Executive Order Calls for Expansion of Multiple Employer Retirement Plans, Less Burdensome Disclosures, and Lower Minimum Distributions

Expressing concern that regulatory burdens and complexity are keeping small businesses from providing retirement plan coverage to their employees, the President has issued an executive order intended to expand access to workplace retirement plans. The order directs federal agencies to revise or eliminate rules and regulations that hinder formation of workplace retirement plans and reduce plan effectiveness. Specifically, the order calls for the following actions:

• Multiple Employer Retirement Plans. Within 180 days, the DOL is to consider issuing proposed regulations or other guidance expanding the circumstances under which employees of different private-sector employers may participate in a single retirement plan (a multiple employer retirement plan or MEP). Specifically, the DOL is to clarify when a group or association of employers or other business or organization could be an employer under ERISA. In addition, the IRS is to consider easing the qualification requirements for MEPs, as well as the consequences if one or more employers in the MEP fails to meet those requirements.
• Disclosures. Within one year, the DOL and IRS are to complete a review of actions that could make retirement plan disclosures required under ERISA and the Code more understandable and useful, while also reducing the costs and burdens associated with their preparation and distribution. The agencies are specifically directed to consider broader use of electronic delivery as a possible means of improving effectiveness while reducing costs.
• Required Minimum Distribution Tables. Within 180 days, the IRS is directed to examine and consider updating the life expectancy and distribution period tables used to calculate required minimum distributions for 401(k) plans, other defined contribution plans, and IRAs. Tables reflecting longer life expectancies could allow retirees to keep more money in their accounts and spread retirement savings over a longer period.

EBIA Comment: The President’s directive to consider expanding the availability of MEPs echoes the DOL’s recent expansion of the availability of association health plans (see our Checkpoint articles on the final regulations and related guidance), which was the result of an earlier executive order (see our Checkpoint article). While the latest executive order does not change any laws or regulations, it directs the agencies to consider regulations or other guidance to implement the order’s suggested changes and stated goals. The Secretary of Labor has commented that the proposed changes would benefit small businesses in particular by breaking down the barriers they face when sponsoring workplace retirement plans. For more information, see EBIA’s 401(k) Plans manual at Sections II.F.2 (“Multiple Employer Plan”), XXVIII.F (“Using Electronic Plan Administration”), and XII.I (“Required Minimum Distributions”).

Contributing Editors: EBIA Staff.