ERISA

DOL Releases Interim Final Rules To Protect Workers’ Retirement Funds From Bankruptcy (Abandon Plan Program)

On May 16, 2024, the Employee Benefits Security Administration published interim final rules and an amendment to a prohibited transaction class exemption that better protect workers’ retirement savings by amending the agency’s Abandoned Plan Program to allow Chapter 7 trustees to use the program to terminate, wind up, and distribute benefits, making it easier for trustees to distribute assets from bankrupt companies’ retirement plans. See the U.S. Department of Labor’s news release.

Public comments were due on July 16, 2024. Read the interim final rules and amendment.

DOL Finalizes Retirement Security Rule Updating “Fiduciary” Definition

On April 23, 2024, the Biden-Harris administration announced that the U.S. Department of Labor had finalized its Retirement Security Rule to protect millions of workers who rely on trusted professionals on how to invest their savings. The final rule will achieve this by updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.

The updated definition of an investment fiduciary, which will take effect on September 23, 2024, applies when trusted financial services providers give compensated investment advice to retirement plan participants, individual retirement account owners and plan officials responsible for administering plans and managing their assets.

Access the rule here. Read the news release here.

DOL Announces Information Collection To Find Lost Retirement Savings

On April 16, 2024, the Employee Benefits Security Administration published an information collection request as directed by the Secure 2.0 Act of 2022, which requires EBSA to establish a search tool to help missing participants and their beneficiaries find their retirement benefits by December 29, 2024. The notice of proposed information collection directs plan administrators to provide information on a voluntary basis.

Written comments on the proposal could be submitted on or before June 17, 2024. See the U.S. Department of Labor’s news release here.

DOL Releases Final Amendment to Qualified Professional Asset Manager Exemption

On April 3, 2024, the Employee Benefits Security Administration released a final amendment to the Qualified Professional Asset Management (QPAM) Exemption, which permits various parties related to employee benefit plans and retirement accounts to engage in transactions involving assets. The amendment protects plan participants and beneficiaries and IRA owners by 1) clarifying that foreign convictions are included in the exemption’s ineligibility provision 2) expanding the ineligibility provision to include additional types of serious misconduct 3) adding a one-year transition period that focuses on mitigating costs and disruption to plans and IRA owners 4) updating asset management and equity thresholds 5) clarifying the independence and control a QPAM must have regarding investment decisions 6) adding a standard recordkeeping requirement.

The amendment took effect on June 17, 2024. Read the DOL’s news release here.

DOL Announces Amendments To Prohibited Transaction Exemption Filing

On January 23, 2024, the Employee Benefits Security Administration announced that it was amending its procedures governing the filing and processing of prohibited transaction exemption applications. The new regulation amends the department’s prohibited transaction exemption procedure that was established in 2011 and finalizes the exemption procedure regulation the department proposed on March 15, 2022. The amendments took effect on April 8, 2024.

The Exemption Procedure Regulation promotes the department’s prompt and efficient consideration of all prohibited transaction exemption applications by, among other things:

  • Clarifying the types of information and documentation required for a complete application.
  • Revising the definitions of a qualified independent fiduciary and qualified independent appraiser in order to ensure their independence.
  • Clarifying the content of specific reports and documents applicants must submit in order to ensure that the department receives sufficient information to make the requisite findings under ERISA Section 408(a) to issue an exemption.
  • Updating various timing requirements to ensure clarity in the application review process.
  • Specifying items that are included in the administrative record for an application and when the administrative record is available for public inspection.
  • Expanding opportunities for applicants to submit information to the department electronically.

Read the final Exemption Procedure Regulation notice here. Access the news release here.

DOL Releases RFI Related to Reporting and Disclosure Requirements

On January 19, 2024, the Employee Benefits Security Administration, the Department of the Treasury, the IRS, and the Pension Benefit Guaranty Corp issued a Request for Information (RFI) as required by the Secure 2.0 Act of 2022. This order instructs the ESBA to seek inputs on improving the effectiveness of existing reporting and disclosure requirements for retirement plans with the aim of promoting participant engagement and outcomes. Written submissions regarding the RFI were due by May 22, 2024. See related DOL news release: Department of Labor Issues Joint Request To Help Improve Retirement Plan Benefits Information Provided To Workers, Federal Government. See extension to the reporting period here.

DOL Proposes Regulation on Retirement Plan Portability When Employees Change Jobs

On January 18, 2024, the Employee Benefits Security Administration released a proposed regulation on automatic portability transactions under SECURE 2.0 Act of 2022. The goal of automatic portability transactions is to help workers keep track of their retirement savings accounts and improve retirement security by reducing cash-outs when they change jobs.

The proposed rule would implement Section 120 of the SECURE 2.0 Act, which allows an automatic portability provider to receive a fee in connection with executing an automatic portability transaction for certain distributions into Safe Harbor IRAs, through an added exemption to Internal Revenue Code section 4975. The regulation tracks the requirements under the statutory exemption that must be satisfied for the automatic portability transaction to be covered by the exemption.

Access the news release here.

DOL Issues Guidance on New Emergency Savings Accounts

On January 17, 2024, the Employee Benefits Security Administration released a guidance to improve retirement security through pension-linked emergency savings accounts under the implementation of the SECURE 2.0 Act of 2022.

The SECURE 2.0 Act authorized the establishment of pension-linked emergency savings accounts, which are short-term savings accounts established and maintained as part of an individual’s retirement savings plan, such as a 401(k) plan.

This guidance, which was developed after communication with stakeholders, consists of 20 frequently asked questions and responses. The department consulted with the Department of the Treasury and the Internal Revenue Service in developing the FAQs.

The FAQs can be found here. The news release can be read here.

DOL Proposes Rule Updating Definition of Investment Advice Fiduciary

On October 31, 2023, the Employee Benefits Security Administration proposed a retirement security rule updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. The proposal would require trusted investment advisors to adhere to high standards of care and loyalty when they make investment recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers.

The updated definition would apply when financial services providers give investment advice for a fee to retirement plan participants, individual retirement account owners, and others. The current 1975 definition was written when IRAs were less common and 401(k) plans did not exist, so most Americans relied on traditional defined benefit pensions. In today’s marketplace, individual plan participants and IRA owners are expected to make complex financial decisions and seek the help of expert advisers, making the proposed rulemaking necessary.

Read the Fact Sheet here.

DOL Issues Field Assistance Bulleting for Multiemployer Plans Receiving Special Financial Assistance

On April 25, 2023, the Employee Benefits Security Administration issued Field Assistance Bulletin 2023-01 with FAQs on the annual funding notice requirements for multiemployer pension plans that received special financial assistance under the American Rescue Plan Act.

Read the news release here. Read the Field Assistance Bulletin here.

DOL Issues Final Rules Changing 2023 Form 5500 & 5500-SF

On February 23, 2023, the U.S. Department of Labor, IRA, and the Pension Benefit Guaranty Corporation released Federal Register notices that announce changes to the 2024 Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF Short Form. These changes are estimated to reduce overall filing costs for employee benefit plans by $95 million annually.

The 2023 plan year reports – which generally will be filed beginning in July 2024 for calendar year plans – include the following changes:

  • A consolidated Form 5500 reporting option for certain groups of defined contribution retirement plans, improved reporting by pooled employer plans and other multiple employer plans.
  • A change in the participant-counting methodology for determining eligibility for simplified reporting alternatives available to “small plans,” which are generally plans with fewer than 100 participants.
  • A breakout of reporting on administrative expenses paid by the plan on the plan’s financial statements.
  • Further improvements in financial and funding reporting by PBGC-covered defined benefit plans.
  • The addition of selected Internal Revenue Code compliance questions to improve tax oversight and compliance of tax-qualified retirement plans.
  • Technical and conforming changes as part of the annual rollover of forms and instructions.

Read the Notice for Final Forms Revision here. Read the Notice of Final Rulemaking here. Access the news release here.

DOL Announces Reopening Of Comment Period On Voluntary Fiduciary Correction Program

On February 13, 2023, the U.S. Department of Labor announced that its Employee Benefits Security Administration will reopen the public comment period on amendments to its Voluntary Fiduciary Correction Program and the proposed amendment to the associated class Prohibited Transaction Exemption 2002-51.

The program encourages plans to comply with the Employee Retirement Income Security Act and the Internal Revenue Code by self-correcting violations of the law. If plans voluntarily correct eligible transactions and meet the specified requirements, the program and exemption together allow the plans to avoid potential civil enforcement actions and penalties.

Read the action here. Access the news release here.

DOL Announces Final Rule Removing Barriers To Considering ESG Factors In Plan Investments

On November 22, 2022, the U.S. Department of Labor announced a final rule that allows plan fiduciaries to consider climate change and other environmental, social, and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.

The rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” follows Executive Order 14030, which was signed by President Biden on May 20, 2021. The order directs the federal government to identify and assess policies to protect the life savings and pensions of America’s workers and families from the threat of climate-related financial risk.

Learn more about the new rule here. Access the news release here.

DOL Seeks Public Comments on Proposed Improvements to Voluntary Fiduciary Correction Program For Employers

On November 18, 2022, the U.S. Department of Labor announced that its Employee Benefits Security Administration has proposed updates to the Voluntary Fiduciary Correction Program, including a self-correction component for employers who fail to send employee salary withholding contributions or participant loan repayments to retirement plans in a timely manner.

EBSA’s proposed changes will do the following:

  • Clarify some existing transactions that are eligible for correction under the program.
  • Expand the scope of other transactions currently eligible for correction and simplify administrative or procedural requirements under the program.
  • Amend the associated prohibited transaction class exemption, known as PTE 2002-51.

Most significant among the proposed changes is the addition of the self-correction component, which will enable employers and other plan officials to notify EBSA electronically that they have self-corrected certain failures to send participant contributions and loan repayments to pension plans on time.

Access the proposed updates here. Read the news release here.

DOL Updates Independence Requirement Bulletin for Accountants Auditing Employee Benefit Plans

On September 2, 2022, the U.S. Department of Labor’s Employee Benefits Security Administration announced the release of the Interpretive Bulletin 2022-01, updating its guidance on the “independence” requirement for accountants who audit employee benefit plans under section 103(a)(3)(A) of the Employee Retirement Income Security Act.

Under ERISA, plan administrators, subject to certain exceptions, are required to retain on behalf of all plan participants an “independent qualified public accountant” to conduct an annual examination of the plan’s financial statements in accordance with generally accepted auditing standards. The accountant also must render an opinion as to whether the financial statements are presented fairly in conformity with generally accepted accounting principles and whether the schedules required to be included in the plan’s annual report present fairly and in all material respects the information contained therein when considered in conjunction with the financial statements taken as a whole.

Access the updated Interpretive Bulletin here. Read the news release here.

DOL Proposes Amendment To Qualified Professional Asset Manager Exemption To Protect Benefits Plans, Participants, Beneficiaries

On July 26, 2022, the U.S. Department of Labor’s Employee Benefits Security Administration announced a proposed amendment to the Class Prohibited Transaction Exemption 84-14, also known as the Qualified Professional Asset Manager Exemption, to ensure the exemption continues to protect plans, participants and beneficiaries, individual retirement account owners and their interests.

The amendment would protect plans and their participants and beneficiaries by:

  • Addressing perceived ambiguity as to whether foreign convictions are included in the scope of the exemption’s ineligibility provision.
  • Expanding the ineligibility provision to include additional types of serious misconduct.
  • Focusing on mitigating potential costs and disruption to plans and IRAs when a QPAM becomes ineligible due to a conviction or participates in other serious misconduct.
  • Updating asset management and equity thresholds in the definition of “Qualified Professional Asset Manager.”
  • Adding a standard recordkeeping requirement that the exemption currently lacks.
  • Clarifying the requisite independence and control that a QPAM must have with respect to investment decisions and transactions.

Read the notice of the proposed amendment here. Access the news release here.

DOL Releases RFI Related to Climate-Related Financial Risk

On February 14, 2022, the Employee Benefits Security Administration released a Request for Information (RFI) following the Executive Order on Climate-Related Financial Risk. The order instructs the ESBA to seek input on what actions it can take under ERISA and FERSA to safeguard the savings and pensions of U.S. workers from the threats of climate-related financial risk; including both physical risk and transition risk. Issues inquired about include data collection and publication, best sources of information about risks, and the benefits of including guaranteed lifetime income products into ERISA-covered plans. Written submissions regarding the RFI are due by May 16, 2022. See related DOL news release: U.S. Department of Labor Seeking Public Comment on Protecting Workers’ Life Savings, Pensions from Climate-Related Financial Risk. According to the news release: “The RFI follows a proposed rule published by the department, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights. The RFI deals with a broader set of questions than the proposed rule and is a different initiative.”

DOL Releases Proposed Rule to Encourage ESG

On October 14, 2021, the Department of Labor (the “DOL”) published a proposed regulation, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights to amend the DOL’s investment duties regulation under the Employment Income Security Act of 1974. Comments to the Proposed Rule will be accepted up until Monday, December 13, 2021.

For more information, see DOL Proposes Rule Encouraging ESG & Proxy Voting, Reducing Documentation Requirements prepared by the Groom Law Group.  See also DOL’s news release.

DOL Releases New Investment Advice Exemption Guidance

On April 13, 2021, the U.S. Department of Labor’s Employee Benefit Security Administration issued guidance on fiduciary investment advice for retirement investors, employee benefit plans and investment advice providers. The guidance relates to the department’s “Improving Investment Advice for Workers & Retirees” exemption and follows its Feb. 12, 2021, announcement that that exemption would go into effect as scheduled on Feb. 16, 2021.

The department issued two documents:

  • “Choosing the Right Person to Give You Investment Advice: Information for Investors in Retirement Plans and Individual Retirement Accounts,” which includes questions a retirement investor can ask when interviewing potential advice providers, background information to help them understand the purpose of each question, and investor-focused FAQs about the exemption. Read it here.
  • A set of compliance-focused FAQs that provide guidance for investment advisors who are relying, or planning to rely, on the exemption. Read it here.

Access the news release here.

DOL Confirms Investment Advice Exemption

On February 12, 2021, the Department of Labor’s Employee Benefits Security Administration confirmed that “Improving Investment Advice for Worker & Retirees,” an exemption for investment advice fiduciaries, will go into effect as scheduled on Feb. 16, 2021.

“This exemption allows for important investor protections, including a stringent ‘best interest’ standard of care for fiduciary recommendations of rollovers from ERISA-protected retirement accounts,” said Deputy Assistant Secretary of Labor for the Employee Benefits Security Administration Ali Khawar. “We recognize that investment advice providers have been preparing for the exemption, and this step will allow them to implement important system changes. That said, we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach.”

Read the exemption here. Access the news release here.

DOL Releases Missing Participant Guidance

On January 12, 2021, the Department of Labor’s Employee Benefits Security Administration announced a new guidance in its efforts to help plan fiduciaries meet their obligations under the Employee Retirement Income Security Avt of 1974 to locate and distribute retirement benefits to missing or nonresponsive participants.

The guidance comes in three forms:

  1. Best Practices for Pension Plans, which describes a range of best practices plan fiduciaries should consider as steps their plans could take to reduce missing participant issues
  2. Compliance Assistance Release 2021-01, which outlines the investigative approach that will guide all of EBSA’s Regional Offices under the Terminated Vested Participants Project
  3. Field Assistance Bulletin 2021-01, which authorizes plan fiduciaries of terminating defined contribution plans use of the PBGC missing participants program for missing or nonresponsive participants’ account balances.

Read the news release here.

DOL Releases Proposed and Final Rules on Pooled Plan Provider Registration Requirements

On November 12, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration issued a final rule establishing registration requirements for pooled plan providers. For more information, see The Race to Register: DOL Issues Final Rule on PPP Registration prepared by the Groom Law Group.

The DOL had issued a notice of proposed rulemaking on pooled plan provider registration requirements on August 20, 2020. The proposal was published on September 1, 2020 and seeks to implement the registration requirements for “pooled plan providers” pursuant to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Public comments were accepted until October 1, 2020.

DOL Releases Proposed Rule and Final Rules on “Investment Duties” (aka the ESG Rule)

On June 23, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration issued a proposed rule that proposes amendments to the Employee Retirement Income Security Act requiring plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action. Public comments on the proposed rule were accepted until July 30, 2020. See the U.S. Department of Labor’s news release.

On October 30, 2020, the U.S. Department of Labor (DOL) issued the final rule on “Financial Factors in Selecting Plan Investments.” The final rule amends the existing “investment duties” rule that outlines how fiduciaries can meet their obligations under ERISA. The notable change from the June 2020 proposed rule is the removal of references to environmental, social and governance (“ESG”) factors. View an overview of the rulemaking prepared by the Groom Law Group.

DOL Releases Interim Final Rule on Lifetime Income Disclosures

On September 18, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA)  issued an interim final rule (IFR) that will help workers determine their ability to retire by allowing them to estimate how their current savings in a 401(k)-type plan might translate into lifetime monthly payments. The rule implements section 203 of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.  This IFR is effective September 20, 2021.

On July 26, 2021, DOL issued some Temporary Frequently Asked Questions (FAQs) related to the IFR.

DOL Releases Request for Information

On June 18, 2020, Employee Benefits Security Administration released a Request for Information (RFI) in response to the SECURE Act’s amendment of ERISA allowing for pooled employer plans. It requests information on the possible parties, business models, and conflicts of interest that respondents anticipate will be involved in the formation and ongoing operation of PEPs, in addition to information regarding similar issues involving multiple employer plans sponsored by employer groups or associations or professional employer organizations. The Department of Labor (the Department) is considering whether to propose a class exemption on its own motion to cover prohibited transactions involving PEPs and MEPs. Comments on the RFI were received until July 20, 2020.

DOL Information Letter

On June 3, 2020, the U.S. Department of Labor (DOL) issued an information letter intended to provide clarity about how ERISA fiduciary duties apply to including alternative investments as they do to more-typical investments in defined contribution (DC) plans. The guidance is an effort to make it clear that ERISA does not prohibit alternative investment in DC plans, and therefore a fiduciary could, if it follows a prudent process, decide to allocate a portion of a target date fund (TDF) portfolio to alternative investments. See DOL’s related press release.

MEP Proposed Rulemaking

Department of Labor

On July 31, 2019, the Employee Benefits Security Administration, Department of Labor (DOL), issued a Request for Information regarding the definition of “employer” in section 3(5) of the Employee Retirement Income Security Act of 1974, as amended. According to the DOL, the RFI is in response to public comments submitted for the proposed rule in October 2018 (see next bullet for details) and could serve as the basis for future rulemaking. The RFI was open for comments for 90 days and closed on October 29, 2019.  All public comments submitted to the RFI can be viewed here.

In addition, on July 31, 2019, the Employee Benefits Security Administration, Department of Labor, published final rules of “Definition of ‘Employer’ Under Section 3(5) of ERISA-Association Retirement Plans and Other Multiple-Employer Plans.” The regulation addresses when a group or association of employers or PEO falls within the definition of “employer” under ERISA section 3(5) for purposes of sponsoring a MEP under title I of ERISA to cover the employees of member employers.

  • See the Department of Labor’s news release on the final rule.
  • The proposed rules were issued on October 23, 2018 and were open for public comments until December 24, 2018. On December 21, 2018, CRI submitted comments to the U.S. Department of Labor regarding this proposed rule. Click here to view the letter. All public comments can be viewed here. 

Additional Resources:

The District Court of Washington, D.C. ruled that portions of the U.S. Department of Labor’s rule relating to the definition of employer related to Associated Health Plan undercut the Affordable Care Act. Because the definition of employer for MEPs under ERISA is similar to that of employer for Associated Health Plans, there is concern that a court may similarly block U.S. Department of Labor’s s new MEP rule.

The U.S. Department of Labor proposed rules that clarify which organizations can sponsor MEPs as defined by ERISA section 3(5). The impact on state-run MEPs is unclear, as the proposed rules do not explicitly mention them.

Treasury Department

On July 3, 2019, the Internal Revenue Service, Department of the Treasury, issued a notice of proposed rulemaking related to the tax qualifications of multiple employer plans. Proposed regulations would provide an exception to the “unified plan rule” if one employer fails to satisfy a qualification requirement or fail to provide information used to determine compliance with such requirements. The comment period closed on October 1, 2019.

Additional Resources:

ERISA Basics

View Recent DOL ERISA Advisory Council Reports:

CRI ERISA Related Policy Reports

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