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President Trump's Executive Order

September 12, 2018

Retiring Your Way

UBT News

President Trump Issues Executive Order on Strengthening Retirement Security

President Trump issued an Executive Order on August 31, directing the Department of Labor (DOL) and Department of Treasury to look at the following issues to improve worker retirement security:

  • Expanding Access to Multiple Employer Plans - A multiple employer plan (MEP) is a retirement plan that allows unrelated employers to adopt a single plan. This allows small and mid-sized businesses to achieve economies of scale by sharing the administrative and overhead expenses of sponsoring a plan.  Currently, unrelated employers can form a MEP only if they share some type of commonality (e.g., group of employers engaged in a particular trade in a specified geographic region). The Executive Order directs the DOL to look at how to expand employer access to MEPs, presumably by loosening the commonality requirement.
    • Why it’s important: The Administration believes that cost is a significant barrier, preventing many smaller companies from sponsoring retirement plans. Loosening the MEP rules would encourage more employers to sponsor a plan allowing them to sponsor a single plan, and sharing expenses, with other employers.
    • Timeframe: The President ordered the DOL to consider, within 180 days, whether to issue proposed regulations, or other guidance, changing the rules to make MEPS accessible to more employers.
  • Improving Disclosures - The President also directed the DOL and Treasury to review what action can be taken – either through regulation, other guidance or both - to make required disclosures more understandable and useful while reducing the cost and burdens of complying with the disclosure rules.  In addition, the review must consider the potential for broader use of electronic delivery of required disclosures.
    • Why it’s important:  Disclosures are often drafted in legalese and not easily understood by participants. In addition, given the rapid changes in technology, and how employees often expect information to be provided electronically, retirement plan industry groups have argued for simplifying the electronic disclosure rules under ERISA and the Internal Revenue Code.
    • Timeframe: The President ordered the notice review to be completed within one year.
  • Update RMD Distribution Life Expectancy Tables - Finally, the Executive Order directs the Treasury to examine the current life expectancy tables found in the required minimum distribution (RMD) regulations to determine whether they should be updated to reflect current mortality data.
    • Why it’s important: The Administration is concerned the RMD rules require retirees to receive retirement plan distributions in amounts greater than what they need. The directive will look at whether the RMD rules can be changed to allow retirees to spread their retirement savings over a longer period.
    • Timeframe - The President ordered the RMD review to be completed within 180 days.

Union Bank & Trust will keep you updated on agency responses to the President’s Executive Order.

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