A new proposed fiduciary rule will be coming “very soon,” according to Assistant Secretary of Labor Lisa Gomez. She was joined by Carol Weiser, Benefits Tax Counsel at the Department of the Treasury, at an Oct. 24 session of the 2023 ASPPA Annual conference at National Harbor, MD.
Issuing proposed guidance on when an individual who provides advice is a fiduciary under ERISA is a “very high priority” for the Department of Labor (DOL) and for the Administration, said Gomez. “This proposed rule takes into consideration so much that has happened” as well as what the DOL has heard from stakeholders, Gomez added.
While she did not give a specific date, Gomez did say that the DOL would be issuing the rule “very soon.”
Securing SECURE
Gomez outlined some of the major activities in which the DOL and her agency, the Employee Benefits Security Administration (EBSA), are currently engaging in the wake of the enactment of SECURE 2.0.
Interpretive Bulletin 95-1. Gomez noted that SECURE 2.0 requires that the DOL review Interpretive Bulletin 95-1 regarding pension risk transfers. The department is “engaged in a really thoughtful process” with stakeholders and other parties for whom this is an important matter, she said. They are working on a report for Congress, she said, and will have one out by the end of the year.
WORK Act. Gomez noted that there are two pieces concerning Section 346 of SECURE 2.0, otherwise known as the WORK Act: (1) setting up a division to promote and educate regarding employee ownership, and (2) issuing guidance on evaluation of employer stock in employee stock ownership plans (ESOPs). She reported that the DOL is preparing proposed rules, and will be issuing them “relatively soon.”
Auto Portability. This is “certainly an issue we need to be addressing,” said Gomez; she added that the agency is working on guidance which “will be coming our soon.”
Reporting and Disclosure. Some provisions of SECURE 2.0 are very specific about reporting and disclosure, Gomez said, while others require a more holistic look. Accordingly, she said, the DOL has issued two requests for information regarding how to best implement those provisions.
Lost and Found. The DOL is “working very hard” on the technical aspects of creating a “lost and found” database. She said they are working with other agencies as well as looking for data from plan sponsors.
Gomez was careful to add that the DOL’s work on the “lost and found” database “is not a displacement” of its efforts to find missing participants. Rather, she said, it will be “just another tool.”
ESG Rule
Gomez said that the department was pleased with the court ruling that did not invalidate the ESG the DOL issued in February 2022, and that the department is providing education and guidance to plan sponsors about them. “The interest of participants is always paramount,” she said.
Cyber Security
In response to a question from ARA CEO Brian Graff concerning cyber security, Gomez said that the matter “continues to remain a high priority.” She added that there are questions surrounding the issue, though—such as what constitutes an obligation and how one should be satisfied. She said they seek to make best practices “front of mind” for plan sponsors.
The DOL continues to review the issue, Gomez said, adding, “Cyber attacks are not a matter of ‘if,’ but ‘when.’”
Treasury, Too
Weiser said that for the Treasury Department and the IRS, too, there is “a lot of work” to do regarding SECURE 2.0. She said there were questions about the application of the measure almost immediately upon its enactment. “It takes a while to figure it out,” she said.
Mortality Regs. Weiser noted that the IRS had issued proposed regulations concerning mortality rates in the previous week. They are “substantially the same” as those contained in proposed regulations issued in April 2022, she said, except that there is a delay in the evaluation dates.
The proposed regulations, Weiser noted, will apply to plan years after Jan. 1, 2025. They are “essentially the same” as those issued in 2017, she said, but there is a variation from them regarding adjustments for COVID-19, as well as for those who identify as non-binary.
The IRS seeks comments on these proposed regulations by Dec. 19, 2023, she said, adding that they “very much encourage” comments. The goal, she said, is to issue final regulations “as early as possible in 2024.”
Catch-up Contributions. Notice 2023-62, Weiser noted, does not negate catch-up contributions in 2024. She also noted that there is an administrative transition period of two years after Dec. 31, 2023. During that period, Weiser said, “catch-up contributions will be treated as satisfying the new provisions even if they are not designated as Roth contributions, and that plans that do not provide for designated Roth contributions are treated as satisfying the new provision as well.”
Comments on this matter will be accepted, Weiser said—but only until Oct. 25, 2023.
LTPT Regs. It is a “very high priority” to issue regulations on long-term part-time (LTPT) employees, Weiser said. It is a “very significant” package of regulations, she said, and will be a “significant, comprehensive update.”
Weiser attributed the delay in issuing them to the fact that work on LTPT guidance was the task of the same team that had been working of Roth catch-up contributions.
When asked by Graff if there would be administrative relief regarding compliance with the guidance when it is issued, Weiser was careful to point out that they will be issued in proposed—not final—form.
All Together Now
Graff asked Gomez and Weiser if their respective departments talk to each other and coordinate their efforts.
Gomez said they do talk to each other regarding how to best approach notices; Weiser responded that with most of the regulations for which there is any kind of overlap, Treasury shares them with “sister agencies” for their input.
The Big Picture
Having people understand more about EBSA, who it is, and what it does is very important, Gomez said. “We really do want to hear from folks,” she said, about specific things, those that are more general as well as “real world” perceptions and experiences. The DOL, she said, “seeks to create an ‘air of cooperation.’”
For her part, Weiser said that it is “very, very helpful” to the Treasury Department to have input from the retirement community in identifying areas where guidance is needed and there are questions.
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