White House Reviewing Enhanced 401(k) Reporting, Disclosure Rule

The White House is reviewing a US Labor Department rule that is expected to propose enhanced workplace 401(k) reporting and disclosure requirements mandated under the SECURE 2.0 Act Congress passed late last year.

DOL’s Employee Benefits Security Administration sent the pre-rule (RIN 1210-AC23) to the Office of Information and Regulatory Affairs for review this week, according to a White House website. The office’s sign off is generally the last step before a regulation can be released by an agency.

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Saving for retirement at work often means participants get overloaded with paperwork such as summary plan descriptions, annual reports, and fee disclosures. Lawmakers and regulators want to ensure employers draft those reports so they’re easily understood and can be used to make smart choices about investments, contributions, and distributions in an account.

SECURE 2.0 (Pub. L. No. 117-328) requires EBSA to review fiduciary disclosure requirements in self-directed 401(k) and 403(b) plans and assess ways to “consolidate, simplify, standardize, and improve” participant-level communications in the US retirement system.

The Labor Department has publicly supported the new congressional mandate, saying there’s “too much lawyer in the disclosure work.” Plan communications are “effectively incomprehensible to plan participants,” EBSA Deputy Assistant Secretary Ali Khawar said at an American Bar Association conference in February.

Participant fee disclosures were targeted in a 2021 Government Accountability Office report that found that nearly 40% of 401(k) participants don’t fully understand documents EBSA requires their employers to give them.

The report recommended that the agency require companies to use simple, consistent terms for complex investing themes and draft more frequent reports with long-term investment projections, fee benchmarks, and actual cost breakdowns. All four of the GAO’s recommendations remain open.

Employers also draft reports for regulators to review, and the SECURE 2.0 Act requires companies to provide more information in their annual Form 5500 documents, such as terminated worker balances.

EBSA’s rule hasn’t appeared on any of the agency’s regulatory agendas, making it difficult to determine exactly what regulatory changes it would make.

OIRA has up to 90 days to review the proposal before it’s sent back to the agency for modification or to be formally published in the Federal Register. At that point, regulated stakeholders will have a chance to comment on the proposal before it’s revised, sent back to the White House for review, and finalized.