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COLLECTED WISDOM™ on the ERISA Advisory Council Final Working ReportsThis archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic. If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
Section 512 of ERISA provides for the establishment of an Advisory Council (Council) on Employee Welfare and Pension Benefit Plans. The Council consists of 15 members appointed each year by the Secretary of Labor. Each year the Council forms a number of working groups to focus on issues important to the administration of ERISA. These working groups identify and define subject issues, investigate, take testimony from witnesses, and submit a final report of findings and recommendations. These final reports can provide both valuable information and insight into issues studied. This Collected Wisdom™ is a catalog of those reports of concern to or focused on 401k plans.
2022 Advisory Council Report on Cybersecurity Insurance and Employee Benefit PlansThe 2022 Advisory Council hopes first to gain an understanding of cybersecurity insurers and the current market for cybersecurity insurance. This will include learning about insurers that are writing cybersecurity insurance coverage, the underwriting standards that insurers use for such insurance, and controls that insurers require or recommend that insureds have in place as a condition to underwriting coverage for cybersecurity risk. The Council also intends to investigate the terms of typical cybersecurity insurance policies. Source: Dol.gov, July 2022
ERISA Advisory Council Pulls Back the Curtain on Brokerage WindowsThe ERISA Advisory Council released a detailed report on its recent examination of brokerage windows in DC plans, previously an area of controversy due to shifting guidance from the DOL. Though the council considered several topics, its sole recommendation is for DOL to conduct additional fact-finding on "brokerage window only" plans. The DOL-appointed council can't issue guidance, but these findings may help alleviate concerns for plan fiduciaries currently offering -- or looking to offer -- a brokerage window by making the case for DOL to preserve the status quo. Source: Mercer.com, March 2022
Council Recommends More Research About "Brokerage Window Only" PlansThe ERISA Advisory Council has revisited the topic of brokerage windows in self-directed retirement plans in a recent report to Department of Labor Secretary Marty Walsh. But the Council also declined to recommend additional regulations for brokerage windows in general, saying the costs outweigh the benefits. Source: Planadviser.com, February 2022
ERISA Advisory Body Suggests Reviewing Plan Leakage Penalties"The retirement system in the United States reflects the imperfections of its labor markets with regards to people of color and women," the report states. "The voluntary approach embedded in ERISA has not moved the needle to encourage the employers of half of the American workforce to sponsor a retirement plan for their employees. Our recommendations attempt to find ways within the existing voluntary system to expand retirement plan coverage and participation." Source: Planadviser.com, February 2022
Beyond Plan Audit Compliance: Improving the Financial Statement Audit ProcessThis report was produced by the DOL's ERISA Advisory Council. In this 28-page report, the 2019 ERISA Advisory Council examined the regulations and guidance implementing the independent qualified public accountant annual examination of financial statement requirements under Section 103 of ERISA to determine whether changes could enhance the safety of plan assets, the effectiveness of the plan's design, the efficiency of the plan's operations, and the compliance of the plan with ERISA, the Code, and other applicable laws. Source: Dol.gov, July 2020
Voluntary Transfers of Uncashed Checks From ERISA Plans to State Unclaimed Property ProgramsThis report was produced by the DOL's ERISA Advisory Council. In this 48-page report, the 2019 ERISA Advisory Council explored whether there are circumstances under which a defined benefit or defined contribution pension plan might consider voluntary transfers of uncashed distribution checks to a state unclaimed property program to advance the goal of reuniting participants and beneficiaries who cannot be found or who are nonresponsive with their retirement savings. Source: Dol.gov, July 2020
Evaluating the DOL's Regulations and Guidance on ERISA Bonding Requirements and Exploring Reform ConsiderationsThe 2018 ERISA Advisory Council examined the effectiveness of the DOL's regulations and sub-regulatory guidance under section 412 of ERISA, which requires that an employee benefit plan purchase a fidelity bond to protect against losses to plan funds or other property caused by acts of fraud or dishonesty. In particular, the Council focused its inquiry on whether changes to the regulations and sub-regulatory guidance implementing section 412 of ERISA could improve compliance and thereby enhance the safeguarding of plan funds or other property from acts of fraud or dishonesty. This is their 15-page report on the topic. Source: Dol.gov, April 2019
Lifetime Income Solutions as a QDIA -- Focus on Decumulation and RolloversThe 2018 ERISA Advisory Council's objective was to focus recommendations on promoting lifetime income within DC plans through changes to the annuity selection safe harbor and modifying the Qualified Default Investment Alternative rule to focus on asset accumulation and decumulation issues in the context of LTI needs and solutions. This is their 44-page report on the topic. Source: Dol.gov, April 2019
ERISA Advisory Council Recommends Rules for the Encouragement of Lifetime Income Options in QDIAsBrief article that reviews the ERISA Advisory Council recommendations for rule changes to encourage the inclusion of lifetime income options in QDIAs, the effect of the new Society of Actuaries MP-2018 mortality improvement scale on liability valuations, and a recent IRS “Program Letter” identifying qualified plan distributions as a compliance target. Source: Octoberthree.com, November 2018
ERISA Advisory Council Urges DOL to Streamline Retirement Plan DisclosuresERISA Advisory Council has released a report urging the DOL to streamline retirement plan disclosure requirements. The report reiterates concerns the Council expressed in 2005 and 2009, echoed by the U.S. Government and Accountability Office in 2013, that the number and complexity of mandatory disclosures confuses participants and burdens plan administrators. The Council's latest report goes further than previous reports have done, outlining four recommendations for specific rule changes and proposing new model notices to simplify the current disclosure scheme. Source: Natlawreview.com, May 2018
Mandated Disclosure for Retirement Plans -- Enhancing Effectiveness for Participants and SponsorsThe 2016 ERISA Advisory Council followed up on issues identified and recommended for further study by the 2014 and 2015 Council's work on facilitating lifetime plan participation related to plan-to-plan transfers and account consolidations. Based on these past recommendations, the Department of Labor asked the 2016 Council to study further the challenges involved with plan-to-plan transfers and account consolidations, and to make recommendations to facilitate these processes for the advancement of lifetime plan participation. Source: Dol.gov, January 2017
Participant Plan Transfers and Account Consolidation for the Advancement of Lifetime Plan ParticipationThe 2016 ERISA Advisory Council followed up on issues identified and recommended for further study by the 2014 and 2015 Council's work on facilitating lifetime plan participation related to plan-to-plan transfers and account consolidations. Based on these past recommendations, the Department of Labor asked the 2016 Council to study further the challenges involved with plan-to-plan transfers and account consolidations, and to make recommendations to facilitate these processes for the advancement of lifetime plan participation. Source: Dol.gov, January 2017
Cybersecurity Considerations for Benefit PlansThe 2016 ERISA Advisory Council examined cybersecurity considerations as they relate to pension and welfare benefit plans. The 2016 Council focused on information that would be useful to plan sponsors, fiduciaries and their service providers in evaluating and developing a cybersecurity program for their benefit plans. Source: Dol.gov, January 2017
Model Notices and Plan Sponsor Education on Lifetime Plan ParticipationThe 2015 ERISA Advisory Council has taken the 2014 Council's report entitled "Issues and Considerations Surrounding Facilitating Lifetime Plan Participation" to the next level by developing sample participant notices, as well as educational materials for plan sponsors regarding plan design features that encourage lifetime plan participation. Source: Dol.gov, January 2016
Model Notices and Disclosures for Pension Risk TransfersThe 2015 ERISA Advisory Council examined information needs of plan participants and disclosure practices of plan sponsors when engaging in defined benefit plan risk transfer transactions and drafted Model Notices relevant to these transactions. Source: Dol.gov, January 2016
Issues and Considerations Surrounding Facilitating Lifetime Plan ParticipationThe 2014 ERISA Advisory Council examined recent movement of participant assets out of DC and DB plans, and into retirement accounts not covered by ERISA, such as IRAs or other savings accounts, or as plan distributions. Based upon testimony received during two days of hearings, this report provides ideas for plan administrators and plan participants, including communications strategies and plan design options to facilitate lifetime retirement plan participation. Source: Dol.gov, January 2015
ERISA Advisory Council Report on Outsourcing Employee Benefit Plan ServicesThe 2014 ERISA Advisory Council examined the role that outsourcing plays in helping plan sponsors and other ERISA plan fiduciaries meet the increasingly complex task of managing and administering their employee benefit plans. This is their report with recommendations. Source: Dol.gov, January 2015
Examining Income Replacement During Retirement Years in a Defined Contribution Plan SystemThe 2012 ERISA Advisory Council examined income replacement during retirement years in a defined contribution retirement system and the issues individuals and plan sponsors face to ensure financial security during the participants’ retirement years. Through testimony and research, the Council developed recommendations to the Secretary that certain plan sponsors and participants may find beneficial when examining options for income replacement in a DC plan system. Source: U.S. Department of Labor, April 2013
Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement PlansThe 2012 ERISA Advisory Council studied current challenges and best practices concerning beneficiary designations in retirement and life insurance plans. The Council examined the issues surrounding attempts to pay the correct plan beneficiaries in a timely manner and to improve plan design and administrative practices to ensure that the participant’s intent is carried out. In particular, the Council focused on steps that plans and service providers can take to ensure the proper beneficiary receives the intended benefit payment from the plan. Source: U.S. Department of Labor, April 2013
Current Challenges and Best Practices for ERISA Compliance for 403(b) Plan SponsorsThe 2011 ERISA Advisory Council studied the Current Challenges for ERISA Compliance for 403(b) Plan Sponsors and heard testimony supporting the proposition that there is a need for additional clarification and guidance for plan sponsors who maintain and/or offer 403(b) plans. The objectives of this report are to (1) identify areas where guidance is confusing or lacking relating to complying with the new 403(b) regulations and (2) to determine what actions the Department of Labor (DOL) could take to enhance compliance with the regulations issued by DOL, as well as to ease certain regulatory burdens for 403(b) plan sponsors, especially smaller employers. Source: U.S. Department of Labor, March 2012
Privacy and Security Issues Affecting Employee Benefit PlansThe 2011 ERISA Advisory Council studied Privacy and Security Issues Affecting Employee Benefit Plans (other than health care benefit plans). The Council focused on the privacy and security of benefit data and personal information in light of the dramatic changes in technology and its use in the last decade in employee benefit plan management. The Council examined issues and concerns about potential breaches of the technological systems used in the employee benefit industry, the misuse of benefit data and personal information, and the impact on plan sponsors, service providers and participants and beneficiaries. Source: U.S. Department of Labor, March 2012
Hedge Funds and Private Equity InvestmentsThe 2011 ERISA Advisory Council examined the investment of ERISA plans in hedge funds and private equity funds, the risks associated with these investments, and the process plan sponsors are taking to evaluate their appropriateness as investments in pension benefit plans. The purpose of the Council's examination is to provide recommendations to the Department of Labor on guidance for plan sponsors, such as suggested best practices, for purposes of evaluating the investment strategies for and monitoring the investment of retirement plan assets in these investment options in a manner that is consistent with the obligations of plan sponsors as fiduciaries under ERISA. Source: U.S. Department of Labor, March 2012
Employee Benefit Plan Auditing and Financial Reporting ModelsThe 2010 ERISA Advisory Council studied Employee Benefit Plan Auditing and Financial Reporting Models. Because a great deal has changed in the retirement plan industry since the enactment of ERISA's audit requirements in 1974, the Council focused on retirement plans. An examination of current audit requirements and reporting models, and concerns about how they are implemented and applied, led to a focus on three topics and recommendations on each. Source: U.S. Department of Labor, April 2011
Disparities for Women and Minorities in Retirement SavingsThe 2010 ERISA Advisory Council studied disparities for women and minorities as they relate to retirement security. he objectives of this study are to 1) identify the causes of existing discrepancies with regard to retirement readiness for women and minorities and 2) determine what actions the Secretary of Labor could take to mitigate these discrepancies. The Council assembled empirical information from multiple sources to understand the causes of the disparities, and developed recommendations for the Secretary. Source: U.S. Department of Labor, April 2011
Report on Stable Value Funds and Retirement SecurityThis report was produced by the 2009 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group purpose in studying stable value funds and other stable value investment products was to determine whether the DOL should provide (i) requirements or guidelines to retirement plan service providers related to the design or marketing of Stable Value Fund investments; (ii) requirements or guidelines to plan sponsors and fiduciaries for selecting and monitoring Stable Value Funds; and (iii) information to plan participants to assist them in making informed investment decisions regarding Stable Value Fund investments in participant-directed plans. Source: U.S. Department of Labor, April 2010
Report on Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and BeneficiariesThis report was produced by the 2009 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group believes the DOL needs to address ERISA's disclosure requirements and made a number of recommendations to the Secretary of Labor for consideration. Source: U.S. Department of Labor, April 2010
Report on Approaches to Retirement SecurityThis report was produced by the 2009 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group reached a consensus focusing on the adequacy of and structure of U.S. retirement plans to assess whether structural aspects of these plans contribute to retirement security. Source: U.S. Department of Labor, April 2010
Report on Hard to Value Assets and Target Date FundsThis report was produced by the 2008 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group studied issues involving two topics concerning: first, plan assets invested in Hard To Value Assets, or alternative investments, and second, plan assets which allow participants to invest in Target Date Funds. Source: U.S. Department of Labor, February 2009
Report On Phased RetirementThis report was produced by the 2008 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group examined the issues facing employers who wish to create phased retirement plans, the issues facing employees who wish to take part in phased retirement programs, and the various legal and regulatory obstacles to the implementation of a phased retirement arrangement. They also examined whether there were any actions needed to facilitate an improved system of phased retirement. Source: U.S. Department of Labor, February 2009
Report On The Spend Down Of Defined Contribution Assets At RetirementThis report was produced by the 2008 Advisory Council on Employee Welfare and Pension Benefit Plans. This Working Group examined and reviewed the spend down of DC assets at retirement to assess the issues and barriers facing plan fiduciaries, plan sponsors and plan participants. Source: U.S. Department of Labor, February 2009
Financial Literacy of Plan Participants and the Role of the EmployerThe 2007 ERISA Advisory Council formed a Working Group on Financial Literacy of Plan Participants to study numerous issues in increasing the financial decision-making skills of plan participants. This is there report. Source: U.S. Department of Labor, May 2008
Fiduciary Responsibilities and Revenue Sharing PracticesThe 2007 ERISA Advisory Council formed the Working Group on Fiduciary Responsibilities and Revenue Sharing Practices to study numerous issues relative to the practice of revenue sharing. This is there report. Source: U.S. Department of Labor, May 2008
Prudent Investment ProcessThis report was produced by the 2006 ERISA Advisory Council's Working Group on Prudent Investment Process. The desired result of the Working Group was to discover and present matters that would enhance the ability of fiduciaries to execute their responsibilities under ERISA. Source: U.S. Department of Labor, May 2007
Retirement Distributions & OptionsThis Working Group made inquiry into the nature of the distribution options available to participants of defined contribution qualified retirement plans, and the sufficiency of the communication of the options to retiring or terminating participants. This is their final report including recommendations. Source: U.S. Department of Labor, March 2006
Communications To Retirement Plan ParticipantsThe 2005 ERISA Advisory Council formed a Working Group on Communications to Retirement Plan Participants to assess whether plan participants understand their rights and benefits under retirement plans and if existing ERISA-required communication tools are accomplishing the goal of full disclosure. This is their final report including recommendations. Source: U.S. Department of Labor, March 2006
Report on Plan Fees and Reporting on Form 5500This ERISA Advisory Council working groups task was to determine what fees and expenses are currently reported by plan sponsors on Form 5500 and to determine whether there are other fees and expenses that should be reported, but currently are not. The working group was also charged with studying whether plan sponsors adequately understand the total fees and expenses they are paying and whether those fees are reported on the Form 5500 in a manner consistent with the Department of Labor's reporting objectives. This is their final report including recommendations. Source: 401khelpcenter.com, LLC, December 2004
Fee And Related Disclosures to ParticipantsThis ERISA Advisory Council working group studied fee and related disclosures to participants in defined contribution plans that relate to investment decisions and retirement savings. The scope of their study encompass both plans that are intended to meet the ERISA §404(c) requirements and those that are not intended to meet those requirements. Existing disclosure requirements within the scope of this study were examined. Their goal was to assess the adequacy and usefulness of the current requirements and whether changing the disclosure requirements could help participants to more effectively manage their retirement savings. This is their final report including recommendations. Source: 401khelpcenter.com, LLC, December 2004
Exploring the Utilization of Third-Party Trustees to Protect PlanIn 1993, the ERISA Advisory Council's Defined Contribution Working Group began the first phase of a three-phase study. The third phase, studied during 1995, considered the question whether defined contribution plans provide employees with an adequate source of retirement income. Source: U.S. Department of Labor, December 2004
Guidance in Selecting and Monitoring Service ProvidersThe Working Group on Guidance in Selecting and Monitoring Service providers presents its interim report and recommendations to the 1996 ERISA Advisory Council. Source: U.S. Department of Labor, December 2004
Soft Dollars/Commission RecaptureThe Soft Dollar and Directed Brokerage Working Group respectfully submits the following report and recommendations to the 1997 ERISA Advisory Council. Source: U.S. Department of Labor, December 2004
Optional Professional Management In Defined Contribution PlansPlan sponsors are beginning to incorporate in their plan design the opportunity for participants to delegate the investment allocation/implementation of their plan assets to professional investment advisors and managers. The Working Group examines the advantages, disadvantages, fiduciary implications, and industry practices of this emerging plan design practice. Source: U.S. Department of Labor, December 2004
Orphan PlansAlthough orphan plans are estimated to represent only about two percent of all defined contribution plans and less that one percent of total defined contribution plan assets, the problems that orphan plans create for participants, administrators, the government and the courts are substantial. Source: U.S. Department of Labor, December 2004
Employer Assets in ERISA Employer-Sponsored PlansExcept for some very modest provisions enacted as part of the Taxpayer Relief Act of 1997, there is absolutely no limit on the amount of employer assets that can be held in defined contribution plans. The dearth of limitations for defined contribution plans is in stark contrast to the ten (10) percent limit on employer assets that has applied to defined benefit plans since the enactment of ERISA in 1974. Source: U.S. Department of Labor, December 2004
Fiduciary Education and TrainingEducation for fiduciaries of both deferred compensation and employee welfare plans is essential if such fiduciaries are to keep current. While it may be unreasonable to expect that fiduciaries of plans in small firms can keep abreast of every development in such a complex regulatory environment, such fiduciaries are still in need of education, particularly about what a fiduciary under ERISA is and what responsibilities such fiduciaries have. Source: U.S. Department of Labor, December 2004
Small Business: How to Enhance and Encourage the Establishment of Pension PlansAs a result of the Working Group's findings, it is clear that there is a need for marketing to promote the creation of plans; for education of employers and employees; and for legislation to deal with regulatory obstacles, as well as the need to create tax and financial incentives. Source: U.S. Department of Labor, December 2004
Working Group on Soft Dollar and Directed BrokerageThe 1997 Advisory Council on Employee Welfare and Pension Benefit Plans created a working group to study the need for regulatory changes and/or additional disclosure to pension plan sponsors and fiduciaries on soft dollar and directed brokerage practices. In choosing this topic, council members expressed concern this area lacked sufficient guidance for plan fiduciaries to properly administer their pension plans in compliance with ERISA's fiduciary requirements. In addition, soft dollar and directed brokerage practices had not been comprehensively addressed by Department of Labor staff since the mid-1980s. Source: U.S. Department of Labor, December 2004
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