- The U.S. Department of Labor (DOL) has proposed a federal rule that could increase costs for retirement plans in Florida by requiring them to monitor members’ access to electronic communications, potentially leading to higher fees for consumers.
- This rule emerged after the passage of SECURE 2.0, intended to encourage retirement savings, but some lawmakers believe the DOL’s interpretation may go beyond the intended scope and create unnecessary regulatory burdens.
- U.S. Rep. Virginia Foxx (NC) and a pair of Florida lawmakers have expressed concerns in a letter to the Employee Benefits Security Administration (EBSA).
- The lawmakers state that the regulation could result in increased administrative and compliance expenses, potentially leading to reduced investment choices.
A new federal rule proposed by the U.S. Department of Labor (DOL) has raised concerns about potential added costs for retirement plans in Florida. The regulation could require retirement plans to monitor whether their members access electronic communications, a measure that may ultimately be passed on to consumers.
The rule in question emerged following the passage of SECURE 2.0, a bill adopted by Congress designed to encourage retirement savings. However, lawmakers contend that the government’s interpretation of this legislation may go beyond what was intended and impose unnecessary regulatory burdens.
U.S. Rep. Virginia Foxx, Chair of the Education and the Workforce Committee, was joined by bipartisan Florida lawmakers Reps. Aaron Bean and Frederica Wilson to compose a letter to the Employee Benefits Security Administration (EBSA) expressing reservations about the rule. In the letter, Foxx points out that the agency’s Request for Information (RFI) suggests plans to expand regulations beyond the scope of the law.
“These RFI questions contemplate amendments to DOL regulations well beyond the provisions of section 338. Congress’ directives to the Secretary of Labor in section 338 are clear, specific, and intentionally limited,” says Foxx . “This letter is intended to remind DOL of its obligation to comply with the statutory provisions of section 338, as limited by Congress.”
One particular concern highlighted in the letter is RFI Question 21, which proposes additional regulatory requirements not authorized by Congress. It raises questions about whether the Department of Labor’s electronic delivery guidance should be conditioned on actual access by plan members, a notion that Rep. Foxx likened to an impractical demand comparable to confirming whether participants open and read physical mail.
Moreover, the lawmakers assert that the proposed regulation could result in higher costs for consumers through the necessitated increased administrative and compliance expenses for retirement plans, including the development of monitoring systems and legal expertise, which could be passed on to consumers through elevated fees or reduced investment returns.
“To require a plan administrator to monitor electronic access is as ridiculous as requiring a plan administrator to confirm that a participant opens and reads paper mail,” the letter reads. “This is an insult to participants and gross regulatory overreach.”
The representatives further speculate that the added costs may lead to a potential reduction in investment choices, limiting individuals’ ability to diversify their portfolios and potentially diminishing overall retirement plan benefits for plan participants.