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 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 notice of proposed rulemaking fact sheet.
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.
- U.S. Department of Labor Publishes Request for Information On Pooled Employer Plans and Other Multiple Employer Plans (News release)
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 fact sheet and 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.
- Court Ruling on Association Health Plans Leaves Future of DOL MEP Rule in Doubt (Groom Law Group, April 2019)
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.
- Department of Labor Proposes Multiple Employer Plan Expansion (Groom Law Group, October 2018)
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.
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.
- IRS Proposed Rule Offers Relief to The Multiple Employer Plan One Bad Apple Rule (Groom Law Group, August 2019)
- Summary of the Employee Retirement Income Security Act. Click here to learn more.
- Retirement Plans and ERISA FAQs. Click here to learn more.
- ERISA – Title 29 of the Code of Federal Regulations. Click here to learn more.
View Recent DOL ERISA Advisory Council Reports:
- 2021 Topics:
- 2020 Topics:
- 2019 Topics:
- 2018 Topic: Lifetime Income Solutions as a Qualified Default Investment Alternative (QDIA) – Focus on Decumulation and Rollovers
- “Mandated Disclosure for Retirement Plans – Enhancing Effectiveness for Participants and Sponsors” (November 2017)
- “Participant Plan Transfers and Account Consolidation for the Advancement of Lifetime Plan Participation” (November 2016)
- “Model Notices and Plan Sponsor Education on Lifetime Plan Participation” (November 2015)
- “Model Notices and Disclosures for Pension Risk Transfers” (November 2015)
- “Issues and Considerations Surrounding Facilitating Lifetime Plan Participation”(November 2014)
- “Outsourcing Employee Benefit Plan Services” (November 2014)
CRI ERISA Related Policy Reports
- State-Facilitated Retirement Savings Programs: A Policymaker’s Guide to ERISA and the Tax Code for IRAs and 401(k)s (Policy Report 21-02, March 2021). Updates Policy Report 14-01, December 2014)
- Multiple Employer Plans: An Overview of Legal, Regulatory and Plan Design Considerations for States. (Policy Report 17-02, August 2017). Learn more about how ERISA and other laws apply to MEPs.
- Review of Potential Public Retirement Plan Options for Private Sector Employees/Employers in the State of Vermont. Learn more about how ERISA and other laws apply to retirement plan design options.
- State Initiatives to Expand the Availability and Effectiveness of Private Sector Retirement Plans: How Federal Laws Apply to Plan Design Options. (Policy Report 14-01, December 2014)