[Federal Register Volume 89, Number 15 (Tuesday, January 23, 2024)]
[Proposed Rules]
[Pages 4215-4221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01077]
[[Page 4215]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 54, and 301
RIN 1545-BQ98
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2510, 2520, and 2550
RIN 1210-AC09
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4000, 4007, 4010, 4041, 4041A, 4043, 4050, 4062, 4063,
4204, 4211, 4219, 4231, 4245, 4262, and 4281
RIN 1212-AB58
Request for Information--SECURE 2.0 Section 319--Effectiveness of
Reporting and Disclosure Requirements
AGENCY: Internal Revenue Service, U.S. Department of the Treasury;
Employee Benefits Security Administration, U.S. Department of Labor;
Pension Benefit Guaranty Corporation.
ACTION: Request for information.
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SUMMARY: The Department of the Treasury (Treasury Department), the
Employee Benefits Security Administration (EBSA) of the U.S. Department
of Labor (Labor Department), and the Pension Benefit Guaranty
Corporation (PBGC) are publishing this Request for Information to
develop a public record for purposes of the directive in the SECURE 2.0
Act of 2022 (SECURE 2.0). Specifically, this Request for Information
addresses section 319 of SECURE 2.0, requiring that these agencies
review the existing reporting and disclosure requirements for certain
retirement plans under the Employee Retirement Income Security Act of
1974, as amended (ERISA) and the Internal Revenue Code (Code) that are
applicable to each agency. Following this review, the agencies are to
report to Congress, no later than December 29, 2025, concerning the
effectiveness of the reporting and disclosure requirements. The report
will include recommendations on consolidating, simplifying,
standardizing, and improving such requirements with the dual goals of
reducing compliance burdens and ensuring plan participants' and
beneficiaries' timely receipt and better understanding of the
information they need to monitor their plans, prepare for retirement,
and get the benefits they have earned. The report will also consider
how participants and beneficiaries are providing preferred contact
information, the methods by which plan sponsors and plans are
furnishing disclosures, and the rate at which participants and
beneficiaries are receiving, accessing, understanding, and retaining
disclosures. Consistent with the directive in section 319 of SECURE
2.0, this Request for Information focuses generally on the overall
effectiveness of the reporting and disclosure frameworks in ERISA and
the Code. Responses to this Request for Information will inform the
agencies in preparation of the required report to Congress and in any
future action taken by the agencies to enhance the effectiveness of
existing requirements.
DATES: To be assured consideration, comments must be received at one of
the following addresses no later than April 22, 2024.
ADDRESSES: Written comments, identified by RIN 1210-AC09, may be
submitted to one of the addresses specified below. Any comment that is
submitted will be shared with the Department of the Treasury, the
Internal Revenue Service (IRS), and the Pension Benefit Guaranty
Corporation. Please do not submit duplicates.
Federal eRulemaking Portal: www.regulations.gov. Follow
the instructions for submitting comments.
Mail: Please address to ``Attention: Request for
Information--SECURE 2.0 Section 319--Effectiveness of Reporting and
Disclosure Requirements.'' Office of Regulations and Interpretations,
Employee Benefits Security Administration, U.S. Department of Labor,
Room N-5655, U.S. Department of Labor, 200 Constitution Avenue NW,
Washington, DC 20210.
Instructions: Persons submitting comments electronically are
encouraged not to submit paper copies. Comments will be available to
the public, without charge, at www.regulations.gov, on the Department
of Labor's website at www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/public-comments, and at the Public Disclosure
Room, EBSA, U.S. Department of Labor, Suite N-1515, 200 Constitution
Avenue NW, Washington, DC 20210. Comments may also be accessed from
PBGC's website at www.pbgc.gov.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records and can be retrieved by most internet search
engines.
FOR FURTHER INFORMATION CONTACT: Rebecca Davis, Office of Regulations
and Interpretations, EBSA, Labor Department, (202) 693-8500. Jamie
Dvoretzky, Office of Associate Chief Counsel (Employee Benefits, Exempt
Organizations, and Employment Taxes (CC:EEE)), IRS, Treasury
Department, at (202) 317-4102. David Simonetti, Legal Policy Division,
Office of the General Counsel, PBGC, (202) 229-4362.
SUPPLEMENTARY INFORMATION:
I. Background
SECURE 2.0 includes provisions amending ERISA and the Code and
requiring the Labor Department, the Treasury Department, and PBGC (each
an Agency and, together, the Agencies) to undertake specified
statutory, regulatory, and review requirements and, in some cases, to
report to Congress based on their findings.\1\ A number of these
provisions relate to the reporting and disclosure requirements of ERISA
and the Code. For example, on August 11, 2023, the Labor Department
published a separate request for information focusing on ten specific
sections of SECURE 2.0 that amend ERISA or otherwise impact, directly
or indirectly, ERISA's reporting and disclosure requirements.\2\ At
that time, the Labor Department stated its intention to move forward in
the short term with a separate initiative, in coordination with the
Treasury Department and PBGC, to formally solicit input from
stakeholders in response to section 319 of SECURE 2.0.
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\1\ The SECURE 2.0 Act of 2022, Division T of the Consolidated
Appropriations Act, 2023, Public Law 117-328, 136 Stat. 4459 (2022)
(SECURE 2.0).
\2\ 88 FR 54511 (Aug. 11, 2023). Not all of the SECURE 2.0
provisions that affect ERISA's reporting and disclosure framework
are covered in this RFI. For example, the changes to ERISA's audit
requirements made by section 345 of SECURE 2.0 were implemented
through a rulemaking relating to annual reporting requirements under
ERISA. 88 FR 11793 (Feb. 24, 2023).
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Section 319 of SECURE 2.0 includes a wide-ranging directive to the
Agencies to review each Agency's existing reporting and disclosure
requirements under the Code and ERISA for retirement plans specified in
section 319 of SECURE 2.0.\3\ After this review,
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and in consultation with a balanced group of participant and employer
representatives, the Agencies are to report to Congress on the
effectiveness of these reporting and disclosure requirements, including
recommendations to consolidate, simplify, standardize, and improve such
requirements. This review is to be expansive in scope. In the Agencies'
view, the review calls for generalized questions about how plans can
(a) efficiently furnish valuable information to the Agencies, and (b)
best communicate information to workers and former employees, who have
widely varying backgrounds and expertise, that would enable them to
effectively obtain, understand, and use information about their plans
and to plan for retirement. The overarching theme of ``effectiveness''
will be explored in the context of both the reporting and disclosure
requirements under the jurisdiction of the three Agencies. The public
is directed to www.irs.gov/retirement-plans/irc-notice-and-reporting-requirements-affecting-retirement-plans (Treasury Department),
www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdf (Labor Department), and www.pbgc.gov (PBGC) to review
the principal requirements of each Agency relating to reporting and
disclosure under ERISA or the Code with respect to retirement plans.
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\3\ Section 319(a)(1)-(2) of SECURE 2.0 excludes health and
welfare plans from the scope of the Agencies' review (directing
agency heads to review the reporting and disclosure requirements of
pension plans (as defined in ERISA section 3(2)) covered by title I
of ERISA and applicable qualified retirement plans (as defined in
Code section 4974(c), without regard to Code section 4974(c)(4) and
(5), including a plan described in Code section 401(a) which
includes a trust exempt from tax under Code section 501(a), an
annuity plan described in Code section 403(a), and an annuity
contract described in section Code section 403(b), but excluding
plans described in Code section 408(a) or (b) and eligible plans
described in Code section 457(b)).
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ERISA and the Code require that plans furnish information to
participants and beneficiaries, in some cases on a regular and
recurring basis (e.g., pension benefit statements,\4\ Code section
401(k)(12) safe harbor notices,\5\ and annual funding notices \6\) and
in other cases when triggered by plan or participant actions (e.g.,
black-out notices,\7\ Code section 402(f) notices,\8\ and notices of
intent to terminate \9\). For purposes of this Request for Information
(RFI), the term ``disclosure'' includes notices, statements, and other
documents and refers generally to the furnishing of information to
participants and beneficiaries of retirement plans as required by ERISA
or the Code or regulations issued by the Agencies thereunder.
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\4\ ERISA section 105; 29 U.S.C. 1025.
\5\ Code section 401(k)(12); 26 U.S.C. 401(k)(12); 26 CFR
1.401(k)-3(d).
\6\ ERISA section 101(f); 29 U.S.C. 1021(f); 29 CFR 2520.101-5.
\7\ ERISA section 101(i); 29 U.S.C. 1021(i); 29 CFR 2520.101-3.
\8\ Code section 402(f); 26 U.S.C. 402(f); 26 CFR 1.402(f)-1.
\9\ ERISA section 4041(a)(2); 29 U.S.C. 1341; 29 CFR 4041.23.
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The term ``reporting'' is used in this RFI to refer to the
furnishing of information, or ``reports,'' by plans to the Agencies, as
required by ERISA or the Code, or regulations issued by the Agencies
thereunder. The Agencies do not consider information that is submitted
to the Agencies in connection with an audit, examination,
investigation, or enforcement action to be ``reports'' for purposes of
section 319. The Agencies also do not consider information that is
furnished on a voluntary basis to an Agency to obtain favorable
treatment, or information relating to financial transactions that is
not retirement-plan-specific information to be ``reports'' for purposes
of section 319. Examples of information not considered to be
``reports'' include:
[ssquf] Information that is submitted as a condition of an
individual exemption under ERISA section 408(a).
[ssquf] Information that is submitted to the Agencies to receive
financial assistance or benefits.
[ssquf] Information that is submitted to the Agencies in connection
with requests for determination or opinion letters, advisory opinions,
information letters, private letter rulings, closing agreements,
voluntary compliance statements under the Employee Plans Compliance
Resolution System, or relief pursuant to the Voluntary Fiduciary
Correction Program or the Delinquent Filer Voluntary Compliance
Program.
[ssquf] Information that is submitted to the Agencies and that is
not specific to retirement plans, such as reporting that may be
required of financial institutions holding foreign investments.
The Agencies recognize that a key component of retirement plans'
reporting to the Agencies is the Form 5500 Annual Report. However, for
purposes of this RFI, the Agencies are primarily focusing, and
requesting comments, on reporting requirements other than the Form 5500
Annual Report. Apart from the context of SECURE 2.0 section 319, the
Agencies have an annual process for soliciting feedback from the public
on the Form 5500 Annual Report and reviewing and improving the
effectiveness of that form in response to such feedback. The Agencies
therefore pursue the overarching goal of the review required by section
319--improving the effectiveness of reporting on the Form 5500 Annual
Report--every year. The Agencies urge commenters, when responding to
this RFI, to focus on information and analyses that look beyond the
requirements of the Form 5500 Annual Report.
In addition to information received and points of view expressed by
public commenters in response to this RFI, the Agencies' review for
purposes of the report to Congress may include feedback from the public
provided as part of prior efforts of the Agencies and others to assess
and improve the effectiveness of the reporting and disclosure
requirements of the Code and ERISA. The Labor Department, for example,
as recently as 2019, published a request for information (the DOL 2019
RFI), which solicited information, data, and ideas from the public on
measures that the Labor Department could take to improve the
effectiveness of plan disclosures, especially for the design and
content of ERISA disclosures.\10\ Similarly PBGC, in 2017, published a
request for information (the PBGC 2017 RFI), which, in part, solicited
information and suggestions from the public for improving reporting
requirements.\11\
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\10\ 84 FR 56894, 56908 (Oct. 23, 2019).
\11\ 82 FR 34619, 34620 (July 26, 2017).
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Parties external to the Agencies also have studied whether and how
the reporting and disclosure frameworks of ERISA and the Code may be
improved. The U.S. Government Accountability Office (GAO) has issued a
number of reports in recent years on this topic, working with the
Agencies to review reporting and disclosure requirements in different
contexts.\12\ The Labor Department's ERISA Advisory Council has also
analyzed reporting- and disclosure-related topics in certain years, in
some cases providing testimony and recommendations to assist the Labor
Department's efforts.\13\ In addition, the Internal Revenue
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Service Advisory Council (IRSAC) provides recommendations to the IRS on
reporting issues. The Agencies are confident that use of these
resources, together with feedback from public commenters pursuant to
this RFI, will facilitate the preparation of a comprehensive,
insightful, and instructive report to Congress on the effectiveness of
reporting and disclosure requirements.
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\12\ GAO-14-92, Private Pensions: Clarity of Required Reports
and Disclosures Could Be Improved (Nov. 2013); GAO-21-357, 401(k)
Retirement Plans: Many Participants Do Not Understand Fee
Information, but DOL Could Take Additional Steps to Help Them (July
2021); GAO-20-541, Retirement Security: DOL Could Better Inform
Divorcing Parties About Dividing Savings (July 2020); GAO-19-179,
Retirement Savings: Additional Data and Analysis Could Provide
Insight into Early Withdrawals (Mar. 2019); GAO-18-111SP, The
Nation's Retirement System: A Comprehensive Re-evaluation is Needed
to Better Promote Future Retirement Security (Oct. 2017).
\13\ The ERISA Advisory Council (established under ERISA section
512) is comprised of 15 members of the public representing employee
organizations, employers, and the general public. The Council holds
public meetings, advises the Secretary of Labor, and submits annual
reports detailing their recommendations to the Labor Department,
including on the topic of reporting and disclosure. See, e.g., ERISA
Advisory Council Report, Mandated Disclosure for Retirement Plans--
Enhancing Effectiveness for Participants and Sponsors (Nov. 2017);
ERISA Advisory Council Report, Successful Plan Communications for
Various Population Segments (Nov. 2013).
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II. Request for Information--SECURE 2.0 Section 319--Effectiveness of
Reporting and Disclosure Requirements
The purpose of this RFI, as explained in Part I, is to obtain input
from the public on the effectiveness of the reporting and disclosure
requirements of ERISA and the Code that the Agencies can consider in
preparing the required report to Congress. Responses to this RFI also
may be used as part of the public record for any future action taken by
the Agencies to enhance such effectiveness. The Agencies invite
comments and relevant data from all interested stakeholders. Commenters
need not answer every question, but are encouraged to identify, by
number, each question addressed. The Agencies request comments no later
than 90 days from the date of publication of this document in the
Federal Register, a timeframe that the Agencies believe is adequate for
commenters to review the RFI and provide considered and timely
responses.
A. Disclosure to Plan Participants and Beneficiaries
The effectiveness of required notices and disclosures may be
measured from different perspectives, including that of the retirement
plan participants and beneficiaries who are the intended recipients of
these disclosures and that of the plans and plan sponsors that provide
disclosures. Section 319 of SECURE 2.0 acknowledges the importance of
both perspectives by directing the Agencies to analyze ways to
consolidate, simplify, standardize, and improve such requirements, so
as to achieve the dual goals of ``simplify[ing] reporting for, and
disclosure from, [retirement] plans'' and ensuring that ``participants
and beneficiaries timely receive and better understand the information
they need to monitor their plans, plan for retirement, and obtain the
benefits they have earned.'' The questions in Part 1 of this Section A
are primarily intended to elicit information about disclosures from the
perspective of participants and beneficiaries. The questions in Part 2
of this Section A are primarily aimed at better understanding the
perspective of plans and plan sponsors on furnishing required
disclosures. The Agencies understand that the distinction between these
perspectives will not always be clear-cut, but nonetheless encourage
commenters to consider the issues raised in this RFI from both
perspectives when possible. Because plan officials and delegees
(including plan fiduciaries, plan administrators, service and
investment providers, and others) exercise important responsibilities
in connection with plans' reporting and disclosure obligations, the
Agencies' references in this RFI to ``plans'' include, unless otherwise
specified, any such plan officials or delegees, to the extent they are
responsible for, or are employed or hired to perform duties associated
with, collecting and consolidating information and data and preparing
and furnishing required notices and disclosures.
ERISA and the Code require plans to furnish information to
participants and beneficiaries about the features of their plans (e.g.,
eligibility requirements, contribution limitations, the availability of
plan loans and distribution options) and plan benefits and rights under
applicable law. Some disclosures are furnished on a regular and
recurring basis, and others when triggered by plan or participant
actions. For an individual participant or beneficiary, the number of
disclosures that will be received depends on a number of factors,
including the type of plan, its specific features, and whether certain
actions are taken by the participant or beneficiary. One of the most
significant disclosures under ERISA is the summary plan description
(SPD). The SPD is the primary resource informing participants and
beneficiaries about their plan and how it operates--an ``owner's
manual'' for the plan.\14\ Other prominent disclosures under ERISA and
the Code include pension benefit statements,\15\ ERISA's comparative
investment chart,\16\ Code section 401(k)(12) safe harbor notices,\17\
defined benefit plan annual funding notices,\18\ black-out notices,\19\
Code section 402(f) notices,\20\ and notices of intent to
terminate.\21\
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\14\ 29 CFR 2520.102-3.
\15\ ERISA section 105; 29 U.S.C. 1025 (periodic statements of a
participant's individual account balance or plan benefits).
\16\ 29 CFR 2550.404a-5 (annual comparative chart of fee,
historical return, and other information about investment options in
a participant-directed individual account plan).
\17\ Code section 401(k)(12); 26 U.S.C. 401(k)(12); 26 CFR
1.401(k)-3(d) (notice describing eligible employees' rights and
obligations under a safe harbor section 401(k) plan).
\18\ ERISA section 101(f); 29 U.S.C. 1021(f); 29 CFR 2520.101-5
(provides basic information about the status and financial condition
of a defined benefit pension plan).
\19\ ERISA section 101(i); 29 U.S.C. 1021(i); 29 CFR 2520.101-3
(notice of a temporary suspension or restriction on the ability of
participants to direct plan investments, obtain loans, or take
distributions).
\20\ Code section 402(f); 26 U.S.C. 402(f); 26 CFR 1.402(f)-1
(written explanation provided to a recipient of an eligible rollover
distribution).
\21\ ERISA section 4041(a)(2); 29 U.S.C. 1341; 29 CFR 4041.23.
In the event a defined benefit plan is terminated by a standard or
distress termination, the plan administrator must provide
participants, beneficiaries of deceased participants, alternate
payees under qualified domestic relations orders, employee
organizations representing participants, and PBGC (but only in the
case of a distress termination), a written notice of intent to
terminate (Form 500 for a standard termination, or Form 600 for a
distress termination) at least 60 days, and no more than 90 days,
before the proposed termination date.
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1. Plan Participants and Beneficiaries--Receipt and Comprehension of
Required Disclosures
Question 1. Number of required disclosures.
Is the effectiveness of required disclosures from the Agencies
affected by the number of notices and disclosures that are furnished to
participants and beneficiaries each plan or calendar year (e.g., annual
notices and quarterly benefit statements) and, if so, how? Similarly,
is the effectiveness of disclosures affected by the number of notices
and disclosures that are triggered by certain events (e.g., individual
statements of deferred vested benefits \22\), including when plans are
required to furnish notices upon request from a participant or
beneficiary? In your view, what is the relative significance of the
required disclosures, are participants and beneficiaries able to
recognize the significance of each notice or disclosure, and does this
ability influence your view on how many disclosures should be required
or whether certain disclosures are more or less effective? If you
believe that the number of notices and disclosures is too high, what
steps could the Agencies take to reduce the number of disclosures
without sacrificing participants' and beneficiaries' receipt of
important information? To the extent there are concerns with the number
of disclosures, to what extent could these concerns be mitigated by
combining multiple disclosures into a single mailing or delivery, or by
consolidating information that currently must be furnished in multiple
disclosures into a single disclosure? Are there specific disclosures,
or specific information, that lend themselves to such a combination or
consolidation, and, if so, why? For example, as explained in Q&A-8 of
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Department of Labor Field Assistance Bulletin No. 2008-03, the Labor
Department, Treasury Department, and the IRS previously coordinated to
ensure that plan sponsors could comply with the notice requirements of
Code sections 401(k)(13)(E) (relating to Qualified Automatic
Contribution Arrangements) and 414(w)(4) (relating to Eligible
Automatic Contribution Arrangements) and ERISA sections 404(c)(5)
(relating to Qualified Default Investment Alternatives) and 514(e)(3)
(relating to preemption for Automatic Contribution Arrangements) with a
single, stand-alone document (although plan sponsors are not required
to combine those notices). Further, for plan sponsors that wish to
combine those notices, the Labor Department, Treasury Department, and
the IRS previously provided a sample notice that may be used to help a
plan sponsor satisfy those notice content requirements. As another
example, see Sec. 54.4980F-1, Q&A-9(g)(3), in which a plan is treated
as providing a section 204(h) notice if the plan administrator provides
one of the notices listed in Sec. 54.4980F-1, Q&A-9(g)(3)(ii) and
meets the content and timing requirements for that notice.
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\22\ Code section 6057(e); 26 U.S.C. 6057(e).
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Question 2. Timing of required disclosures.
Do the timing requirements for when certain disclosures must be
furnished increase or decrease the likelihood that participants will
pay attention to them? Should changes be made to when information is
disclosed to participants and, if so, how? For example, to what extent
would it be beneficial for plans to harmonize timing requirements to
specific points in time corresponding to participants' major life
milestones or events? Explain how such changes could be implemented and
how they would enhance the likelihood that participants would pay
attention to the disclosure or disclosures or otherwise improve the
disclosure experience.
Question 3. Content of required disclosures.
Is there duplicative, redundant, stale, or inconsistent information
disclosed to participants under current rules promulgated under ERISA
or the Code? If so, which information? Why do you consider that
information duplicative, redundant, stale, or inconsistent? Do either
ERISA or the Code, or regulations issued thereunder, currently require
disclosure of any information that is unhelpful or outmoded, for
example, due to the passage of time or changes in the regulatory,
business, or technological environment? If so, what information and why
is it unhelpful or outmoded? Is there information that should be
disclosed instead of the unhelpful or outmoded information? If so, what
information? How could it be improved? In analyzing the content of
required disclosures, commenters are reminded to consider the objective
stated in SECURE 2.0 section 319, that participants and beneficiaries
be furnished the ``information they need to monitor their plans, plan
for retirement, and obtain the benefits they have earned.''
Question 4. Comprehension of information furnished in required
disclosures.
Section 319 of SECURE 2.0 requires that the Agencies' report to
Congress include an analysis of ``the rate at which participants and
beneficiaries are receiving, accessing, understanding, and retaining
disclosures.'' As to individuals' understanding, the Agencies are
interested in commenters' views on whether and how the length of
specific disclosures, and the complexity of the information disclosed,
may impact individuals' understanding of the disclosures. Besides
length, what other factors affect comprehension of the information
contained in notices and disclosures or, possibly, whether participants
and beneficiaries even try to read and understand disclosures? Does
review and comprehension of participants and beneficiaries vary among:
(1) industries; (2) individuals of different ages, genders, education
levels, socio-economic classes, place of living, impairments or
disabilities, or other demographic characteristics; or (3) different
types of disclosures? To what degree does the presentation, delivery,
and design of disclosures (as opposed to their written content) impact
the likelihood that participants and beneficiaries will read and
understand the information disclosed? Are there design elements or
tools that are particularly effective, for example, mixed media
presentations, the use of social media, or plain language infographics?
If so, should these presentation and design elements be required, or
are there steps that could be taken to facilitate use of those methods?
Are participants and beneficiaries regularly surveyed or otherwise
assessed regarding their comprehension of information about their
plans? How are those surveys or reviews conducted? What additional
information should be considered in developing disclosures that are
effective for different participants and beneficiaries? How can the
Agencies effectively measure the extent to which participants and
beneficiaries understand the information that is disclosed to them?
Question 5. Plain English; foreign language-based issues;
underserved communities.
Information disclosed to participants and beneficiaries is often
quite technical and complex. However, for disclosures to be useful,
information needs to be conveyed in ``plain language''--in a way that
is understandable to a highly demographically diverse population of
workers and their beneficiaries. Labor Department disclosures, for
example, generally are required to be ``written in a manner calculated
to be understood by the average plan participant.'' \23\ Similarly,
certain PBGC notices to affected parties must be ``readable and written
in a manner calculated to be understood by the average plan
participant.'' \24\ Also, the Treasury Department and the IRS require
that notices to participants and beneficiaries be written in a manner
calculated to be understood by the average plan participant.\25\ Are
these standards sufficient to ensure that notices and disclosures are
likely to be comprehensible to participants and beneficiaries and, if
not, what additional or different standards would enhance individuals'
understanding? Further, not all workers speak English or speak English
only as a second (or further removed) language. Some of the Agencies'
disclosures are subject to standards as to the use of additional
languages. Are these standards sufficient? \26\ If not, what barriers
to comprehension exist for non-native English-speakers, and what
further steps could the Agencies take to reduce these barriers? Do
plans take additional steps,
[[Page 4219]]
in addition to what is required by ERISA and the Code, to educate or
tailor disclosures to their participant populations? Is there existing
research, user testing, or other considerations that the Agencies
should review or steps they could take to increase the effectiveness of
disclosures to participants and beneficiaries in underserved
communities?
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\23\ See, e.g., ERISA section 105(a)(2)(A)(iii); 29 U.S.C.
1025(a)(2)(A)(iii) (applying the readability standard to pension
benefit statements). See also 29 CFR 2520.102-2(a) (applying the
readability standard to summary plan descriptions). The readability
standard requires plan administrators to exercise considered
judgment and discretion, taking into account factors such as the
level of comprehension and education of a plan's participant
population and the complexity of a plan's terms. Consideration of
such factors usually compels plan administrators, for example, to
write notices that limit or eliminate technical jargon and long,
complex sentences, and that use clarifying examples and
illustrations, clear cross references, and tables of contents. Id.
\24\ 29 CFR 4041.3(c)(4).
\25\ See, e.g., 26 CFR 54.4980F-1, Q&A-11(a)(2) (information in
a section 204(h) notice must be written in a manner calculated to be
understood by the average plan participant); 26 CFR 1.401(k)-
3(d)(2)(i)(B) (providing that the safe harbor notice must be written
in a manner calculated to be understood by the average employee).
\26\ See, e.g., 29 CFR 2520.102-2(c) (describing standards for
summary plan descriptions furnished to plan participants literate in
a non-English language and assistance that must be provided to non-
English speakers to inform them of their rights and obligations
under the plan); 29 CFR 4041.3(c)(5).
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Question 6. Accessing required disclosures.
As noted in Question 4, section 319 of SECURE 2.0 requires that the
Agencies' report to Congress include an analysis of ``the rate at which
participants and beneficiaries are receiving, accessing, understanding,
and retaining disclosures.'' (Emphasis added.) The Agencies understand
``access'' to refer to the extent to which participants and
beneficiaries open and look at, review, or consult the disclosure for
purposes of using its information, either contemporaneous with the
receipt of the disclosure or at any point in the future. What tools, if
any, do entities have to discern whether participants and beneficiaries
are accessing disclosures? Do individuals commonly access disclosures
only on receipt, at regular intervals throughout the year, or only at
specific points in time corresponding to major life milestones (e.g.,
marriage, divorce, childbirth, adoption, retirement, or job change)? Do
participants and beneficiaries access disclosures more or less
frequently depending on how the disclosures are furnished, for example,
whether they receive paper disclosures in the mail, electronic
disclosures via email, text messages, mobile applications, or
notifications of disclosures' availability on a continuous-access
website? Do they access certain disclosures at higher rates than
others? What are best practices in ensuring that participants and
beneficiaries have ready access to relevant information at the time
they need it, and that they know they have such access?
Question 7. Retaining disclosures after receipt.
As noted in Question 4, section 319 of SECURE 2.0 requires that the
Agencies' report to Congress include an analysis of ``the rate at which
participants and beneficiaries are receiving, accessing, understanding,
and retaining disclosures.'' As to retention of disclosures, do plans
collect data or conduct surveys on how often participants and
beneficiaries download, print, save, or otherwise ``retain''
disclosures for future use? If so, how, and are any trends evident from
such data? Does data exist on how often participants and beneficiaries
request copies of disclosures, for example, do they often request paper
disclosures to be re-mailed or electronic versions of disclosures to be
re-sent via email, text, or mobile application, and, if so, are any
trends evident from such data? To what extent, if any, does the ability
of plan participants to access plan-related information online, such as
through a continuous access secure website, impact conventional
retention behavior? What methodologies exist, or are in development,
for measuring retention of disclosures by participants and
beneficiaries?
Question 8. Participant and beneficiary engagement; decision-
making.
Do plans collect data on participant and beneficiary levels of
engagement in response to participant notices and disclosures and, if
so, what data is collected, and how is ``engagement'' defined and
determined? What impediments, if any, prevent or dissuade plans from
collecting such data? If such data is collected, do plans act in
response to such data and, if so, are there illustrative examples? For
example, are there circumstances when plans act based upon evidence of
a participant's lack of engagement? To the extent sensitive or
confidential information may be used in efforts to enhance engagement
with participants and beneficiaries, do best practices exist for plans
to ensure that such information is accessible but is not
inappropriately used or disclosed to other parties? Do plans collect
data on the extent to which disclosures impact participant and
beneficiary behavior and decision-making? If so, how is this impact
assessed? Is certain information or are certain disclosures more likely
to elicit engagement or modify individuals' behavior? If so, which
information or disclosures, and how? Do plans and plan service
providers have ready access to information on when or how often plan
participants and beneficiaries visit a plan's website or open plan-
related emails or text messages? Are there any impediments to plans
collecting and considering such information in assessing engagement and
effectiveness? If so, what are those impediments?
2. Plans, Plan Administrators, and Plan Service Providers--Furnishing
Required Disclosures
Question 9. Provision of preferred contact information to plans.
Section 319 of SECURE 2.0 requires that the Agencies' report to
Congress include an analysis of ``how participants and beneficiaries
are providing preferred contact information.'' Given the fact-based
nature of this analysis, the Agencies request data, statistics, or
other information from plans about whether, when, how, and for what
reasons (e.g., upon hire or plan eligibility, residential move,
physical or mental impairment, marriage or divorce) participants and
beneficiaries communicate and update their contact information for plan
purposes. For example, new employees or participants may indicate their
preferred contact information in plan enrollment materials, and
existing employees and existing participants may update their preferred
contact information directly on a plan's website, a plan recordkeeper's
website, a mobile application, or the plan sponsor's human resources or
other database, or by contacting the plan sponsor directly. Likewise,
some employees, participants, and beneficiaries may need to provide and
update contact information on file with their employer, their unions
(if collectively bargained), and other plans that may be administered
by different recordkeepers or other entities. Do plans remind
employees, participants, and beneficiaries to check the accuracy of
their contact information and update as necessary and, if so, when, and
how? Are there circumstances when plans check the accuracy of a
participant's or beneficiary's contact information, and, if so, under
what circumstances; how are such checks performed? Are there observable
trends in this data, for example, changes in response to Agency
regulatory or other actions or changes in the retirement plan industry?
Question 10. Delivery--furnishing disclosures to participants and
beneficiaries.
Section 319 of SECURE 2.0 requires that the Agencies' report to
Congress include an analysis of both ``the methods by which plan
sponsors and plans are furnishing disclosures'' and ``the rate at which
participants and beneficiaries are receiving, accessing, understanding,
and retaining disclosures.'' (Emphasis added.) Each Agency has specific
guidelines as to methods by which plans may furnish disclosures to
participants and beneficiaries, including the circumstances in which
disclosures may be furnished electronically (e.g., via email, website
access, mobile and smartphone applications, or audio and video
channels), rather than on paper.\27\ As information technology evolves,
so might the standard for ``effective''
[[Page 4220]]
delivery of information to participants and beneficiaries. Are there
certain disclosures that participants and beneficiaries prefer to
receive on paper (e.g., highly individualized and complex notices, such
as quarterly and annual benefit statements), and, if so, what explains
this preference? Commenters are encouraged to provide data, statistics,
or other information about which delivery methods are most commonly
used by plans and factors that may explain participants' preferences
for certain delivery methods. For plans that deliver disclosures
electronically, does data exist on participant opt-in and opt-out
rates, practices, and trends in such rates? Do plans regularly reassess
compliance with applicable electronic delivery standards or survey plan
participants and beneficiaries regarding their preferences for how to
receive information from their plans? Do plans periodically evaluate
whether disclosures are successfully received by participants and
beneficiaries and, if so, how? What data exists about rates of receipt?
Are there observable trends in this data, for example, in response to
Agency regulatory or other actions, changes in participant and
beneficiary preferences, technological advances, or changes in the
retirement plan industry? To what extent are age, demographics, or
residence relevant to participants' and beneficiaries' effective access
to and use of electronic means of delivery? If these variables are
relevant, what are best practices for addressing differential use of
and access to electronic disclosures?
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\27\ 29 CFR 2520.104b-31 (the Labor Department's 2020 safe
harbor); 29 CFR 2520.104b-1 (the Labor Department's 2002 safe
harbor); 26 CFR 1.401(a)-21 and Sec. 54.4980F-1, Q&A-13 (Treasury
Department guidance); 29 CFR part 4000, subpart B (PBGC issuance
rules).
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Question 11. Availability of model notices or model language.
In some cases, the Agencies offer, or are required by statute to
provide, model notices or model language that can be used by plans or
plan administrators to satisfy the content requirements of required
disclosures.\28\ To what extent does the provision of models reduce the
cost to plans for preparing required disclosures? The Agencies
generally provide model notices or language in English; what are
commenters' views on the Agencies' provision of model notices or
language in one or more languages other than English and how to
determine which languages? To what extent does the provision of such
models impact the understanding and retention of the disclosure by a
participant or beneficiary? Are there additional model notices or model
language that the Agencies could provide for specific disclosures that
would be especially helpful to plans or that would reduce the burden on
plans to prepare such disclosures?
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\28\ See, e.g., 29 CFR 2520.101-3(e)(2) (model notice of
blackout periods under individual account plans); 29 CFR 4041.23(b)
and 4041.43(b) (model notices of intention to terminate plan); IRS
Notice 2020-62, 2020-35 IRB 476, (model Code section 402(f)
notices).
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Question 12. Participant and beneficiary feedback regarding notices
and disclosures.
Please describe the extent to which plans receive questions from,
or are made aware of concerns from, individuals who receive required
notices and disclosures regarding those communications. What procedures
are in place to respond to such questions and concerns? Are there
common themes in the types of issues that result in inquiries from
participants and beneficiaries? Is there any notable difference in the
types of questions and concerns that are raised by telephone, by email,
or otherwise?
Question 13. Costs of disclosure.
What is the aggregate annual cost to defined contribution and
defined benefit plans to make required disclosures? Are costs
significantly higher for certain disclosures than others and, if so,
which disclosures and why? To what extent are these disclosure costs
paid from plan assets or from the general assets of a plan sponsor? Are
there ways to lower disclosure costs without negatively impacting the
comprehensiveness or effectiveness of the information that is required
to be disclosed? Commenters are encouraged to provide any data relevant
to these questions.
B. Reporting to the Agencies
As with required disclosures, the effectiveness of required
reporting to the Agencies can be measured from different perspectives.
Section 319 of SECURE 2.0 explicitly refers to ``simplify[ing]
reporting for . . . plans,'' evidencing concern for plans'
perspectives. But the effectiveness of the Code's and ERISA's reporting
requirements also may be evaluated from the perspectives of the
Agencies receiving required reports, the participants and beneficiaries
of reporting plans, and third parties who may be able to aggregate and
use reported information to inform academic, industry, participant
advocacy, or other work. Each of these perspectives is raised below.
1. Submission of Required Reports by Plans
Question 14. Frequency and timing of reports.
What is your view on the number of reports that must be filed with
the Agencies each plan or calendar year and how this number impacts a
plan's ability to implement reporting procedures efficiently? Are the
timing requirements of any reports in conflict or inefficient, either
for one Agency or across the Agencies? Could the filing deadlines for
any reports, either for ERISA or the Code or both, be modified to allow
consolidation of more than one report without compromising the
Agencies' timely receipt of information?
Question 15. Content of reports.
Please describe the extent to which any of the reports required by
ERISA or the Code collect more, or less, information than you believe
should be necessary for the Agencies to discharge their oversight and
other responsibilities? If so, which reports, and how could they be
modified to inform the Agencies more effectively? Do any challenges
exist in obtaining information from sources subject to laws other than
the Code and ERISA (e.g., Federal securities laws or State insurance
laws) that is necessary, or helpful, for preparation of reports?
Question 16. Clarity of reporting requirements.
Are the instructions for reports clear and helpful? Are there
particular reports for which the instructions could be simplified or
could more accurately reflect the administration of retirement plans?
Should the Agencies make instructions available in languages other than
English? Should instructions be written subject to a readability
standard, such as in a manner reasonably calculated to be understood by
the target filers (for example large companies versus small employers)?
Question 17. Efficacy of filing methods for reports.
Do the filing methods for reports need updating or improvement? For
reports that must be filed electronically, are there circumstances when
plans would benefit from waiver procedures permitting paper filings
and, if so, what plans, what reports, and what circumstances?
Alternatively, are there reports that must be filed on paper that would
be more effectively filed electronically, and, if so, as a mandate or
as an option?
Question 18. Improving Agency assistance with reporting
requirements.
Are the Agencies' customer service personnel and capabilities
sufficient or in need of improvement for the questions about the
content of reports, technical support for completing and filing
reports, or otherwise? Should the Agencies monitor, track, and disclose
user experience for any reports? If so, how should the Agencies compile
this data and use it to inform improvements
[[Page 4221]]
to customer service protocols, including technical support?
Question 19. Costs of reporting.
What is the aggregate annual cost to defined contribution and
defined benefit plans to submit reports required by ERISA and the Code?
Are costs significantly higher for certain reports than others and, if
so, which reports, and why? To what extent are such reporting costs
paid from plan assets versus from the general assets of the plan
sponsor? Commenters are encouraged to provide any data relevant to
these questions.
2. Participants, Beneficiaries, and Third Parties--Use of Publicly
Available Information and Data
Question 20. Use of reports and data by participants and
beneficiaries.
Is there information reported to the Agencies, but not
affirmatively required to be furnished by plans to participants and
beneficiaries, that might be beneficial to participants and
beneficiaries? If so, what information and to what benefit? Could such
information be furnished in a cost-effective manner or made available
to participants and beneficiaries? If so, please describe these methods
and how they could be cost effective. Is there evidence that
participants and beneficiaries request to review any reports (or
certain information or data) that is reported?
Question 21. Use of reports and data by other entities.
Do any of the reports required by ERISA and the Code fail to
collect information that data users other than the Agencies, including
the public at large, data aggregators, and participant advocates, would
find useful? If so, which reports and information, and how could
reports be modified to collect this information in a cost-effective
manner? How would this information be used and how would requesting
this information benefit retirement plan participants and
beneficiaries, plans, or others? What information should be publicly
available, and, if so, how might confidentiality, security, or other
concerns be managed (e.g., protection of return information as required
by Code section 6103)? To what extent do plans and plan service
providers give third parties, such as data aggregators and consultants,
access to plan data (e.g., plan investment lineups and associated fees,
costs, and performance data) that could facilitate the development of
analytic tools and comparative analyses that could be used by plan
fiduciaries, participants, or beneficiaries to improve retirement
outcomes? Are there impediments to the disclosure of useful plan data
to such third parties that are inappropriate or that interfere with the
cost-effective delivery of such analytic tools or comparative analyses?
C. Additional Questions
Question 22. Coordination of Agencies' reporting and disclosure
requirements.
Would participants, beneficiaries, and plans benefit from increased
coordination between the Agencies regarding one or more reporting or
disclosure requirements and, if so, how? What steps could the Agencies
take to achieve such coordination, for example, which specific
disclosures, reports, or information could be effectively harmonized by
the Agencies and how could the Agencies do so in a cost-effective
manner?
Question 23. Alternative methods for information collection.
SECURE 2.0 section 319(b)(3) explicitly provides that the Agencies
may ``conduct appropriate surveys and data collection to obtain any
needed information.'' If this authority were used, what data or
information should be collected, and what are cost-effective methods
that the Agencies could employ to collect such data or information, for
example, by consulting with a balanced group of participant and
employer representatives, conducting focus groups, preparing surveys,
or holding a joint hearing?
Question 24. Additional information.
Is there any information or are there any suggestions that the
Agencies should consider that are not addressed by the questions in
this RFI and that may be important to achieve the desired effectiveness
of reporting and disclosures as set forth in SECURE 2.0 section 319?
* * * * *
Signed at Washington, DC.
Rachel D. Levy,
Associate Chief Counsel (Employee Benefits, Exempt Organizations, and
Employment Taxes), Internal Revenue Service, Department of the
Treasury.
Helen H. Morrison,
Benefits Tax Counsel, Department of the Treasury.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2024-01077 Filed 1-22-24; 8:45 am]
BILLING CODE 4510-29-P; 4830-01-P; 7709-02-P