Current Focus of the DOL

According to Phyllis C. Borzi, assistant secretary of labor for the Department of Labor’s (DOL) Employee Benefit Security Administration (EBSA) in Washington, D.C., the agency is focusing on two things: expanding retirement plan coverage and improving adequacy.

“There are about 68 million Americans with no access to a retirement plan at work,” she told attendees of the American Retirement Association’s 2015 ASPPA Annual Conference. “The industry has been trying over the past 40-plus years to expand access to these workers.” Borzi noted that 40 years ago, about 50% of Americans had access to a retirement plan at work, and while the industry has made great strides in improving the participation of workers with access, the percentage with access has not improved.

In recent years, states have started efforts to address the access problem, and earlier this year, President Obama tasked the DOL with providing guidance for them to do so. Borzi said, as the agency worked on the guidance, it considered the Employee Retirement Income Security Act (ERISA).

“The way I see it, there are two approaches—avoid ERISA or embrace ERISA,” she said. According to Borzi, while the early adopter states were trying to craft legislation similar to the federal automatic IRA proposals to get into the payroll deduction safe harbor and avoid being subject to ERISA, other states are realizing that if they avoid ERISA, they will still eventually have to address consumer protections built into ERISA.

So, the EBSA is working on two initiatives to address both approaches. One will create a new payroll deduction safe harbor to address some issues brought up by early adopter states, Borzi said. The second will create mechanisms by which states may offer a prototype plan or multiple employer plan (MEP). “In essence, states will be service providers,” she stated.   

Borzi said the DOL also supports the Treasury’s myRA initiative to expand retirement plan coverage.

One way the DOL is working on improving retirement plan adequacy is through its initiative for including lifetime income projections on participant statements. Borzi told conference attendees the agency needs help.

“The comments we received [from our request for information] were not extremely helpful,” she said, explaining that some said statements should include a snapshot of “this is what your balance translates to in monthly income,” while others said statements should include a projection “based on continued savings and return on investment.” According to Borzi, the EBSA wants to know what behavioral change will occur among participants using one or the other or both approaches.

“We want anyone with data about this to share their data with us,” she urged conference attendees.

Of course, Borzi also commented about the DOL’s conflict of interest (or fiduciary definition) proposed rule. She said with all comments and discussions, the agency learned things. It was looking for constructive suggestions about how to simplify and streamline the rule, and it found some. “I think what you’ll say when the rule is released is ‘They listened; they learned; they made changes,” Borzi commented.

Finally, asked about the change to the Form 5500 deadline, Borzi said the DOL wants to convince Congress to move it back. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236), signed by President Obama on July 31, provides that the maximum extension for the returns of employee benefit plans filing Form 5500 shall be an automatic 3 1⁄2-month period ending on November 15 for calendar year plans. Currently the extension deadline is October 15.

In a previous discussion, Brian H. Graff, Esq., executive director and CEO of the American Retirement Association, explained that the bill extended the deadline for filing with the Internal Revenue Service (IRS), but not the DOL. “We felt blindsided by this, and we think it was a move in the wrong direction, especially since the Government Accountability Office and Office of Inspector General have asked us to get the information sooner,” Borzi said.