Latest Retirement Plan Legislation & Regulations
April 2012 (2Q) Summary
- The retirement industry is working diligently to implement plan sponsor fee disclosure regulations, which were finalized in February, and take effect later this year. The Department of Labor (DOL) delay of participant fee disclosure regulation was welcome news to many plan sponsors who are still finalizing 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.
- Keep a watchful eye on a proposed regulation that could mean sweeping changes for what it means to be a "fiduciary" for retirement plan investment advisers. The DOL has stated they plan on issuing a new re-proposal regulation this summer.
- While changes undoubtedly bring additional challenges, 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.
April 2012 (2Q) 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. |
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| Investment Advice – Definition of a Fiduciary | ERISA 3(21)(A)(ii) | RE-PROPOSAL expected early this year | Unknown | Proposed DOL regulations which more broadly define the circumstances under which a person is considered to be a fiduciary under the Employee Retirement Income Security Act (ERISA). |
| Electronic Delivery of Information | DOL Reg § 2520.104b-1(c) | COMMENT Period ended June 6, 2011 | Unknown | The DOL is seeking comments about the current rules for using electronic media to deliver information to plan participants to determine whether the rules should be changed based on how this technology is used today. |
| Longevity Annuities | N/A | PROPOSED Regulation |
COMMENT Period ends June 1, 2012 | The proposed regulation would enable defined contribution (DC) plans and individual retirement arrangements (IRAs) to utilize longevity annuities, which provide an income stream that begins at an advanced age, such as 80 or 85, and is payable for life. |
| Partial Distribution Options in DB Plans |
N/A | PROPOSED Regulation |
COMMENT Period ends June 1, 2012 | The proposed regulation would permit Defined Benefit (DB) plans to simplify the treatment of optional forms of benefit that are paid partly in the form of an annuity and partly in an accelerated form if certain requirements are met. |
* 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).
April 2012 (2Q) 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 | N/A | Legislative Discussions | Not determined | Discussions in Congress would grant the Pension Benefit Guaranty Corporation (PBGC) the authority to set and adjust the level of premiums — based on an employer's credit rating — that an employer with a defined benefit plan would pay the agency. |
| Help with Mortgage Payments | Hardship Outlays to protect Mortgagee Equity (HOME) Act (S. 1656/H.R. 3104) | PROPOSED Law | Not determined | The proposed law would allow participants to take a penalty free distribution from a 401(k) or 403(b) retirement plan account balance and use it to make home mortgage payments. |
| Increase the number of Small Businesses Sponsoring Retirement Plans | The Small Business Pension Promotion Act (H.R. 3561) | PROPOSED Law | Not determined | The proposed law would reduce administrative burdens currently placed on plan sponsors of retirement plans. |
| State-Run 401(a)/401(k) for Non-Profit Organizations | Massachusetts House Bill 3754 | PROPOSED Legislation | Not determined | The proposed legislation would allow the state of Massachusetts to offer 401(k) plans and other retirement options to non-profit organizations and their employees. |
Additional 2Q 2012 Details
Download the latest version of the Legislative and Regulatory Landscape (PDF) 
