Request for Information-SECURE 2.0 Reporting and Disclosure, 54511-54534 [2023-17249]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 88, Number 154 (Friday, August 11, 2023)]
[Proposed Rules]
[Pages 54511-54534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17249]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Parts 2510, 2520, 2550

RIN 1210-AC23


Request for Information--SECURE 2.0 Reporting and Disclosure

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Request for information.

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SUMMARY: The Employee Benefits Security Administration of the U.S. 
Department of Labor (the Department) is publishing this Request for 
Information to solicit public feedback and to begin developing a public 
record for a number of provisions of Division T of the Consolidated 
Appropriations Act, 2023, (Dec. 29, 2022) (referred to as the SECURE 
2.0 Act of 2022 or SECURE 2.0) that impact the reporting and disclosure 
framework of the Employee Retirement Income Security Act of 1974 
(ERISA). Several sections of SECURE 2.0 establish new, or revise 
existing, ERISA reporting and disclosure requirements, in some cases 
also requiring that the Department undertake a review of existing or 
new requirements and submit reports to Congress on the Department's 
findings. The Department believes that it will be helpful to initiate 
several of these actions, given their commonality in affecting 
reporting of information to the Department and the disclosure of 
information to retirement plan participants and beneficiaries, in this 
Request for Information. Any later action by the Department on these 
SECURE 2.0 provisions, whether rulemaking or otherwise, will be better 
informed by responses to this Request for Information.

DATES: To be assured consideration, comments must be received at one of 
the following addresses no later than October 10, 2023.

ADDRESSES: You may submit written comments to the Office of Regulations 
and Interpretations, identified by RIN 1210-AC23, to one of the 
following addresses:
     Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions for submitting comments.
     Mail: Office of Regulations and Interpretations, Employee 
Benefits Security Administration, Room N-5655, U.S. Department of 
Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention: 
Request for Information--SECURE 2.0 Reporting and Disclosure.
    Instructions: Persons submitting comments electronically are 
encouraged not to submit paper copies. Comments will be available to 
the public, without charge online at www.regulations.gov, at 
www.dol.gov/agencies/ebsa, and at the Public Disclosure Room, EBSA, 
U.S. Department of Labor, Suite N-1513, 200 Constitution Avenue NW, 
Washington, DC 20210.
    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: Kristen Zarenko, Office of Regulations 
and Interpretations, EBSA, Department of Labor, (202) 693-8500.

SUPPLEMENTARY INFORMATION:

Background

    On December 29, 2022, the Consolidated Appropriations Act, 2023, 
H.R. 2617 was enacted. Part of this Act, SECURE 2.0, includes 
provisions amending ERISA and the Internal Revenue Code (the Code). 
Some of the provisions in SECURE 2.0 require regulations or other 
guidance for implementation. Other provisions direct the Department to 
undertake a review of certain statutory and regulatory requirements and 
submit reports to Congress on the Department's findings.
    This Request for Information (RFI) focuses on certain SECURE 2.0 
sections that principally impact, directly or indirectly, ERISA's 
reporting and disclosure requirements. Not all of the SECURE 2.0 
provisions that affect the reporting and disclosure framework of ERISA 
are covered in this RFI, generally because the Department has already 
started or intends to initiate separate notice and comment rulemaking, 
actions, issue guidance, request additional information, or release 
reports, as appropriate, to implement these other provisions. For 
example, the changes to ERISA's audit requirements by section 345 of 
SECURE 2.0 were implemented through a recent rulemaking relating to 
annual reporting requirements under ERISA.\1\ In addition, the 
Department published a solicitation for comment on the effects of 
section 305 of SECURE 2.0 on the Department's Voluntary Fiduciary 
Correction Program on February 14, 2023.\2\
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    \1\ 88 FR 11793 (Feb. 24, 2023).
    \2\ 88 FR 9408 (Feb. 14, 2023).
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    Another example of a SECURE 2.0 provision that affects reporting 
and disclosure but which is not addressed in this RFI is section 319 of 
SECURE 2.0. This provision directs the Department, in consultation with 
the Department of the Treasury (Treasury Department) and the Pension 
Benefit Guaranty Corporation (PBGC), to review each agency's existing 
reporting and disclosure requirements for retirement plans. After this 
review, and in consultation with a balanced group of participant and 
employer representatives, the agencies must report to Congress on the 
effectiveness of these reporting and disclosure requirements, including 
recommendations to consolidate, simplify, standardize, and improve such 
requirements. Rather than dealing with the specific substance of 
individual reporting and disclosure requirements under ERISA and the 
Code, the section 319 review is expansive in scope and calls for more 
generalized questions about how to best communicate information--
information that can be quite complex--to the government and to workers 
of widely variable capabilities, enabling workers to obtain, 
understand, and use information about their plans and retirement. 
Further, these themes are to be explored in the context of a 
significant number of reporting and disclosure requirements under the 
jurisdiction of three different agencies. The Department currently 
intends to move forward by formally soliciting public input on the 
section 319 project, in coordination with the Treasury Department and 
PBGC, but as part of a rulemaking initiative separate from this RFI.
    Apart from these exceptions, the Department believes that it will 
be helpful to initiate progress on the specific SECURE 2.0 items set 
forth below in this RFI by expeditiously obtaining feedback from a 
diverse set of stakeholders from the earliest stages of the process and 
building an initial public record. This feedback will inform more 
specific, detailed rulemaking or other guidance on such provisions in 
the future, including completion of multiple reports to Congress, as 
required by SECURE 2.0. Moving forward, as relevant, the Department 
will continue to consult with other agencies,

[[Page 54512]]

including the Treasury Department and PBGC.

II. Request for Information--SECURE 2.0 Reporting and Disclosure 
Provisions

    The purpose of this RFI, as explained above, is to inform future 
action by the Department on the following SECURE 2.0 mandates related 
to ERISA's reporting and disclosure provisions. The Department invites 
comments, including relevant data, if available, from all interested 
stakeholders. The RFI includes questions about a number of distinct 
SECURE 2.0 provisions. Commenters need not answer every question, but 
are encouraged to identify, by number, each question addressed.
    A. Pooled Employer Plans. Section 105 of SECURE 2.0 amended ERISA 
section 3(43)(B)(ii), defining a ``pooled employer plan'' (PEP), to 
provide that the terms of the plan must ``designate a named fiduciary 
(other than an employer in the plan) to be responsible for collecting 
contributions to the plan and require such fiduciary to implement 
written contribution collection procedures that are reasonable, 
diligent, and systematic[.]'' This clarification as to which persons 
may be designated as a named fiduciary for this purpose is effective 
for plan years beginning after December 31, 2022. The Department 
intends to update the Form PR and Instructions (Registration for Pooled 
Plan Provider), as necessary, to reflect this amendment for purposes of 
reporting the designated named fiduciary.
    Section 344 of SECURE 2.0 also directs Department action on the 
topic of PEPs. Specifically, section 344 directs the Department, not 
later than five years after enactment, and every five years thereafter, 
to submit a report to Congress, and make publicly available on a 
website, the Department's findings from a study of the PEP industry, 
including recommendations on how PEPs can be improved, through 
legislation, to serve and protect retirement plan participants.\3\ The 
Department is in the preliminary stages of planning such a study and 
anticipates using data collected from the Form PR and the Form 5500 
Annual Report to assist in preparing this report. As part of this RFI, 
the Department is requesting commenters' ideas about how to construct 
such a study effectively in response to this directive and whether, and 
what, additional information the Department should focus on to help 
achieve the stated objectives of the study to improve PEPs and 
subsequent reports to Congress. In addition to general feedback on the 
methodology and scope of the required study, the Department seeks input 
on the specific issues set forth below.
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    \3\ The required study will focus on: the legal name and number 
of pooled employer plans; the number of participants in such plans; 
the range of investment options provided in such plans; the fees 
assessed in such plans; the manner in which employers select and 
monitor such plans; the disclosures provided to participants in such 
plans; the number and nature of any enforcement actions by the 
Department on such plans; the extent to which such plans have 
increased retirement savings coverage in the United States; and any 
additional information as the Department determines is necessary. 
SECURE 2.0 section 344.
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    [ssquf] Question 1: What guidance, if any, for purposes of 
reporting on Form PR or otherwise, do pooled plan providers, 
fiduciaries, trustees, or other parties need to implement the revised 
definition in ERISA section 3(43)(B)(ii) effectively?
    [ssquf] Question 2: In addition to the Form PR and the Form 5500 
Annual Report, what are other data sources the Department could use to 
collect data on the topics enumerated in SECURE 2.0 section 344(1), 
e.g., the fees assessed in such plans, or the range of investment 
options provided in such plans?
    [ssquf] Question 3: The Department interprets the language in 
section 344(1)(C) of SECURE 2.0 requiring identification of ``the range 
of investment options provided in such plans'' to mean the specific 
investment options the responsible plan fiduciary has selected as 
``designated investment alternatives'' under the plan.\4\ The 
Department does not, for example, consider this language to require 
examination of the potentially large range of investments available 
through a brokerage window or similar arrangement, to the extent 
offered in a PEP. What would be efficient and comprehensive methods for 
the Department to determine the range of designated investment 
alternatives for all PEPs?
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    \4\ 29 CFR 2550.404a-5(h)(4).
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    [ssquf] Question 4: Section 344(1)(E) of SECURE 2.0 requires the 
study to focus on the ``manner in which employers select and monitor 
such plans.'' How and by whom are PEPs most commonly marketed to 
employers? Do marketing techniques differ based on the size of 
employers? How often do employers rely on the advice of others when 
selecting and monitoring a PEP? If so, who gives this advice to 
employers, generally, e.g., consultants, financial advisors, brokers, 
record keepers, others? In addition to this RFI, are there other 
efficient and comprehensive methods for the Department to solicit 
information on the steps employers take to select and monitor PEPs and 
to decide to stay in the PEPs? For instance, should the Department 
consider a public hearing, focus groups, questionnaires, online 
polling, or other similar information gathering techniques? From whom 
should the Department solicit this information (i.e., directly from 
employers, pooled plan providers, or both), using these other 
techniques?
    [ssquf] Question 5: Section 344(1)(F) of SECURE 2.0 requires the 
study to focus on the disclosures provided to participants in such 
plans. What would be efficient and comprehensive methods for the 
Department to collect examples of such disclosures or otherwise solicit 
information from employers, PEPs, plan administrators, or other parties 
on the disclosures provided to plan participants? Is there additional 
or different information that should be disclosed to participants in 
the context of PEPs, versus what is required to be disclosed under 
ERISA to participants in other defined contribution plans? If so, why, 
and what other additional disclosures should be required in the context 
of PEPs?
    [ssquf] Question 6: Section 344(1)(H) of SECURE 2.0 requires the 
study to focus on the extent to which PEPs have ``increased retirement 
savings coverage in the United States.'' How should the Department 
measure ``increased retirement savings coverage'' and what information 
would the Department need to make this assessment? For example, the 
formation of new PEPs may suggest increased coverage, but if the 
participating employers previously maintained a retirement plan, that 
could indicate a transfer of coverage types, rather than an increase in 
coverage. What are efficient and comprehensive methods for the 
Department, depending on how ``increase retirement savings coverage'' 
is measured, to collect such information?
    B. Emergency Savings Accounts Linked to Individual Account Plans. 
Section 127 of SECURE 2.0 amended ERISA section 3 to add a new 
definition, at section 3(45), for a ``pension-linked emergency savings 
account'' (PLESA). A PLESA is a short-term savings account established 
and maintained as part of an individual account plan. Section 127 of 
SECURE 2.0 also added a new part 8 to subtitle B of title I of ERISA 
that includes a comprehensive set of requirements for PLESAs. This 
includes a requirement that plan administrators for individual account 
plans that include PLESAs furnish to participants an initial and annual 
notice as to: the purpose of PLESAs; limits on and tax treatment of, 
contributions to a PLESA; any fees, expenses, restrictions, or

[[Page 54513]]

charges associated with PLESAs; procedures for electing to make or 
opting out of PLESA contributions, changing contribution rates, and 
making participant withdrawals; the amount of the PLESA account and the 
amount or percentage of compensation a participant has contributed to 
the PLESA; the designated investment option for PLESA contributions; 
options for the PLESA account balance after termination of employment 
or of the PLESA by the plan sponsor; and other information. Section 127 
of SECURE 2.0 also amended section 110 of ERISA to grant the Department 
authority to prescribe an alternative method for satisfying any 
reporting and disclosure requirement under ERISA with respect to 
PLESAs. Section 127 of SECURE 2.0 also amended section 404(c) of ERISA 
with respect to specified default investment arrangements for PLESAs. 
The amendments made to ERISA are applicable to plan years beginning 
after December 31, 2023.
    [ssquf] Question 7: What guidance, if any, do plan administrators 
need to effectively implement the requirements of section 127 of SECURE 
2.0 and new part 8 of ERISA? Because section 127 of SECURE 2.0 impacts 
many provisions under ERISA and the Code, commenters are encouraged to 
be as specific as possible with their responses, with clear citation to 
the specific statutory provision or provisions in question. If guidance 
is needed on multiple provisions, commenters are asked to prioritize 
the issues according to importance and offer a supporting rationale for 
the priority.
    [ssquf] Question 8: Would administrators of plans that include 
PLESAs benefit from a model notice or model language for inclusion in 
the required notice under section 801 of ERISA? If so, commenters are 
encouraged to submit suggested model language.
    C. Performance Benchmarks for Asset Allocation Funds. Section 318 
of SECURE 2.0 requires that the Department, not later than two years 
after enactment, issue regulations under ERISA section 404 (Fiduciary 
duties) providing that:

    [I]n the case of a designated investment alternative that 
contains a mix of asset classes, the administrator of a plan may, 
but is not required to, use a benchmark that is a blend of different 
broad-based securities market indices if--(1) the blend is 
reasonably representative of the asset class holdings of the 
designated investment alternative; (2) for purposes of determining 
the blend's returns for 1-, 5-, and 10-calendar-year periods (or for 
the life of the alternative, if shorter), the blend is modified at 
least once per year if needed to reflect changes in the asset class 
holdings of the designated investment alternative; (3) the blend is 
furnished to participants and beneficiaries in a manner that is 
reasonably calculated to be understood by the average plan 
participant; and (4) each securities market index that is used for 
an associated asset class would separately satisfy the requirements 
of such regulation for such asset class.

    [ssquf] Question 9: Are there additional factors beyond the 
criteria in section 318 of SECURE 2.0 that plan administrators should 
use to ensure they can effectively select and monitor, and participants 
and beneficiaries can effectively understand and utilize, blended 
performance benchmarks for mixed asset class funds? If so, why, and 
what are the other factors the Department should consider when 
developing regulations? Commenters are encouraged to review the 
Department's prior guidance on the use of blended performance 
benchmarks, albeit as secondary benchmarks, for purposes of the 
participant-level disclosure regulation; the standards for use of a 
``reasonable'' blended performance benchmark therein are similar, but 
not identical, to the four criteria in section 318 of SECURE 2.0.\5\
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    \5\ See, e.g., Field Assistance Bulletin 2012-02R (July 30, 
2012), Question 16; 75 FR 64910, 917 (Oct. 20, 2010).
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    [ssquf] Question 10: Section 318 of SECURE 2.0 also requires that 
the Department, not later than three years after the applicability date 
of such regulations, deliver a report to Congress regarding the 
utilization, and participants' understanding of these benchmark 
requirements. Comments are solicited on methods the Department might 
use to assess whether, and the extent to which, participants understand 
the type of benchmark described in section 318 of SECURE 2.0.
    D. Defined Contribution Plan Fee Disclosure Improvements. Section 
340 of SECURE 2.0 requires the Department to undertake a review of 29 
CFR 2550.404a-5, relating to fiduciary requirements for disclosure in 
participant-directed individual account plans. The review must explore 
how the contents and design of the disclosures under this regulation 
may be improved to enhance participants' understanding of defined 
contribution plan fees and expenses, including the cumulative effect of 
such fees on retirement savings over time. The Department must submit a 
report of its findings to Congress within three years, including 
recommendations for legislative changes. Although the Department may 
take steps in addition to this RFI to conduct its review of the 
regulation in question, the Department anticipates that responses to 
the following questions will be a helpful start.
    The regulation that is the subject of this required review was 
published in 2010. The intent of the regulation was to increase fee 
transparency and to provide America's workers with the information they 
need to effectively manage and invest the money they contribute to 
their 401(k)-type retirement plans. The regulation requires that plan 
administrators use standard methodologies when calculating and 
disclosing investment expense and historical return information to 
achieve uniformity across the spectrum of investment options that exist 
in 401(k)-type plans, facilitating ``apples-to-apples'' comparisons 
among investment options. The regulation also requires that investment-
related information is furnished in a format that enables workers to 
meaningfully compare the cost and historical performance of investment 
options available in their plan.
    [ssquf] Question 11: What information, including information 
required by the subject regulation, is currently being provided to 
participants in participant-directed individual account plans to 
provide them with information about their plans' fees and expenses and 
the cumulative effect of fees and expenses on their retirement savings 
over time? How is the information adequate or inadequate in helping 
plan participants make informed investment decisions? If inadequate, is 
there evidence that this inadequacy is tied directly to the subject 
regulation as opposed to other exogenous factors impacting financial 
literacy?
    [ssquf] Question 12: Is there evidence that the subject regulation 
could or should be improved to help participants better understand the 
fees and expenses related to their participant-directed individual 
account plans? For instance, is there additional or different content, 
not required under the current regulation, that could enhance 
participants' understanding of the costs associated with participating 
in their plan, including the costs of their available investment 
options? In addition, are there additional or different design, 
formatting, delivery, or other similar characteristics, not required 
under the current regulation, that could improve the effectiveness of 
these disclosures? If so, how should these improvements be incorporated 
into the subject regulation?
    [ssquf] Question 13: The subject regulation requires that 
investment fee and performance information for each designated 
investment alternative under

[[Page 54514]]

the plan must be furnished in a chart or similar format that is 
designed to facilitate a comparison of such information.\6\ Is the 
Department's model comparative chart, attached to this RFI as Appendix 
A, helpful to participants in facilitating a meaningful comparative 
analysis and selecting among investment options and for plan 
administrators in satisfying their disclosure obligations under the 
regulation? If not, how could the model be modified to enhance its 
effectiveness? Are there examples of disclosures provided to satisfy 
the subject regulation that use formats or designs that differ from the 
Department's model comparative chart that have proven to be more 
effective?
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    \6\ See 29 CFR 2550.404a-5(d)(2).
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    E. Eliminating Unnecessary Plan Requirements Related to Unenrolled 
Participants. Section 320 of SECURE 2.0 amended ERISA by inserting a 
new section 111, applicable for plan years beginning after December 31, 
2022. Section 111 provides that, with respect to individual account 
plans, no required disclosure, notice, or other plan document, must be 
furnished to unenrolled participants, subject to two exceptions. Under 
the first exception, the unenrolled participant must be furnished an 
annual reminder notice of the participant's eligibility to participate 
in the plan and any applicable election deadlines. Under the second 
exception, the unenrolled participant must be furnished any document to 
which they are otherwise entitled if the participant requests the 
document. Section 111 defines an ``unenrolled participant'' for this 
purpose as an employee who is eligible to participate in an individual 
account plan; has been furnished a summary plan description and any 
other ERISA or Code notices related to the participant's initial 
eligibility to participate in the plan; is not participating in such 
plan; and satisfies such other criteria as the Department, in 
consultation with the Treasury Department, may determine appropriate. 
Section 111 also defines an ``annual reminder notice'' for this purpose 
as a notice provided in accordance with 29 CFR 2520.104b-1 that is 
furnished in connection with the annual open season election period for 
the plan or, if there is no such period, is furnished within a 
reasonable period prior to the beginning of each plan year; and that 
notifies the unenrolled participant of their eligibility to participate 
in the plan, the key benefits and rights under the plan, with a focus 
on employer contributions and vesting provisions; and provides such 
information in a prominent manner calculated to be understood by the 
average participant. Section 320 of SECURE 2.0 also makes amendments to 
the Code that are parallel to the amendments to ERISA.
    [ssquf] Question 14: Is there any guidance, regulatory or 
otherwise, that plan administrators need or would find helpful to 
implement ERISA section 111?
    [ssquf] Question 15: Are there additional criteria that the 
Department, in consultation with the Treasury Department, should 
consider for determining who is an unenrolled participant?
    [ssquf] Question 16: Is there additional information that the 
Department, in consultation with the Treasury Department, should 
consider for inclusion on the required ``annual reminder notice'' to 
unenrolled participants?
    [ssquf] Question 17: Would plan administrators benefit from a model 
notice or model language for inclusion in the required ``annual 
reminder notice'' to unenrolled participants? If so, commenters are 
encouraged to submit suggested model language, specifically focusing on 
the ``key benefits and rights under the plan, with a focus on employer 
contributions and vesting provisions'' language. Considering that 
different plans contain different ``benefits and rights,'' and a range 
of plan-specific employer contribution rates and vesting provisions, is 
it feasible for the Department to create model language?
    [ssquf] Question 18: Is there a reliable source of data to estimate 
the number of people that may be impacted by section 111 of ERISA?
    F. Requirement to Provide Paper Statements in Certain Cases. 
Section 338 of SECURE 2.0 amended ERISA section 105(a)(2) by adding a 
new requirement, ``Provision of Paper Statements,'' effective for plan 
years beginning after December 31, 2025, that at least one pension 
benefit statement furnished for a calendar year for an individual 
account plan, and at least one pension benefit statement furnished 
every three years for a defined benefit plan, must be furnished on 
paper in written form, with two general exceptions. First, if a plan 
furnishes such statement in accordance with 29 CFR 2520.104b-1(c) (the 
Department's 2002 electronic delivery safe harbor, or the 2002 safe 
harbor), no paper statement must be furnished. Second, if a plan 
permits participants and beneficiaries to request that pension benefit 
statements be furnished by electronic delivery, no paper statement must 
be furnished to individuals who request electronic delivery if the 
statements are so delivered.\7\
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    \7\ Section 338 of SECURE 2.0 did not amend the alternative 
notice provision in section 105(a)(3) of ERISA. ERISA section 
105(a)(3)(A), in relevant part, provides that plan administrators of 
defined benefit plans shall be treated as meeting the requirements 
of ERISA section 105(a)(1)(B)(i) ``if at least once each year the 
administrator provides to the participant notice of the availability 
of the pension benefit statement and the ways in which the 
participant may obtain such statement.''
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    Section 338 of SECURE 2.0 directs the Department to update the 2002 
safe harbor to provide that, in addition to the other requirements of 
the safe harbor, participants who first become eligible to participate 
(and beneficiaries who first become eligible for benefits) after 
December 31, 2025 must be furnished a one-time initial notice on paper 
in written form, prior to the electronic delivery of any pension 
benefit statement, their right to request that all documents be 
furnished on paper in written form. Section 338 of SECURE 2.0 also 
directs the Department, no later than December 31, 2024, to update 
``applicable guidance governing electronic disclosure,'' except for the 
2002 safe harbor, as necessary to ensure that (1) participants and 
beneficiaries are permitted the opportunity to request that any 
disclosure required to be delivered on paper under such guidance shall 
be furnished electronically; (2) each paper statement furnished 
pursuant to such updated guidance includes an explanation of how to 
request that all such statements, and any other documents required to 
be disclosed under ERISA, be furnished electronically and contact 
information for the plan sponsor, including a telephone number; (3) the 
plan may not charge any fee to a participant or beneficiary for 
delivery of any paper statements; (4) each required document that is 
furnished electronically by such plan shall include an explanation of 
how to request that all such documents be furnished on paper in written 
form; and (5) a plan is permitted to furnish a duplicate electronic 
statement in any case when the plan furnishes a paper pension benefit 
statement. The ``applicable guidance governing electronic disclosure'' 
referenced in section 338(b) of SECURE 2.0 refers to the Department's 
second electronic delivery safe harbor regulation at 29 CFR 2520.104b-
31, titled ``Alternative method for disclosure through electronic 
media--Notice-and-access'' (the 2020 electronic delivery safe harbor, 
or the 2020 safe harbor).\8\ The Department intends, therefore, to 
update

[[Page 54515]]

the 2020 safe harbor as necessary to reflect these updates.
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    \8\ 29 CFR 2520.104b-31; 85 FR 31884 (May 27, 2020).
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    [ssquf] Question 19: What modifications or updates to the 2002 safe 
harbor are needed to implement section 338 of SECURE 2.0? Commenters 
are encouraged to consider whether any additional information (other 
than a statement of the right to request that all documents required to 
be disclosed under ERISA be furnished on paper in written form) should 
be included, and whether there are other standards that should apply to 
the required one-time initial paper notice that must be furnished for 
compliance with 29 CFR 2520.104b-1(c), the 2002 safe harbor? For 
example, should the 2002 safe harbor be modified or updated to include 
an initial paper notice that resembles the initial paper notice 
required by paragraph (g) of the 2020 safe harbor regulation?
    [ssquf] Question 20: What modifications or updates to the 2020 safe 
harbor are needed to implement section 338 of SECURE 2.0? Commenters 
are encouraged to consider and compare the contents of the initial 
paper notification required under paragraph (g) of the 2020 safe harbor 
with the content requirements of section 338(b)(2)(B) of SECURE 2.0. To 
what extent should a statement under ERISA section 105(a)(2) contain 
the content of the initial paper notification described in paragraph 
(g) of the 2020 safe harbor, and why?
    [ssquf] Question 21: Should both safe harbors be modified such that 
their continued use by plans is conditioned on access in fact? Can plan 
administrators (through their electronic delivery systems) reliably and 
accurately ascertain whether an individual actually accessed or 
downloaded an electronically furnished disclosure, or determine the 
length of time the individual accessed the document? If so, should the 
safe harbors contain a condition that plan administrators monitor 
whether individuals actually visited the specified website or logged on 
to the website, as a condition of treating website access as effective 
disclosure? And, in the event that such monitoring reveals individuals 
have not visited or logged on to the specified website (meaning that 
effective disclosure was not achieved through website access), should 
the safe harbors require that plan administrators revert to paper 
disclosures or take some other action in the case of individuals whom 
plan administrators know forsake such access?
    G. Consolidation of Defined Contribution Plan Notices. Section 341 
of SECURE 2.0 requires the Department and the Treasury Department, not 
later than two years after enactment, to issue regulations providing 
that plan administrators may, but are not required to, consolidate two 
or more of the following notices into a single notice: (1) the 
qualified default investment alternative notice, ERISA section 
404(c)(5)(B); (2) the notice for preemption of automatic contribution 
arrangements, ERISA section 514(e)(3); (3) the notice for alternative 
methods of meeting nondiscrimination requirements, Code section 
401(k)(12)(D); (4) the notice for alternative methods of meeting 
nondiscrimination requirements for automatic contribution arrangements, 
Code section 401(k)(13)(E); and (5) the notice for special rules for 
certain withdrawals from eligible automatic contribution arrangements, 
Code section 414(w)(4). The consolidated notice must include all 
required content, clearly identify the matters addressed therein, 
satisfy the timing and frequency requirements for each such notice, and 
be presented in a manner that is reasonably calculated to be understood 
by the average plan participant without obscuring, or failing to 
highlight, the primary information for each notice.
    [ssquf] Question 22: To what extent are regulations needed for plan 
administrators to consolidate the notices described in section 341 of 
SECURE 2.0? What are the perceived legal impediments to consolidation 
under current law and regulations? What are the perceived 
administrative or other practical impediments to consolidation? What 
are the benefits and drawbacks to plans of consolidating the notices 
described in section 341 of SECURE 2.0? Similarly, what are the 
benefits and drawbacks to plan participants and beneficiaries of 
consolidating these notices? Other than plans and plan participants, 
are there other stakeholders that have an interest in this topic? If 
so, who and what are their interests?
    H. Information Needed for Financial Options Risk Mitigation. 
Section 342 of SECURE 2.0 amended part 1 of ERISA by adding a new 
section 113 that requires administrators of plans amended to provide a 
period of time during which a participant or beneficiary may elect to 
receive a lump sum to, among other things, provide participants and 
beneficiaries with advance notice of the opportunity to elect a lump 
sum payment in lieu of annuity payments for life from the pension plan. 
The disclosure under section 113 would provide participants and 
beneficiaries, as they consider what is best for their financial 
futures, with important information to compare the other distribution 
options available under the plan, such as monthly payments for life and 
the life of their spouses, and the lump sum. In addition to explaining 
the potential ramifications of accepting the lump sum, the disclosure 
also would explain how the lump sum was calculated, including whether 
the lump sum is based on the early retirement benefit and, for a 
terminated vested participant, the relative values of the lump sum, the 
single life annuity, and the qualified joint and survivor annuity. The 
disclosure would also have to provide details about the election 
period, and how to obtain additional information. Section 342 of SECURE 
2.0 requires the Department to issue regulations implementing the 
requirements under section 113 of ERISA not earlier than one year after 
enactment. Further, these regulations must contain a model disclosure 
reflecting the content requirements under section 113 that plan 
administrators may use to discharge their statutory obligation.
    [ssquf] Question 23: Is there a need for guidance with respect to 
any of the specific content requirements in ERISA section 113(b)(1)(A) 
through (H)? If so, please specify the particular content requirement 
and explain the need for guidance.
    [ssquf] Question 24: ERISA section 113(b)(1)(E) requires the notice 
to specify, in a manner calculated to be understood by the average plan 
participant, the ``potential ramifications of accepting the lump sum.'' 
Beyond the specific items set forth in ERISA section 113(b)(1)(E), what 
other potential ramifications should the Department consider 
incorporating into regulations under ERISA section 113, and why?
    [ssquf] Question 25: Are transactional complexity, aging and 
cognitive decline, and financial literacy relevant factors the 
Department should consider when deciding to add to the list of 
potential ramifications in making regulations under section 113 of 
ERISA? Risk transfer transactions are by nature inherently complex 
involving uncertainty. Some behavioral finance professionals suggest 
that more and better information by itself is unlikely to ensure that 
people, even with average financial literacy, make good choices in the 
cognitively challenging task of choosing between an annuity and a lump-
sum payout. Despite such challenges, are there ways to structure and 
present the notice that would increase the likelihood of better 
decisions and retirement outcomes?
    [ssquf] Question 26: Are there mandatory notices or disclosures 
under the Code

[[Page 54516]]

that the Department should factor into the development of regulations 
under section 113 of ERISA? If so, which notices and disclosures, and 
how should they be factored into regulations under section 113 of 
ERISA?
    [ssquf] Question 27: The Department must issue a model notice for 
plan administrators to use in discharging their new statutory 
disclosure obligations under section 113 of ERISA. Commenters are 
encouraged to submit for the Department's consideration exemplary 
samples of notices that plan administrators have used in prior lump sum 
offers that comprehensively explain the consequences of electing a lump 
sum in lieu of annuity payments for life. Commenters should include a 
concise explanation of why the commenter believes that the sample was 
effective in conveying meaningful information to participants and 
beneficiaries. The Department, in turn, offers for consideration by 
commenters a model notice developed in 2015 by the ERISA Advisory 
Council.\9\ The Council's model is the product of careful deliberation 
following the receipt of extensive public input from a broad array of 
stakeholders.\10\ The model is attached as Appendix B to this RFI.\11\ 
Should the Department consider using this model as the starting point 
for the model required under section 113 of ERISA, and if not, why? If 
so, to what extent could and should this model be improved, for 
example, to conform to specific requirements under section 113 that 
were not considered by the ERISA Advisory Council?
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    \9\ ERISA section 512 provides for the establishment of an 
advisory council on employee pension and welfare plans, known as the 
ERISA Advisory Council. The Council is comprised of fifteen members 
representing different stakeholders, meets at least four times 
annually, and advises the Department and submits recommendations on 
the Department's functions under ERISA.
    \10\ A list of witnesses providing input to the Council on this 
topic, including their written statements, is available at 
www.dol.gov/agencies/ebsa/about-ebsa/about-us/erisa-advisory-council/2015-written-statements-by-invited-witnesses-and-issue-statements#2.
    \11\ The full Report explaining the model is available at 
www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2015-model-notices-and-disclosures-for-pension-risk-transfers.pdf.
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    [ssquf] Question 28: ERISA section 113 contains a pre- and post-
election window reporting framework under which plans must report 
information relating to the lump sum offerings and elections to the 
Department and the PBGC. In addition to the number of participants and 
beneficiaries who accepted the lump sum offer, the Department has 
authority to require plans to furnish ``such other information as the 
Department may require'' in the post-election report. Separately, the 
Department itself must report information about offerings and elections 
to Congress on a biennial basis. The Department also must post on its 
website for public consumption the information it receives under this 
reporting framework. The Department is considering what information 
should be reported to the Department to ensure that the Department can 
effectively discharge its monitoring, enforcement, public disclosure, 
and biennial reporting obligations under ERISA. To these ends, what 
data or information other than the number of participants and 
beneficiaries who were eligible for and accepted lump sum offers should 
be reported to the Department, and why? For instance, should the 
Department collect demographic information on those individuals who 
elected lump sum offers and, if so, what information? This information 
could, for instance, enable the Department to provide Congress with 
more detailed information on the cohorts of participants and 
beneficiaries who accept lump sum offers as compared to those who do 
not.
    I. Defined Benefit Annual Funding Notices. Section 343 of SECURE 
2.0 amended section 101(f) of ERISA by modifying the content 
requirements for defined benefit plan annual funding notices. For 
single-employer defined benefit plans, the ``funding target attainment 
percentage'' was replaced by the ``percentage of plan liabilities 
funded'' as a measure to reflect the plan's current funding status in 
section 101(f) notices. The replacement measure uses year-end market 
value for assets rather than actuarial value, disregards prefunding and 
funding carryover balances, and determines year-end liabilities using 
unadjusted spot segment rates. Funding notices for single-employer 
plans also must contain a statement of the circumstances when 
participants and beneficiaries may receive benefits in excess of the 
amount guaranteed by PBGC. The existing requirement regarding 
participant demographic data also was expanded to include the preceding 
two years and mandates presentation of the data in tabular format. The 
new amendments apply for plan years beginning after December 31, 2023.
    [ssquf] Question 29: Is there a need for guidance with respect to 
any of the amended content requirements in section 101(f)(2)(B) of 
ERISA? If so, please specify the provision and explain the need for 
such guidance.
    [ssquf] Question 30: Is there a need for guidance on the 
interrelationship of the new definition of ``percentage of plan 
liabilities funded'' in section 101(f)(2)(B) and the segment rate 
stabilization disclosure provisions in section 101(f)(2)(D)? When 
applicable, the segment rate stabilization disclosure provisions 
continue to use the funding target attainment percentage. In responding 
to this question, commenters are encouraged to address the extent to 
which participants and beneficiaries would find value in, or 
alternatively be confused by, two different funding percentages for the 
same plan.
    [ssquf] Question 31: Existing regulations under section 101(f) of 
ERISA contain a model notice for single-employer defined benefit 
plans.\12\ The Department is interested in suggestions and comments on 
how to modify the model to reflect the amendments to section 101(f) of 
ERISA by SECURE 2.0, and for improvements more generally. For ease of 
reference, the model is attached to this RFI as Appendix C.\13\
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    \12\ 29 CFR 2520.101-5.
    \13\ Although SECURE 2.0 made only modest changes under section 
101(f) with respect to multiemployer defined benefit plans, 
commenters are not precluded from submitting suggestions or ideas on 
how to improve the existing model notice for such plans.
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    Signed at Washington, DC, this 8th day of August, 2023.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2023-17249 Filed 8-10-23; 8:45 am]
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