DOL Seeks Info on SECURE 2.0 ERISA Reporting and Disclosure Mandates

The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a request for information (RFI) on SECURE 2.0 mandates related to ERISA’s reporting and disclosure provisions.

Several sections of SECURE 2.0 establish new, or revise existing, ERISA reporting and disclosure requirements. The DOL says it will be helpful to initiate several of these actions, and that they will be better equipped to do that if they have more information. 

Matters Affected

Matters that the RFI concerns include the following. 

Pooled Employer Plans. Section 105 of SECURE 2.0 amended ERISA Section 3(43)(B)(ii), which defines a pooled employer plan (PEP). It provides a clarification regarding which persons may be designated as a named fiduciary for this purpose, effective for plan years beginning after Dec. 31, 2022. The DOL intends to update the Form PR and Instructions (Registration for Pooled Plan Provider) to reflect this amendment for purposes of reporting the designated named fiduciary.

Emergency Savings Accounts Linked to Individual Account Plans. Section 127 of SECURE 2.0 amended ERISA Section 3 to add a new definition for a pension-linked emergency savings account (PLESA), a short-term savings account established and maintained as part of an individual account plan. Section 127 also added a comprehensive set of requirements for PLESAs. Further, it amended ERISA Section 110 to grant the DOL authority to prescribe an alternative method for satisfying any reporting and disclosure requirement under ERISA regarding PLESAs and ERISA Section 404(c) regarding specified default investment arrangements for PLESAs. These amendments are applicable to plan years beginning after Dec. 31, 2023.

Performance Benchmarks for Asset Allocation Funds. Section 318 of SECURE 2.0 requires that the DOL, not later than two years after enactment, issue regulations under ERISA Section 404 concerning designated investment alternatives.  

Defined Contribution Plan Fee Disclosure Improvements. Section 340 of SECURE 2.0 requires the DOL to review 29 CFR 2550.404a-5 relating to fiduciary requirements for disclosure in participant-directed individual account plans. 

Eliminating Unnecessary Plan Requirements Related to Unenrolled Participants. Section 320 of SECURE 2.0 amended ERISA by inserting a new Section 111, which provides that—regarding individual account plans—no required disclosure, notice, or other plan document must be furnished to unenrolled participants, subject to two exceptions. It is applicable for plan years beginning after Dec. 31, 2022.

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 Dec. 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.

Consolidation of Defined Contribution Plan Notices. Section 341 of SECURE 2.0 requires the DOL and the Treasury Department, not later than two years after enactment, to issue regulations providing that plan administrators may consolidate two or more of the following notices into a single notice:

• the qualified default investment alternative notice;
• the notice for preemption of automatic contribution arrangements;
• the notice for alternative methods of meeting nondiscrimination requirements; 
• the notice for alternative methods of meeting nondiscrimination requirements for automatic contribution arrangements; and 
• the notice for special rules for certain withdrawals from eligible automatic contribution arrangements. 

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 during which a participant or beneficiary may elect to receive a lump sum.

DB Annual Funding Notices. Section 343 of SECURE 2.0 amended ERISA Section 101(f) by modifying the content requirements for DB plan annual funding notices.

Questions from the DOL

The DOL is seeking information from answers to the following questions:

What guidance, 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?

In addition to the Form PR and the Form 5500, what other data sources could the DOL 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?

What would be efficient and comprehensive methods for the DOL to determine the range of designated investment alternatives for all PEPs?

How, and by whom, are PEPs most commonly marketed to employers? Do marketing techniques differ based on employer size? 

How often do employers rely on the advice of others when selecting and monitoring a PEP? If so, who generally gives this advice to employers? 

In addition to this RFI, are there other efficient and comprehensive methods for the DOL to solicit information on the steps employers take to select and monitor PEPs and to decide to stay in the PEPs? 

From whom should the DOL solicit this information (i.e., directly from employers, pooled plan providers, or both), using these other techniques?

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?

How should the DOL measure “increased retirement savings coverage” and what information would it need to do so? 

What are efficient and comprehensive methods for the DOL—depending on how “increase retirement savings coverage” is measured—to collect such information?

What guidance do plan administrators need to effectively implement the requirements of Section 127 of SECURE 2.0 and new part 8 of ERISA? 

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? 

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 DOL should consider when developing regulations? 

What information, including what the regulation requires, 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 affecting financial literacy?

Is there evidence that the regulation could, or should, be improved to help participants better understand the fees and expenses related to their participant-directed individual account plans? Are there additional or different design, formatting, delivery, or other similar characteristics that could improve the effectiveness of these disclosures? If so, how should these improvements be incorporated into the regulation?

Is the DOL’s model comparative chart attached to the 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? 

Is there any guidance that plan administrators need or would find helpful to implement ERISA Section 111?

Are there additional criteria that the DOL, in consultation with the Treasury Department, should consider for determining who an unenrolled participant is?

Is there additional information that the DOL, in consultation with the Treasury Department, should consider for inclusion on the required “annual reminder notice” to unenrolled participants?

Would plan administrators benefit from a model notice or model language for inclusion in the required “annual reminder notice” to unenrolled participants? 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 DOL to create model language?

Is there a reliable source of data to estimate the number of people ERISA Section 111 may affect?

What modifications or updates to the 2002 safe harbor are needed to implement Section 338 of SECURE 2.0? 

Should safe harbors be modified so 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?

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, administrative or other practical impediments to consolidation under current law and regulations? 

What are the benefits and drawbacks to plans of consolidating the notices described in Section 341 of SECURE 2.0? 

Is there a need for guidance regarding any of the specific content requirements in ERISA Section 113(b)(1)(A) through (H)? 

Beyond the specific items set forth in ERISA Section 113(b)(1)(E), what other potential ramifications should the DOL consider incorporating into regulations under that section, and why?

Are transactional complexity, aging and cognitive decline, and financial literacy relevant factors the DOL should consider when deciding to add to the list of potential ramifications in making regulations under ERISA Section 113? 

Are there mandatory notices or disclosures under the Internal Revenue Code that the DOL should factor into the development of regulations under ERISA Section 113? 

Should the DOL consider using the model notice developed in 2015 by the ERISA Advisory Council as the starting point for the model required under ERISA Section 113, and if not, why? If so, to what extent could and should this model be improved?

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 DOL, and why? 

Is there a need for guidance regarding any of the amended content requirements in ERISA Section 101(f)(2)(B)? 

Is there a need for guidance on the interrelationship of the new definition of “percentage of plan liabilities funded” in ERISA Section 101(f)(2)(B) and the segment rate stabilization disclosure provisions in Section 101(f)(2)(D)? 

Do you have any suggestions and comments on how to modify the model to reflect the amendments to ERISA Section 101(f) by SECURE 2.0?

Making Comments

Written comments should be sent to the Office of Regulations and Interpretations, identified by RIN 1210–AC23, no later than 60 days after the after the RFI is published in the Federal Register, which is scheduled to take place on Aug. 11, 2023. 

Comments can be submitted electronically through the federal eRulemaking Portal, www.regulations.gov. 

Comments can be sent by mail to 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.