In its response to President Obama’s January 18 Executive Order on ways government agencies can reduce the burden associated with regulations, the Treasury Department said it is reviewing certain regulations pertaining to retirement plans to determine whether any modifications could better achieve the objective of promoting retirement security by facilitating the offering of benefit distribution options in the form of retirement income. This initiative is expected to include projects that would facilitate the delivery of lifetime income in qualified plans and, to some extent, IRAs, and would reduce administrative burdens for retirement plan sponsors that would like to expand employees’ retirement income options.
Within its plan “designed to create a defined method and schedule for identifying certain significant rules that are obsolete, unnecessary, excessively burdensome, or ineffective,” the Department also listed final regulations that would provide relief to employers facing financial difficulty from certain requirements under the existing regulations on safe harbor contributions to section 401(k) and (m) plans as scheduled for review in the next two years. This is one item identified by commenters responding to the Treasury Department’s Request for Information pertaining to the President’s executive order (see ASPPA Recommends Streamlined Participant Communications). The regulations would provide new flexibility to employers sponsoring certain safe harbor 401(k) plans by allowing them to respond to changes in their financial health by suspending required contributions.
The Department outlined a plan for “creating a strong, ongoing culture of retrospective analysis.” As part of its plan, on an annual basis, members of the public will be provided with an opportunity to suggest to each bureau of the Department the specific regulations or other guidance that should be updated or amended as part of a targeted revision. In addition, every year, each bureau will conduct a retrospective review of 10% of its regulations. This ten percent review will continue on an annual basis in order for all Treasury regulations to be reviewed at least every ten years.The Department’s plan is here.