Senate HELP Committee Releases Retirement Bill Discussion Draft

Senators Patty Murray (D-WA) and Richard Burr (R-NC)—chair and ranking members of the Senate Health, Education, Labor and Pensions Committee respectively—have released a discussion draft of compiled retirement provisions from several bills into the Senate’s latest version of what has been coined SECURE Act 2.0. The RISE & SHINE Act shares some similarities to, and builds upon the Securing a Strong Retirement Act bill that passed the House in March.

The draft focuses primarily on ERISA provisions, and includes the following:

• Updates the mandatory distribution limit from $5,000 to $7,000
• Directs the Department of Labor (DOL) to update regulations regarding benchmarking investments (such as target date funds), and report to Congress
• Directs the DOL, Treasury Department, and the Pension Benefit Guaranty Corporation (PBGC) to review reporting and disclosure requirements for retirement plans and make recommendations to Congress to standardize and simplify requirements
• Removes the requirement for employers to provide certain notices to unenrolled participants
• Clarifies rules relating to recoupment of overpayments to participants and beneficiaries
• Reduces eligibility requirements for part-time workers from three years of service with 500 hours to two years of service with 500 hours
• Creates optional pension-linked emergency savings accounts that would allow automatic enrollment at a rate of no more than three percent of an employee’s salary, with these after-tax contributions to the account capped at $2,500.
• Requires the DOL to review plan fee fiduciary disclosure requirements in participant-directed plans and provide findings and recommendations to Congress
• Directs the Treasury Department and DOL to amend regulations to permit consolidation of certain required plan notices
• Requires re-enrollment of eligible employees who opted out of a qualified automatic contribution arrangement (QACA) or an eligible automatic contribution arrangement (EACA) at least every three years
• Allows incidental plan expenses associated with implementing plan design features that benefit participants to be reimbursed from plan assets
• Clarifies that participating employers with more than 100 participants in a Group of Plans must each have their own audit opinion
• Allows plan amendments to be made by the end of 2024 (2026 in the case of governmental plans), and conforms the plan amendment dates under the SECURE Act, the CARES Act, and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 to these new dates

Provisions specific to multiple employer plans

• Enables 403(b) plans to participate in multiple employer plans (MEPs) and pooled employer plans (PEPs)
• Clarifies that a named fiduciary is responsible for collecting contributions in a PEP
• Requires DOL to study and report on pooled employer plans

Provisions specific to defined benefit plans

• Requires the DOL to review and report to Congress on a current interpretive bulletin on pension risk transfers
• Makes certain changes to information contained in defined benefit plan annual funding notices
• Requires pension plan administrators to provide certain information to plan participants when offering lump sum distributions
• Provides that for purposes of Internal Revenue Code and ERISA rules applicable to cash balance plans, such as those related to backloading, the interest crediting rate that is treated as in effect and as the projected interest crediting rate is a reasonable projection of such variable interest rate, subject to a maximum of six percent
• Eliminates indexing of the PBGC variable rate premiums and freezes the rate at $48 per $1,000 of unfunded vested benefits
• Extends rules concerning the transfer of excess pension assets to retiree health accounts through 2032

Senator Murray and Senator Burr plan to introduce and mark up final legislation in the coming weeks. The Senate Finance Committee is also expected to release its version of SECURE 2.0 in the coming weeks, with a likely focus on tax provisions.