The American Retirement Association, on behalf of its five retirement industry associations, regularly engages with Federal and State regulators through correspondence on regulatory projects that impact our membership. This engagement enables ARA to detail its policy positions to the regulators and make recommendations on improving the rules governing the employer-based retirement plan system.
In August, the Department of Labor published a request for information (RFI)[1] regarding provisions of SECURE 2.0[2] that impact the reporting and disclosure framework of the Employee Retirement Income Security Act of 1974 (ERISA). SECURE 2.0 includes provisions amending ERISA and the Internal Revenue Code (the Code). Some of those provisions require regulations or other guidance for implementation. Other provisions direct the Department to review certain statutory and regulatory requirements and submit reports to Congress on the Department’s findings. The RFI focuses on the SECURE 2.0 sections that directly or indirectly impact ERISA’s reporting and disclosure requirements.
Soliciting input from the regulated community, subject matter experts, and community stakeholders is consistent with the Department’s mandate to review whether agency actions could improve the effectiveness of disclosures and reduce their cost to employers policy goals supported by the ARA.
ARA submitted responses to all thirty-one questions the Department posed and provided model language where it was requested. GAC members from all of ARA’s sister organizations provided input.
Some of the RFI’s questions concern issues of interest to all of our Government Affairs Committee (GAC) members, while others are of more interest to subsets of the membership. The ASEA GAC was principally responsible for responses to three of the RFI questions under the section “Defined Benefit Annual Funding Notices.” The questions and the answers in this section may be of particular interest to ASEA members. They are reproduced here:
Q29. 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.
ARA recommends that the Department clarify the options plans have to provide end-of-plan-year measurements when the plan uses a beginning-of-year valuation. Requiring the actuary to perform valuations on more than one date will unnecessarily increase costs to the plan, particularly for small plan sponsors, without meaningfully increasing the value of the disclosure to the participants.
Q30. 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.
ARA believes participants will only be confused by different funding percentages disclosed for the same plan. ARA recommends the Department provide a uniform and streamlined disclosure to the maximum extent possible.
Q31. Existing regulations under section 101(f) of ERISA contain a model notice for single-employer defined benefit plans. 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. For this question, the ARA proposed model language as an appendix to our letter, which can be found on the ARA Advocacy website (https://araadvocacy.org/resources/comment-letters/)
The feedback that ARA and others provided will inform more specific, detailed rulemaking on the SECURE 2.0 provisions or other guidance on such provisions in the future, including the completion of multiple reports to Congress. ARA will, as always, stay tuned for these proposals and other opportunities to provide input.
Just a week or so after ARA submitted responses to the RFI, we learned that another RFI from the Department is coming soon. SECURE 2.0 directs the Department, in consultation with the Department of the Treasury and the Pension Benefit Guaranty Corporation, to review each agency’s existing reporting and disclosure requirements for retirement plans. After this review and in consultation with plan participants and employers, 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. This review is not intended to deal with the specific substance of individual reporting and disclosure requirements under ERISA and the Code. Instead, it is expansive and calls for more generalized questions about best-communicating information to the government and American workers. We understand the Department will formally solicit public input on this report in coordination with Treasury and the PBGC. ARA will be on the lookout for it.
[1] Request for Information—SECURE 2.0 Reporting and Disclosure, 88 Fed. Reg. 54511 (Aug. 11, 2023)
[2] Division T of the Consolidated Appropriations Act, 2023, Setting Every Community Up for Retirement Enhancement Act, 2023, Pub. L. No. 117-328, 136 Stat. 1963 (Dec. 29, 2022)(SECURE 2.0).
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