DOL

The Department of Labor (DOL) has reopened the comment period for receiving written comments related to prohibited transaction class exemption 84-14 (the Proposed QPAM Amendment) to April 6, 2023.

As expected, President Biden has vetoed H.J. 30, a resolution for congressional disapproval of the Department of Labor’s rule “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.”

President Biden has announced his intent to nominate Julie Su to serve as Secretary of the Department of Labor.

Representative Suzan DelBene (D-WA) and co-sponsors Sean Casten (D-IL), Juan Vargas (D-CA), and Dean Phillips (D-MN) have introduced the Freedom to Invest in a Sustainable Future Act.

The Department of Labor’s (DOL’s) Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation (PBGC) have released a third and final phase that implements a September 2021 regulatory proposal.

The Department of Labor’s Employee Benefits and Security Administration (EBSA) recently released a proposed amendment to the Voluntary Fiduciary Correction Program (VFCP) to include a Self-Correction Component (SCC) for transactions eligible for correction under the program.

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) is reopening the comment period for its proposed amendments to the Voluntary Fiduciary Correction Program (VFCP) and amendments to Prohibited Transaction Exemption 2002-51, as originally proposed in November 2022. In reopening the comment period that had originally closed January 20, 2023, EBSA is citing section 305 of the SECURE 2.0 Act of 2022 that provides for the expansion of the IRS’s Employee Plans Compliance Resolution System (EPCRS).

The Pension Benefit Guaranty Corporation has published in the Federal Register inflation-adjusted penalty amounts for failure to provide certain notices or other material information and for failure to provide certain multiemployer notices.

• Daily penalty under ERISA Section 4071 rises from $2,400 to $2,586
• Daily penalty under ERISA Section 4302 rises from $320 to $345

These adjustments for 2023 are made under the authority of the Federal Civil Penalties Inflation Adjustment Act and are in effect for any of the described penalties that are assessed after January 12, 2023.

The Department of Labor has published in the Federal Register several inflation-adjusted penalty amounts for certain failures associated with qualified retirement plans.

• Per day, for failure to properly file a plan annual report (Form 5500 series); penalty rises from $2,400 to $2,586
• Per day, for failure to properly provide a plan black-out notice, or notice of right to divest employer securities (each recipient being a separate failure); penalty rises from $152 to $164
• Per day, for failure to provide DOL-requested documents; penalty increases from $171 to $184 (not to exceed $1,846 per request)
• Failure to properly provide benefit statements and maintain records vis-à-vis former participants and beneficiaries; penalty rises from $33 to $36 per required statement
• Failure of a fiduciary to comply with the prohibition on certain types of distributions from defined benefit pension plans with certain liquidity shortfalls; maximum penalty rises from $18,500 to $19,933 (penalty will be the amount of any distribution, if less)

Additionally, penalty amounts for certain failures associated with group health plans have been updated as follows.

• Failure to provide the Summary of Benefits and Coverage (“SBC”); penalty rises from $1,264 to $1,362 per failure
• Failure to comply with the Genetic Information Nondiscrimination Act (GINA), and failure to comply with disclosure requirements under Medicaid or the Children’s Health Insurance Program (CHIP); penalty rises from $127 to $137 per participant, per day
• Failure to meet filing requirements for multiple employer welfare arrangements (MEWA); penalty increases from $1,746 to $1,881 per day

These adjustments for 2023 are made under the authority of the Federal Civil Penalties Inflation Adjustment Act and are in effect for any of the described penalties that are assessed after January 15, 2023.

Retirement plan assets should be invested prudently to obtain the best possible financial returns, of course. But what if your plan invests in a company that conducts business in a way that violates your ethical values? For example, is it okay for a plan administrator to buy stock in a company with a record of environmental violations and polluting with impunity? Should that behavior affect whether a company qualifies as a suitable retirement plan investment? Is it possible, or even likely, that a company that responsibly produces a similar product may actually be a better choice, measured both by investment returns and by other factors?