The proposal will likely be released in a matter of weeks. (Photo: Mike Scarcella/ALM)
The Labor Department has sent a proposed rule for electronic disclosures to participants in 401(k) plans to the White House’s Office of Management and Budget.
The proposal, titled “Improving Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures,” is the result of President Trump’s 2018 executive order, “Strengthening Retirement Security in America.”
Under the order, Labor was instructed to review whether ERISA’s retirement plan disclosure requirements, fashioned in 1986, should be updated to make the documents more understandable for plan participants, while reducing cost burdens on employers and other plan fiduciaries.
“This review shall include an exploration of the potential for broader use of electronic delivery as a way to improve the effectiveness of disclosures and to reduce their associated costs and burdens,” the White Houses executive order said.
OMB typically takes 30 days or less to review a proposal—it was delivered to the White House on August 16. If it satisfies OMB’s policy and cost review, the proposal will be released to the public.
“It’s significant in that it’s the last step before a proposed rule gets published,” said Kevin Walsh, a partner with The Groom Law Group. “It signals DOL has finished its work on it.”
In 2011, the Labor Department issued a technical release clarifying a safe harbor provision on the electronic delivery of plan documents. Under the safe harbor, documents can be electronically delivered as long as participants consent to receiving the information digitally and those participants have access to a computer as part of their core work responsibilities.
That guidance was seen as overly restrictive by industry advocates. In a 2011 comment letter to Labor, The SPARK Institute cited two of its sponsor members that claimed only 25 percent of their participants had elected to receive plan information electronically.
Exactly how the proposal addresses the existing safe harbor restrictions won’t be known until the proposal is released, said Walsh.
The proposal is listed as “economically significant,” meaning it is likely to have an annual impact on the economy of $100 million or more.
Walsh said a public comment period on the proposal can be expected.
“There will be plenty of time for DOL to finalize a rule before any possible change in administration in the next election,” he said.
“This is low-hanging fruit,” added Walsh. “The DOL’s disclosure rules were written for an era where the presumption was people didn’t have access to computers. It’s an area where it’s reasonable to ask what has taken so long for DOL to update the rules.”
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
