Recommendation: The Commissioner of Internal Revenue should assess options for updating Publications 590-A and 590-B to either include more information or direct taxpayers to other resources for IRA owners with investments in unconventional assets. Such information could include: storage requirements for IRA investments in certain precious metals; valuation methods for hard-to-value IRA assets; the Department of Labor's process for granting exemptions to IRA prohibited transactions rules; and IRA investments with the potential to create unrelated business income tax liabilities. (Recommendation 1)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Commissioner of Internal Revenue, building on forthcoming compliance research using new IRA asset data, should evaluate the feasibility of requiring disclosure for high-risk IRA asset types associated with abusive schemes as transactions of interest. (Recommendation 2)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Commissioner of Internal Revenue should develop resources (such as training materials or job aids) for Small Business/Self-Employed examiners conducting IRA owner audits that explain how IRAs with unconventional assets can generate unrelated business income tax liability, and how examiners can refer cases to unrelated business income experts in IRS for assistance. (Recommendation 3)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To better identify the incidence and amount of loan offsets in 401(k) plans nationwide, we recommend that the Secretary of Labor direct the Assistant Secretary for the Employee Benefits Security Administration, in coordination with IRS, to revise the Form 5500 to require plan sponsors to report qualified plan loan offsets as a separate line item distinct from other types of distributions. (Recommendation 1)

Agency: Department of Labor
Status: Open

Comments: DOL neither agreed nor disagreed with this recommendation. The agency said it would consider the recommendation as part of its overall evaluation of the Form 5500. IRS said it would work with DOL as it responds to this recommendation.

Recommendation: The IRS Commissioner should work with the Department of the Treasury to consider clarifying if transfers of unclaimed savings from employer-based plans (such as 401(k) plans) to states are distributions, what, if any, tax reporting and withholding requirements apply, and when they apply. (Recommendation 1)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS agreed with this recommendation and stated that it would work with Treasury to consider clarifying the issues raised by this recommendation.

Recommendation: The IRS Commissioner should work with the Department of the Treasury to consider adding retirement savings transferred to states from terminating DC plans to the list of permitted reasons for rolling over savings after the 60-day rollover period, in a form consistent with the rules adopted on the taxation of transfers of unclaimed retirement savings. (Recommendation 2)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS agreed with this recommendation and stated that it would work with Treasury to consider addressing the issues outlined in this recommendation.

Recommendation: The Secretary of Labor should specify the circumstances, if any, under which uncashed distribution checks from active plans can be transferred to the states. (Recommendation 3)

Agency: Department of Labor
Status: Open

Comments: DOL neither agreed nor disagreed with this recommendation. However, DOL stated it plans to continue to evaluate whether there are circumstances in which the transfer of uncashed distribution checks from an ongoing plan to the states advances the goal of reuniting missing participants with their savings, which is consistent with this recommendation. We commend DOL for recognizing the importance of this issue and will monitor the agency's efforts to address this recommendation.

Recommendation: Congress should consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve how the nation can promote more stable retirement security. We suggest that such a commission include representatives from government agencies, employers, the financial services industry, unions, participant advocates, and researchers, among others, to help inform policymakers on changes needed to improve the current U.S. retirement system.

Agency: Congress
Status: Open

Comments: On April 25, 2018, the Senate introduced the "Commission on Retirement Security Act of 2018" (S.2753). On May 14, 2019, the Senate re-introduced this legislation (S.1435). This bipartisan legislation would establish a comprehensive retirement Commission that would be responsible for developing findings, conclusions, and recommendations for how to improve or replace existing private retirement programs. Commission members would be appointed using a bipartisan process and would include representatives from government agencies; current or former members of Congress; economic experts; and practitioners with expertise or experience engaging with employers, labor unions, and consumers designing and administering retirement plans. As of July 2020, no additional action has been taken.

Recommendation: To ensure that current vesting policies appropriately balance plans' needs and interests with the needs of workers to have employment mobility while also saving for retirement, Treasury should evaluate the appropriateness of existing maximum vesting policies for account-based plans, considering today's mobile labor force, and seek legislative action to revise vesting schedules, if deemed necessary. The Department of Labor could provide assistance with such an evaluation.

Agency: Department of the Treasury
Status: Open

Comments: As of August 2020, no action had been taken on this recommendation. Treasury did not report an evaluation of existing maximum vesting policies for account-based plans and reiterated its policy of not recommending any legislative change to Congress. Other priorities have delayed the agency's plan to work with IRS on guidance to update the regulations under Code section 411, which concern vesting schedules, as currently in effect. But those updates, even if they should occur in the future, cannot modify permitted vesting schedules because, as Treasury notes in its comments, the vesting rules were determined by Congress. Given that more than 84 million people hold 401(k) plan accounts and that median current tenure in the private-sector is about four years, the potential for these policies to significantly impact Americans' retirement security remains. We will close this recommendation when Treasury evaluates the appropriateness of current maximum vesting policies to help determine whether they unduly reduce the retirement savings of workers, regardless of whether the agency opts to seek legislative action.

Recommendation: To help participants better understand eligibility and vesting policies, the Department of Labor (DOL) should develop guidance for plan sponsors that identifies best practices for communicating information about eligibility and vesting policies in a clear manner in summary plan descriptions. For example, DOL could discourage plans from including in documents information about employer contributions or other provisions that are not actually being used by the plan sponsor.

Agency: Department of Labor
Status: Open

Comments: As of June 2020, the Department of Labor (DOL) was considering delaying regulatory action to improve disclosures, to direct its regulatory resources elsewhere. The agency noted however, that it may reopen for further comment a Request for Information posted in 2019, which sought public input on actions that could make retirement plan disclosures more understandable and useful for participants and beneficiaries, among other things. Such actions may include revising standards for the summary plan description, which our report found can contain obsolete and confusing information concerning eligibility and vesting. We continue to encourage the agency to include eligibility and vesting among topics considered for clarification in its future regulatory work and, in the meantime, to consider using sub-regulatory guidance to help plan sponsors better communicate these critical policies.

Recommendation: Congress should consider whether ERISA's provisions related to the timing of employer matching contributions need to be adjusted to reflect today's mobile workforce and workplace plans, which are predominantly 401(k) plans offering matching employer contributions.

Agency: Congress
Status: Open

Comments: As of February 2020, Congress has not taken action on this matter.

Recommendation: Congress should consider whether ERISA's provisions related to last day policies need to be adjusted to reflect today's mobile workforce and workplace plans, which are predominantly 401(k) plans offering matching employer contributions.

Agency: Congress
Status: Open

Comments: As of March 2020, Congress did not take action on this matter.

Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to use a record keeper that includes annuities from multiple providers on their record keeping platform.

Agency: Department of Labor
Status: Open

Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement. The agency noted that its Spring 2018 regulatory agenda continues to classify the relevant project as a long-term action and there has been no change or additional action since then.

Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to offer participants the option to partially annuitize their account balance by allowing them the ability to purchase the amount of guaranteed lifetime income most appropriate for them.

Agency: Department of Labor
Status: Open

Comments: In 2019, DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement. In 2020, the agency reviewed "Meeting Your Fiduciary Responsibilities" in light of this recommendation. It is updating this publication to, among other things, implement lifetime income provisions in the Setting Every Community Up for Retirement Enhancement (SECURE) Act. We await further progress by the agency.

Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to include participant access to advice on the plan's lifetime income options from an expert in retirement income strategies.

Agency: Department of Labor
Status: Open

Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement. In 2019, the agency noted that its Spring 2019 regulatory agenda continues to classify the relevant project as a long-term action.

Recommendation: To guide fiduciaries as they consider how the account balances of their participants will translate into financial security in retirement, DOL should modify its Meeting Your Fiduciary Responsibilities publication or issue new guidance to encourage plan sponsors to consider providing RMD-based default income-plan distributions as a default stream of lifetime income based on the RMD methodology-beginning, unless they opt-out, when retirement-age participants separate from employment, rather than after age 70½.

Agency: Department of Labor
Status: Open

Comments: DOL stated that it reviewed its publications to explore ways to encourage use of products and arrangements designed to provide participants and beneficiaries a lifetime income stream after retirement, and it is working on ways to build on them to better educate participants and plan sponsors about the need to think of making retirement savings last throughout retirement. In 2019, the agency noted that its Spring 2019 regulatory agenda continues to classify the relevant project as a long-term action.