President Donald Trump last week signed an executive order that states, “It shall be the policy of the Federal Government to expand access to workplace retirement plans for American workers.”
The order called on the Secretary of Labor to clarify and expand the circumstances under which U.S. employers, especially small and mid-sized businesses, may sponsor or adopt an open multiple employer plan (MEP) as a workplace retirement option for their employees, subject to appropriate safeguards; and increase retirement security for part-time workers, sole proprietors, working owners, and other entrepreneurial workers with non-traditional employer-employee relationships by expanding their access to workplace retirement plans, including MEPs.
The President also ordered the Secretary of the Treasury to examine the life expectancy and distribution period tables in the regulations on required minimum distributions (RMDs) from retirement plans and determine whether they should be updated to reflect current mortality data and whether such updates should be made annually or on another periodic basis.
While Trump noted that expanding access to MEPs can reduce administrative costs for the establishment of a retirement plan, especially for small businesses, he also pointed out that reducing the number and complexity of employee benefit plan notices and disclosures currently required would ease regulatory burdens.
So, in the executive order, Trump calls on both the Labor and Treasury Departments to “complete a review of actions that could be taken through regulation or guidance, or both, to make retirement plan disclosures required under ERISA [Employee Retirement Income Security Act] and the Internal Revenue Code of 1986 more understandable and useful for participants and beneficiaries, while also reducing the costs and burdens they impose on employers and other plan fiduciaries responsible for their production and distribution.” He says the review should include an exploration for the broader use of electronic delivery of disclosures.
An American Retirement Association study found current regulations requiring paper delivery of participant defined contribution (DC) plan information can cost investors between $350 million and $500 million per year, which can reduce the average account balance by 2.4% over a 40-year work life. Five years ago, the Government Accountability Office (GAO) asked the U.S. Treasury and Department of Labor (DOL) to revise electronic disclosure rules governing employee-sponsored retirement plans to improve clarity and protect participant rights.And, legislators continue to push for a bill that would allow retirement plan sponsors to automatically default participants into receiving plan documents and statements online.