Pres. Trump Issues Executive Order on Retirement Plans
On Aug. 31, 2018, Pres. Trump issued the Executive Order on Strengthening Retirement Security in America (“the Order”). The Order seeks to expand access to workplace retirement plans for American workers and reduce the regulatory burdens and complexity associated with sponsoring a retirement plan.
Specifically, the Order directs the DOL to examine policies which would allow more small employers to band together to provide retirement plans through the use of multiple employer plans (MEPs). It further directs the DOL to promulgate rules that would redefine ‘employer’ under ERISA, in an effort to allow more employers to participate in MEPs. Currently, unrelated employer groups that wish to band together to offer retirement plans must meet stringent requirements concerning their relation to each other. The Order makes it clear that the Administration would like to amend those rules to allow for more small and mid-sized businesses to have access to MEPs. (Any subsequent changes in this regard would likely be very similar to the changes made to allow for more employers to participate in association health plans for health and welfare benefits.)
The Order also directs the DOL to review actions that could be taken to make notices and distribution requirements less costly and burdensome. There are a number of disclosures that are required for retirement plans, and while the Order doesn’t specify which disclosures could potentially be changed or altered, it does seem to be aimed at reducing the number of disclosures or making them less complex. Additionally, the Order explicitly mentions that the DOL’s review should explore the potential for broader use of electronic delivery as a way to distribute the necessary disclosures.
Finally, the Order instructs the Treasury to review the life expectancy and required minimum distribution tables to determine if they should be changed to reflect current mortality data. As background, retirees must withdraw minimum amounts of money from their retirement account beginning at age 70 ½. In essence, the Order directs the Treasury to review updated information to determine if the age of 70 ½ is still appropriate or should be increased.
Although the Order ultimately signals the administration’s policy on these topics, it’s likely that the DOL and IRS will promulgate the rules requested by the President. Until those rules are finalized, the current rules remain in place and employers should continue to follow them. We will provide updated information as the rules are published in their proposed and finalized forms.