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Legislation, Regulation & Fees

Latest Retirement Plan Legislation & Regulations

October 2012 (4Q) Summary

  • The retirement industry is working diligently to implement plan sponsor fee disclosure regulations, which were finalized in February. The Department of Labor (DOL) delay of participant fee disclosure regulation was welcome news to many plan sponsors who needed time to finalize plans to share the required information with participants.
  • Tax expenditures will likely consume the headlines in 2012 as political debate continues about how to reduce the national debt.
  • Defined benefit plans are getting some much needed relief as several pieces of legislation addressing funding levels and interest rate volatility, were approved.
  • While changes undoubtedly bring additional challenges, we believe they also bring significant opportunities. Preparation is the key. Financial professionals, TPAs and plan sponsors who are informed can make adjustments to retirement plan(s) accordingly.

October 2012 (4Q) Regulatory Landscape

This summary tracks relevant portions of federal regulatory developments. This summary is intended to provide you with a basic overview of these developments.

Topic Name of Regulation Status Effective Date Description
Fee & Investment Disclosure Regulations for Plan Sponsors ERISA 408(b)(2) FINAL Regulation July 1, 2012 Final Department of Labor (DOL) regulations requiring disclosures by plan service providers to plan sponsors/fiduciaries of fee and service information.
Fee & Investment Disclosure Regulations for Participants 404(a)(5) FINAL Regulation * Final DOL regulations requiring plan fiduciaries to disclose certain plan, fee and investment-related information to participants and beneficiaries.
Technical Release 2011-03   On Sept., 13, 2011, the DOL confirmed that quarterly
disclosures may be provided in the same manner that
participant statements are permitted.
Field Assistance Bulletin   On May 7, 2012, the DOL provided more details regarding several aspects of the participant disclosure regulation.
Normal Retirement Age (NRA) Rule for Gov. Plans N/A PROPOSED
Proposed effective date is no earlier than Jan. 1, 2015 The Internal Revenue Service (IRS) plans to modify its 2007 Normal Retirement Age (NRA) regulation, which provides guidelines on distributions from a retirement plan upon attainment of NRA - on the application of the NRA regulation to governmental plans.
DB Funding Limitations IRS Notice 2012-46 FINAL
Nov. 1, 2012 The IRS finalized guidance on the notice of funding based limitations in single-employer DB plans. The guidance clarifies the notice requirements and provides a sample notice.
Designated Investment Alternatives (DIAs) Field Assistance Bulletin (FAB) 2012-02R FINAL Guidance Immediately The DOL clarified its position on brokerage windows, self-directed brokerage accounts and similar arrangements, stating that they are not designated investment alternatives (DIAs) under a plan.

* The Department of Labor has provided transition relief for complying. The initial disclosure must be furnished no later than the later of:

  • 60 days after the plan's anniversary date that occurs on or after November 1, 2011; or
  • 60 days after the effective date of the plan sponsor fee and investment disclosure rule (July 1, 2012).

October 2012 (4Q) Legislative Landscape

This summary tracks relevant portions of federal legislative developments. This summary is intended to provide you with a basic overview of these developments.

Topic Name of Bill Status Effective Date Description
Automatic IRAs Automatic IRA Act of 2012 (H.R.4049)

Retirement Plan Simplification and Enhancement Act of 2012 (H.R. 4050)
PROPOSED Legislation

PROPOSED Legislation
Not determined

Not determined
The proposed legislation would require employers that do not sponsor a retirement plan to enroll their employees into a payroll deduction individual retirement account (IRA).

The proposed legislation would simplify/revise some of the qualified plan rules surrounding retirement plans.
Alleviating Leakage in 401(k) Savings Savings Enhancement by Alleviating Leakage in 401(k) Savings (SEAL) Act PROPOSED Legislation Not determined The proposed legislation is intended to protect 401(k) plans by providing flexibility in the repayment of loans, and limiting the number of outstanding loans that a plan may permit.
Defined Benefit – PBGC Premium Levels
and Funding Stabilization
Rebuild America Act PROPOSED
Effective upon
The proposed Act includes a wide range of domestic and economic policies, including a few that relate to employersponsored retirement plans. The most notable provisions would involve changes to the Pension Benefit Guaranty Corporation's (PBGC) organization and policies, and changing funding rules for defined benefit (DB) plans.
Interest Rate Stabilization – Improved Funding
Status for DB Plans
Moving Ahead for Progress in the 21st Century FINAL
Required for 2013 This legislation is intended to stabilize the average of interest rates, which will reduce required funding and improve funded status for most DB plans. However, it also significantly increases Pension Benefit Guaranty Corporation (PBGC) premiums.

Additional 4Q 2012 Details

Download the latest version of the Legislative and Regulatory Landscape (PDF)


While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

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