Executive Order Directs Department of Labor and Department of Treasury to Take Steps to Strengthen Retirement Security and Reduce Disclosure Burdens
On August 31, 2018, President Trump signed an executive order (EO) announcing a goal of improving retirement security by expanding access to multiple employer plans (MEPs), simplifying the qualification requirements for MEPs, and improving the effectiveness and reducing the cost of furnishing retirement plan notices and disclosures.
The EO’s policy goals include improving workplace retirement plan coverage to ensure that American workers will be financially prepared to retire. The EO explains that expanding access to MEPs, under which employees of different private-sector employers may participate in a single retirement plan, is an efficient way to reduce the administrative costs of retirement plans. Further, it would encourage more plan formation and broader availability of workplace retirement plans, especially among small employers.
The EO directs federal agencies to revise or eliminate rules and regulations that result in unnecessary costs and burdens on businesses–especially small businesses–and make creating retirement plans burdensome. The EO sets out initiatives to improve the effectiveness of required notices and disclosures and reduce their cost to employers, with the goal of promoting retirement security by expanding access to workplace retirement plans.
The EO specifically directs the Secretary of Labor to examine policies that would:
- Clarify and expand the circumstances under which employers, especially small and mid-sized businesses, may sponsor or adopt an MEP as a workplace retirement option for their employees.
- Increase retirement security for part-time workers, sole proprietors, working owners, and other workers with non-traditional employer-employee relationships, by expanding their access to workplace retirement plans, including MEPs.
The EO sets out several specific targets for the Department of Labor and the Treasury Department:
- Within 180 days of August 31, 2018
- The Labor Secretary is to consider whether to issue proposed regulations, guidance, or both that would clarify when a group or association of employers (or other appropriate business or organization) could be an “employer” within the meaning of ERISA.
- The Treasury Secretary is to consider proposing amendments to regulations or other guidance on the requirements by which an MEP may satisfy the tax qualification requirements set out in Code.
- The Treasury Secretary is directed to consult with the Labor Secretary before issuing any proposed guidance, and the Labor Secretary is directed to take steps to implement any such guidance, as appropriate and consistent with applicable law.
- The Treasury Secretary is to examine the life expectancy and distribution period tables in the regulations on required minimum distributions from retirement plans, and determine whether they should be updated to reflect current mortality data and whether the updates should be made annually or on another periodic basis.
- Within one year of August 31, 2018
- The Labor Secretary is directed to, in consultation with the Treasury Secretary, complete a review of potential actions, through regulations, guidance, or both, to make retirement plan disclosures required under ERISA and the Code more understandable and useful for participants and beneficiaries, while still reducing the costs and burdens disclosure requirements impose on those responsible for providing such disclosures.
- If the Labor Secretary determines that action should be taken, the Labor Secretary is directed to propose appropriate regulations or guidance, consistent with applicable law and these policies.
The employee benefits lawyers of Woods Rogers PLC will monitor the actions directed to be taken under this Executive Order, and we look forward to reporting further as steps are implemented to strengthen retirement security.
If you have any questions concerning this Executive Order or any other employee benefits questions, our employee benefits lawyers are ready to help you.
Article brought to you by:
Neil V. Birkhoff
Tax Practice Group