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DOL’s ERISA Advisory Council Will Examine Lifetime Retirement Plan Participation

The Department of Labor’s Employee Benefits Security Administration has announced that its ERISA Advisory Council will be examining issues and considerations related to facilitating lifetime retirement plan participation. In explaining its rationale for doing so, it cites the recent movement of participant assets out of defined contribution and defined benefit plans, and into retirement accounts not covered by ERISA — such as IRAs or other savings accounts — or as plan distributions. 

The council will examine some of the factors that lead participants to leave their assets in, or move them out of, a plan. 

The council will focus on evaluating differences between employer-based and non-employer based systems, understanding plan sponsor attitudes around keeping participants within their plan or the employer based system overall, and discussing whether there are positive steps that can be taken to further encourage individuals to stay in the system.

It will examine the types of communications participants are receiving from their employer when they leave employment, and whether the quality of the participant’s decision-making can and should be enhanced by communication or other plan design features under the plan sponsor’s control. 

The council will focus on the following areas:

  • Compare and contrast considerations for participants in deciding whether or not to leave money within the employer-based system. 
  • Gain a better understanding of asset movements out of the employer-based system. 
  • Understand the plan sponsor’s perspectives and attitudes towards retaining assets within their plan. 
  • Examine what information is currently available to participants from DOL and other government sources concerning the pros and cons of rollovers to IRAs, whether the DOL should provide such information on its website and whether it would be helpful to suggest that DC plans might wish to provide link(s) to such information.
  • Examine whether there are educational programs or reasonable plan mechanisms which can serve a positive role in discouraging pre-retirement withdrawals from a DC plan and facilitating return of assets to the fund.
  • John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.