High Points of Trump’s Retirement Security Executive Order: MEPs, Benefit Plan Disclosures, Required Minimum Distribution Changes Anticipated
On August 31, 2018, President Trump signed an executive order outlining the administration’s priorities for American retirement plans. Emphasizing that as many as 34 percent of workers do not have access to a workplace retirement plan, the order outlines the administration’s plan for increasing workplace retirement plan availability.
The first section of the order outlines policy points, noting that employers with more than 500 employees are more likely to offer retirement plans than are employers with fewer than 100 employees. The current “[r]egulatory burdens and complexity” of offering a retirement plan may be cost prohibitive for small employers who might otherwise offer retirement benefits. The order calls on federal agencies to “revise or eliminate” rules that impose “unnecessary costs and burdens” which may be preventing small businesses from establishing retirement plans. The administration’s goal of increasing access to multiple employer plans (MEPs), which would allow small employers to band together to participate in a single retirement plan, echoes the recent expansion of access to association health plans. The order also prioritizes both the reduction/simplification of employee benefit plan notice requirements and the revamping of current required minimum distribution rules to prevent retirees from running out of money during their later retirement years.
The second section of the order directs the Secretaries of Labor and Treasury to “examine policies” to increase access to MEPs. Within 180 days of the signing of the order, the Secretary of Labor is to consider whether a notice of proposed rulemaking, other guidance, or both should be issued regarding what groups or employer associations may be an ERISA section 3(5) “employer.” The Secretary of Treasury is specifically directed to consider providing guidance to MEPs navigating the tax qualification process. The second section of the order also directs the Secretaries to overhaul current retirement plan disclosure notices within the next year. The goal is to make notices both user-friendly for participants and less burdensome for employers and other plan fiduciaries to produce. Lastly, the Secretary of Treasury is also directed to review within 180 days the life expectancy and distribution period tables applicable to required minimum distributions to determine whether updates are needed.
While the order does not immediately affect workplace retirement plans, the order provides valuable insight on the administration’s workplace retirement policy. If you have questions about how this may affect your business, or if you are considering implementing a qualified retirement plan, please contact us or the Stinson Leonard Street attorney with whom you regularly work.
Contact Abigail Clark for more information.