DOL Opens Public Comment on SECURE 2.0 Provisions

The Department of Labor is seeking public feedback and comment on several sections of the SECURE 2.0 Act of 2022 that establish new or revised reporting requirements, according to a request for information filed on Thursday.

The RFI period with the DOL’s Employee Benefits Security Administration runs for 60 days from the notice, ending on October 10, according to the filing. EBSA notes that several sections of the law establish new or revise existing Employee Retirement Income Security Act reporting, which in some cases require the department to submit regular reports to Congress as updates or to guide future legislation.

“[EBSA] believes that it will be helpful to initiate several of these actions, given their commonality in affecting reporting of information to the department and the disclosure of information to retirement plan participants and beneficiaries,” the department wrote.

The request for information includes questions about SECURE 2.0 provisions that affect pooled employer plans, emergency savings accounts linked to retirement plans, defined contribution plan fee disclosure improvements, consolidating DC plan notices and defined benefit annual funding notices.

The general areas for comment, some of which retirement plan advisers and others in the industry have been seeking clarity on, include:

• Pooled Employer Plans: Section 344 of SECURE 2.0 directs EBSA to study and report on the PEP industry every five years and make recommendations for its improvement. In the RFI, EBSA asked for ideas on how to construct an effective study.
  
  
• Emergency Savings Accounts: Section 127 amended ERISA to add a new definition for a “pension-linked emergency savings account.” EBSA is seeking comment on what kind of guidance plan administrators need to implement these accounts for participants.
  
  
• Performance Benchmarks for Asset Allocation Funds: Section 318 requires EBSA to issue regulations regarding fiduciary investment duties and the types of benchmarks used to measure designated retirement plan investments. The rules include responsibilities such as making sure the benchmark is a blend that “is reasonably representative of the asset class holdings of the designated investment alternative” and that the “blend is modified at least once per year if needed to reflect changes in the asset class holdings of the designated investment alternative.”

The RFI also requested comment on other areas that plan administrators should consider, as well as thoughts on how EBSA might ensure participants understand the benchmarking used.

• Defined Contribution Plan Fee Disclosure Improvements: Section 340 requires EBSA to review fiduciary requirements for disclosure in participant-directed individual account plans to improve participants’ understanding of DC plan fees and expenses, including the cumulative effect of such fees on retirement savings over time. The RFI asked what the department should consider in terms of DC plan transparency and how it might best be modelled for participants.
• Eliminating Unnecessary Plan Requirements Related to Unenrolled Participants: Section 320 amends ERISA regarding when and how unenrolled participants must be notified about a plan. The RFI asked what further information or guidance plan administrators need on when and how to communicate with unenrolled participants.
• Requirement to Provide Paper Statements in Certain Cases: Section 338 changes the rules for when a paper statement for a retirement plan’s performance must be given. The RFI requested comment on how safe harbor retirement plan rules might be modified or clarified to make the reporting requirements clear.
• Consolidation of Defined Contribution Plan Notices: Section 341 addresses regulations that allows plan administrators to consolidate various notices, including their qualified default investment alternative notices and notices for pre-emption 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.

The RIF asked for comment on any legal or administrative issues regarding consolidation.

• Information Needed for Financial Options Risk Mitigation. Section 342 amended ERISA by adding Section 113, which requires administrators of amended plans to provide a period of time, as well as an explanation, for a participant or beneficiary to be able to elect a lump sum in lieu of annuity payments for life from the pension plan. The RIF asked about the communication to participants and what information EBSA should gather and report on the participant pool
  
  
• Defined Benefit Annual Funding Notices. Section 343 modifies the content requirements for defined benefit plan annual funding notices. For single-employer defined benefit plans, the “funding target attainment percentage” was replaced by the “percentage of plan liabilities funded” as a measure to reflect the plan’s current funding status in section 101(f) notices. EBSA asked if more guidance is needed, and in what areas, to meet the new requirements for these funding notices.

EBSA will accept written comments through its federal rulemaking portal at www.regulations.gov or by mail to the department. Comments will also be publicly available on the website.