Compliance April 7, 2025

Tuberville Reintroduces Bill to Reverse Retirement Plan Crypto Warning

The Financial Freedom Act would reverse the Department of Labor’s guidance against including cryptocurrency investments in 401(k) accounts.

Reported by

Senator Tommy Tuberville, R-Alabama, has reintroduced legislation that aims to reverse guidance issued by the Department of Labor’s Employee Benefits Security Administration in 2022 that discourages retirement plans from including cryptocurrency assets or other alternative investments in their offerings.

The Financial Freedom Act would prohibit the secretary of labor “from constraining the range or type of investments that may be offered to participants and beneficiaries of individual retirement accounts who exercise control over the assets in such accounts,” according to a Tuberville statement.

Get more!  Sign up for PLANSPONSOR newsletters.

In its guidance, EBSA stated that crypto investments “present significant risks and challenges to participants’ retirement accounts” and violate plan administrators’ fiduciary duty. It also states that it will investigate and “take appropriate action” against retirement plans that ignore the guidance.

Although the text of the bill makes no mention of cryptocurrency or digital assets, it argues that the Employee Retirement Income Security Act of 1974 does not prohibit a fiduciary from including “any particular type of investment alternative,” as long as a fiduciary provides a broad range of investment alternatives. The bill states that the secretary of labor cannot issue regulations or sub-regulatory guidance “constraining or prohibiting the range or type of investments” offered through brokerage windows.

“Meddling in 401(k) investments through overregulation restrains financial growth and restricts personal liberty,” Tuberville said in a statement. “The federal government, which is $36 trillion in debt, shouldn’t be telling anyone how to invest their money.”

The bill is co-sponsored by Senator Cynthia Lummis, R-Wyoming. It was introduced on April 1 and referred to the U.S. Senate Committee on Health, Education, Labor and Pensions.

Tuberville also introduced a bill that would prohibit the Commodity Futures Trading Commission from registering a digital asset platform that is owned in whole or in part by an entity organized or established in China. The Prohibiting Foreign Adversary Interference in Cryptocurrency Markets Act would also require the CFTC to revoke the registration of any digital commodity platform “if a covered entity acquires all or any part of the ownership of the digital commodity platform.”

According to Tuberville, allowing China-based entities to participate raises “serious concerns” related to investor protection, data privacy, national security, sanctions compliance and anti-money laundering efforts.

That bill is co-sponsored by Senator Cindy Hyde-Smith, R-Mississippi.

Compliance April 7, 2025

DOL Offers Guidance on Annual Funding Notice Requirements

The regulator addressed confusion resulting from ERISA-related questions that arose after passage of the SECURE 2.0 Act of 2022.

Reported by

The Department of Labor issued on April 3 a field assistance bulletin to clarify for the administrators of defined benefit pension plans how to furnish annual funding notices to participants, beneficiaries and the Pension Benefit Guaranty Corporation and remain in compliance.

The guidance, Field Assistance Bulletin 2025-02 from the Employee Benefits Security Administration, “provides instruction to EBSA’s national and regional offices of enforcement (Offices of Enforcement) on how retirement plans in this position may comply with the new law pending additional guidance or revisions to [ERISA] 29 CFR 2520.101-5.”

Get more!  Sign up for PLANSPONSOR newsletters.

According to the bulletin, confusion arose from amendments to ERISA Section 101(f) made by Section 343 of the SECURE 2.0 Act of 2022. Those amendments modified annual funding notice requirements for plan years beginning after December 31, 2023.

In the bulletin, the DOL “acknowledges that this bulletin does not address all SECURE 2.0-related issues that may arise with respect to annual funding notices.” For clarity, it continues, if plan administrators file funding notices in “compliance with the guidance in this bulletin,” the DOL will treat such action “as a reasonable, good faith interpretation of the annual funding notice disclosure requirements of section 101(f) of ERISA with respect to the issues discussed in this bulletin.”

Acknowledging that some defined benefit plans may have already prepared and begun distributing funding notices to participants, the DOL wrote that it expects plan administrators “to consider the guidance in this bulletin in evaluating whether the disclosures were consistent with a reasonable, good faith interpretation of section 101(f), as amended, and to take appropriate corrective action to the extent the plan administrator concludes that the disclosures did not meet that standard.”

The bulletin is clear that administrators of single-employer plans can no longer rely on the model funding notice provided by the DOL in Appendix A of 29 CFR 2520.101-5. Instead, the DOL directs administrators of most single-employer plans to the model notice in Appendix 1 of this bulletin.

Similarly, administrators of multiemployer plans are advised that they should rely on the model notice in Appendix 2 of the current bulletin, not the model notice in Appendix B of 29 CFR 2520.101-5.

The new bulletin also provides model wording that plan administrators can use to explain that the PBGC may pay “vested benefits greater than the guaranteed level of benefits if the terminating single-employer plan has sufficient assets.”

The bulletin offers a detailed series of 12 questions and answers as detailed guidance for plan administrators. The questions cover a range of topics, including:
  • When plan administrators must first comply with the SECURE 2.0 modifications to annual funding notices;
  • That administrators of single employers of “at-risk” plans, starting with the 2024 notice year, “do not disclose ‘at-risk’ liabilities or otherwise take the ‘at-risk’ rule of section 303(i) into account in determining the plan’s year-end liabilities and the percentage of liabilities funded”;
  • How plan administrators may report the required demographic information for plans, referring them, respectively, to the model language in the single-employer plan and multiemployer model notices in Appendixes 1 and 2 of this bulletin;
  • How to determine and disclose “average return on assets” for the notice year of both single-employer and multiemployer plans, referring administrators to Method 1 and Method 2 described in the bulletin;
  • That an annual funding notice for a cooperative and small employer charity plan needs to include the new demographic and average return on assets disclosures; and
  • That the standard has not changed for disclosing known events that will take effect at some point in the current year and are expected to have a material effect on the plan funding.

«