing input to the Council on this
topic, including their written statements, is available at
<a href="http://www.dol.gov/agencies/ebsa/about-ebsa/about-us/erisa-advisory-council/2015-written-statements-by-invited-witnesses-and-issue-statements#2">www.dol.gov/agencies/ebsa/about-ebsa/about-us/erisa-advisory-council/2015-written-statements-by-invited-witnesses-and-issue-statements#2</a>.
\11\ The full Report explaining the model is available at
<a href="http://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2015-model-notices-and-disclosures-for-pension-risk-transfers.pdf">www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2015-model-notices-and-disclosures-for-pension-risk-transfers.pdf</a>.
---------------------------------------------------------------------------
[ssquf] Question 28: ERISA section 113 contains a pre- and post-
election window reporting framework under which plans must report
information relating to the lump sum offerings and elections to the
Department and the PBGC. In addition to the number of participants and
beneficiaries who accepted the lump sum offer, the Department has
authority to require plans to furnish ``such other information as the
Department may require'' in the post-election report. Separately, the
Department itself must report information about offerings and elections
to Congress on a biennial basis. The Department also must post on its
website for public consumption the information it receives under this
reporting framework. The Department is considering what information
should be reported to the Department to ensure that the Department can
effectively discharge its monitoring, enforcement, public disclosure,
and biennial reporting obligations under ERISA. To these ends, what
data or information other than the number of participants and
beneficiaries who were eligible for and accepted lump sum offers should
be reported to the Department, and why? For instance, should the
Department collect demographic information on those individuals who
elected lump sum offers and, if so, what information? This information
could, for instance, enable the Department to provide Congress with
more detailed information on the cohorts of participants and
beneficiaries who accept lump sum offers as compared to those who do
not.
I. Defined Benefit Annual Funding Notices. Section 343 of SECURE
2.0 amended section 101(f) of ERISA by modifying the content
requirements for defined benefit plan annual funding notices. For
single-employer defined benefit plans, the ``funding target attainment
percentage'' was replaced by the ``percentage of plan liabilities
funded'' as a measure to reflect the plan's current funding status in
section 101(f) notices. The replacement measure uses year-end market
value for assets rather than actuarial value, disregards prefunding and
funding carryover balances, and determines year-end liabilities using
unadjusted spot segment rates. Funding notices for single-employer
plans also must contain a statement of the circumstances when
participants and beneficiaries may receive benefits in excess of the
amount guaranteed by PBGC. The existing requirement regarding
participant demographic data also was expanded to include the preceding
two years and mandates presentation of the data in tabular format. The
new amendments apply for plan years beginning after December 31, 2023.
[ssquf] Question 29: Is there a need for guidance with respect to
any of the amended content requirements in section 101(f)(2)(B) of
ERISA? If so, please specify the provision and explain the need for
such guidance.
[ssquf] Question 30: Is there a need for guidance on the
interrelationship of the new definition of ``percentage of plan
liabilities funded'' in section 101(f)(2)(B) and the segment rate
stabilization disclosure provisions in section 101(f)(2)(D)? When
applicable, the segment rate stabilization disclosure provisions
continue to use the funding target attainment percentage. In responding
to this question, commenters are encouraged to address the extent to
which participants and beneficiaries would find value in, or
alternatively be confused by, two different funding percentages for the
same plan.
[ssquf] Question 31: Existing regulations under section 101(f) of
ERISA contain a model notice for single-employer defined benefit
plans.\12\ The Department is interested in suggestions and comments on
how to modify the model to reflect the amendments to section 101(f) of
ERISA by SECURE 2.0, and for improvements more generally. For ease of
reference, the model is attached to this RFI as Appendix C.\13\
---------------------------------------------------------------------------
\12\ 29 CFR 2520.101-5.
\13\ Although SECURE 2.0 made only modest changes under section
101(f) with respect to multiemployer defined benefit plans,
commenters are not precluded from submitting suggestions or ideas on
how to improve the existing model notice for such plans.
---------------------------------------------------------------------------
BILLING CODE 4510-29-P
[[Page 54517]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.001
[[Page 54518]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.002
[[Page 54519]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.003
[[Page 54520]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.004
[[Page 54521]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.005
[[Page 54522]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.006
[[Page 54523]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.007
[[Page 54524]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.008
[[Page 54525]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.009
[[Page 54526]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.010
[[Page 54527]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.011
[[Page 54528]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.012
[[Page 54529]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.013
[[Page 54530]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.014
[[Page 54531]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.015
[[Page 54532]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.016
[[Page 54533]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.017
[[Page 54534]]
[GRAPHIC] [TIFF OMITTED] TP11AU23.018
Signed at Washington, DC, this 8th day of August, 2023.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 2023-17249 Filed 8-10-23; 8:45 am]
BILLING CODE 4510-29-C
</pre></body>
</html>Indexed from Federal Register on August 11, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.