Report: DOL Plans to Weigh in on Lifetime Income Safe Harbor, PEPs

While it's not specifically spelled out in the SECURE Act, a key official with the Labor Department indicated that the agency anticipates issuing guidance to help implement the lifetime income safe harbor provision. 

 

Preston Rutledge, the Department of Labor’s Assistant Secretary for the Employee Benefits Security Administration, shared this information via video with attendees at P&I’s DC East 2020 Conference. “Although the law contains no specific regulatory direction to EBSA, we expect some stakeholders may request some regulations or guidance,” Rutledge was reported as telling the conference attendees in a report by Pensions & Investments. 

Section 204 of the SECURE Act, which did not include a specific effective date, provides fiduciaries an optional safe harbor with respect to the selection of insurers for a guaranteed retirement income contract and protect them from liability for any losses that may result due to an insurer’s inability in the future to satisfy its financial obligations. The SECURE Act also includes provisions relating to disclosures regarding lifetime income and portability of lifetime income options. Rutledge reportedly did not specify what the guidance might entail or provide a timeline for action. 

 

The EBSA Assistant Secretary did confirm, according to the report, that the DOL will issue guidance on other aspects of the SECURE Act, including rules surrounding pooled employer plans. “We believe there are important rules that need to be issued this year to facilitate establishments of the new pooled employer plans,” Rutledge was reported as saying. 

 

What’s more, even though the SECURE Act doesn’t require guidance on prohibited transactions for the new PEP provisions, the Assistant Secretary reportedly stated that, “It does seem to us that some prohibited transactions will be helpful.” 

 

Under the SECURE Act law, a designated pooled plan provider must be a named fiduciary, must be responsible as the ERISA Section 3(16) plan administrator, and must register with the DOL/IRS, among other things. In addition, each adopting employer maintains responsibility for selection and monitoring of the pooled plan provider or any other named fiduciary, while the DOL and IRS have the authority to audit the PPP for compliance.