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Expanding Access and Usage of Workplace Retirement Savings Programs

The expansion of the DC system has been dramatic since the Tax Act of 1978 created the concept and the first 401(k) plans launched in 1981. Two-thirds of private industry workers have access to retirement benefits, and half participate in a DB and/or DC arrangement.  Expanding access and usage of workplace retirement savings programs is currently a major theme of regulatory initiatives and legislative activity in the United States.

Workplace Retirement Hot Topics

DOL Rules on ARPs

The U.S. Department of Labor (DOL) has released a final ruling, to be effective September 30, regarding association retirement plans (ARPs). This will allow small businesses to join together to provide their employees defined benefit retirement plans. Under the rule, ARPs can be offered by a certain industry nationwide or by an association of various employers in a specific city, county, state, or multi-state metro area. Professional Employer Organizations (PEOs) also can sponsor the plans. According to the DOL, “the rule enables small businesses to offer benefit packages comparable to those offered by large employers.”

DOL Issues Final PTE for Auto Portability

July 31st the U.S. Department of Labor (DOL) released the final Prohibited Transaction Exemption (PTE) to Retirement Clearinghouse (RCH) for the RCH Auto Portability program, completing the regulatory framework required for its adoption.

The PTE, was originally proposed by the DOL in November 2018.  Now finalized, the PTE establishes important “guardrails” for Auto Portability.

About Auto Portability
Auto portability is the routine, standardized and automated movement of an inactive participant’s retirement account from a former employer’s retirement plan to their active account in a new employer’s plan. Conceived and developed by Retirement Clearinghouse, auto portability is designed to curb unprecedented levels of cash out leakage, dramatically improve participant outcomes, and to work within the established framework of an automatic rollover program in the qualified employer plan system.

Related LIMRA Research: DConversations - Automatic Portability: A New Approach to Addressing Retirement Plan 'Leakage'

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