For Individuals,For Plan Sponsors,Retirement Savings Plans,Custom

President Trump Issues Executive Order on Retirement-Related Matters

October 1, 2018

On Aug. 31, 2018, President Trump signed an executive order (EO) that directs the U.S. Department of Labor (DOL) and U.S. Department of the Treasury (Treasury) to work on a number of new retirement-related regulatory matters. The EO orders the agencies to examine the issues identified below and to release proposed regulations or other guidance, as appropriate. Any changes resulting from the EO are unlikely to go into effect prior to 2020.

Over half of all private sector workers are not covered by a pension plan, according to Bureau of Labor Statistics estimates,1 with lack of coverage particularly acute among lower paid workers and those employed by small employers. Lack of pension coverage is generally not an issue for full-time public sector workers. Here is an overview of the retirement-related matters:

  • Expand Private-Sector Plan Participation through Multiple Employer Plans (MEPs)
    • Open MEPsCurrently, participating employers in a MEP must have a common industry or other affiliation. These are called "closed MEPs." The DOL could, by regulation, loosen the affiliation requirement, facilitating "open MEPs" which would, in theory, allow smaller employers to achieve economies of scale currently available only to larger employers.
    • One bad apple ruleCurrently, a compliance failure by one employer in a MEP can put the entire plan's qualification status in jeopardy. The EO directs Treasury to consider guidance that would provide relief from this so-called "one bad apple rule."
    • Nontraditional and Gig Economy workers. The EO directs the DOL to "examine policies that would increase retirement security for part-time workers, sole proprietors, working owners, and other entrepreneurial workers with non-traditional employer-employee relationships."
  • Retirement Plan Notices, including eDelivery — The EO directs the DOL to consider improvements to required retirement plan notices, to make them "more understandable and useful." The EO specifically directs "an exploration of the potential for broader use of electronic delivery as a way to improve the effectiveness of disclosures and to reduce their associated costs and burdens."
  • Required Minimum Distribution (RMD) Updates — The EO includes a directive to consider updating the life expectancy tables in the RMD regulations. These rules determine the minimum amount to be distributed from a plan or IRA after an individual reaches age 70½. Should the tables be updated, the amount that must be distributed at each age would be reduced, which would allow retirees to spread retirement savings over a longer period of time.

ICMA-RC will continue to monitor legislative and regulatory developments resulting from the President's EO.The EO is available at the following link.

1Source: https://www.bls.gov/news.release/pdf/ebs2.pdf, July 20, 2018

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