The Department of Labor’s Employee Benefits Security Administration (DOL/EBSA) announced new guidance as featured below. You can subscribe to DOL/EBSA’s homepage for updates.
Required annual fee disclosure
On July 22, DOL/EBSA issued a temporary enforcement policy that will allow 401(k)-type plans to reset the timing for the annual distribution of the investment comparative chart that they are required to furnish to plan participants. Most plans must furnish this year’s annual comparative chart no later than August 30, 2013.
Under the enforcement policy contained in Field Assistance Bulletin 2013-02, plan administrators may reset the deadline one time, for either the 2013 or the 2014 comparative chart, if:
- the responsible plan fiduciary determines that doing so will benefit the plan’s participants and beneficiaries, and
- provided that no more than 18 months may pass before participants receive their next comparative chart.
This enforcement policy does not alter a plan administrator’s obligations under the regulation to timely update the investment information that is available at the plan’s internet web address or to notify participants about changes to investment information, such as a new plan investment option.
The DOL/EBSA participant-level fee disclosure regulation, which was implemented last year, requires that administrators of 401(k)-type plans disclose information about plan investment options, such as fee and performance information, to participants and beneficiaries at least annually. Plans operating on a calendar year had to furnish their first chart no later than August 30, 2012, and their second chart is due no later than August 30, 2013. Many other plan disclosures, however, such as pension benefit statements, are disclosed later in the calendar year. Permitting a one-time “re-set” of the deadline will allow plan administrators to align the comparative chart with other participant disclosures.
On June 3, DOL/EBSA announced that it approved a process to terminate and wind up approximately 180 defined contribution plans that were abandoned by their plan sponsors. This action, conducted through DOL/EBSA’s abandoned plan program, will give plan participants control over the fate of their retirement savings.
When employers abandon their individual account plans, custodians such as banks, insurers and mutual fund companies are left holding the assets of these abandoned plans but without the authority to terminate such plans and make benefit distributions – even in response to participant demands. DOL/EBSA developed the abandoned plan program to facilitate a voluntary, safe and efficient process for winding up the affairs of abandoned individual account plans so that benefit distributions are made to participants and beneficiaries. Visit DOL/EBSA’s website for more information on the abandoned plan program.
Comment letter on Proposed FASB Accounting Standards Update
On May 30, DOL/EBSA submitted a comment letter to the Financial Accounting Standards Board on the Proposed Accounting Standards Update – Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04.
Pension benefit statements – lifetime income illustrations
On May 8, DOL/EBSA published an advanced notice of proposed rulemaking focusing on lifetime income illustrations given to participants in defined contribution plans such as 401(k) and 403(b) plans.
DOL/EBSA is developing proposed regulations on the pension benefit statement requirements under ERISA Section 105. The ANPRM solicits input on a rule that would require a participant’s accrued benefit to be included on his or her pension benefit statement as an estimated lifetime stream of payments, in addition to an account balance. DOL/EBSA also requests comments on a rule that would require a participant’s accrued benefits to be projected to his or her retirement date, assuming annual contributions and an estimated rate of return, and then presented as an estimated lifetime stream of payments.
In conjunction with the publication of this ANPRM, DOL/EBSA posted on its website an interactive calculator that computes lifetime income streams in accordance with the proposed regulatory framework.
The ANPRM serves as a request for comment on specific language and concepts in advance of the proposed regulations. DOL/EBSA extended the comment period to August 7, 2013. Comments received are posted on the DOL/EBSA website.
New annual funding notice requirements
On March 8, DOL/EBSA issued Field Assistance Bulletin 2013-01 concerning new disclosure requirements mandated by the Moving Ahead for Progress in the 21st Century Act.
MAP-21 amended ERISA Section101(f) to require plan administrators of single-employer defined benefit pension plans to provide participants and others additional information on the impact of MAP-21's interest rate stabilization rules on the plan's funding status. An estimated 12,000 single-employer plans covering approximately 33.5 million participants and beneficiaries are subject to the new disclosure requirements. Many of these plans must furnish their first annual funding notice under the new law no later than April 30, 2013.
The FAB addresses a need for interim guidance pending adoption of regulations or other guidance under Section 101(f) as amended by MAP-21. The FAB sets forth technical questions and answers and provides a model supplement that plan administrators may use to meet their MAP-21 disclosure obligations.
Outreach and education
For notice of upcoming events as they are scheduled, subscribe on DOL/EBSA’s homepage. DOL/EBSA also conducts seminars for small businesses sponsoring health benefits plans. Information on these events is also available on DOL/EBSA’s homepage.