Recommendation: The Director of the Office of Workers' Compensation Programs should direct the Division of Federal Employees' Compensation to send a reminder to all FECA recipients as they approach retirement that they may want to obtain FERS retirement benefits estimates for comparisons with FECA, including annuity estimates from their employing agencies and estimates of their Thrift Savings Plan and Social Security benefits. (Recommendation 1)

Agency: Department of Labor
Status: Open

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

Recommendation: The Director of the Office of Workers' Compensation Programs should direct the Division of Federal Employees' Compensation to coordinate with the Social Security Administration to take steps to modernize and improve the process of manually generating benefit amounts with and without federal earnings and exchanging information between the agencies to enable the provision of offset estimates to FECA recipients upon request and to reduce the potential for human error in applying offsets. (Recommendation 2)

Agency: Department of Labor
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 Social Security should direct the Office of Earnings and International Operations to coordinate with the Division of Federal Employees' Compensation to take steps to modernize and improve the process of manually generating benefit amounts with and without federal earnings and exchanging information between the agencies to enable the provision of offset estimates to FECA recipients upon request and to reduce the potential for human error in applying offsets. (Recommendation 3)

Agency: Social Security Administration
Status: Open

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

Recommendation: Congress should consider legislation modifying the Internal Revenue Code to allow routine account transfers within the same foreign workplace retirement plan or between two foreign workplace retirement plans in the same country to be free from U.S. tax in countries covered by an existing income tax treaty that provides for favorable U.S. tax treatment of foreign workplace retirement plan contributions.

Agency: Congress
Status: Open

Comments: We will monitor congressional action related to this matter.

Recommendation: The Secretary of Labor should issue guidance on the obligations under the Employee Retirement Income Security Act of 1974 of sponsors of ongoing plans to prevent, search for, and pay costs associated with locating missing participants. (Recommendation 1)

Agency: Department of Labor
Status: Open

Comments: Labor agreed with this recommendation. In June 2019, the Department reported that it engaged with a range of stakeholders on issues surrounding missing and unresponsive participants, including representatives of plans, employers, financial services groups, consumer groups, and state unclaimed property funds. Their goal is to help plans locate and pay retirement benefits to missing participants and beneficiaries; they will evaluate constructive guidance to issue. There is no specific timeline for next steps regarding subregulatory guidance or regulatory proposals. GAO will monitor the agency's progress in implementing this recommendation.

Recommendation: The IRS Commissioner should review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and clarify for the public the Internal Revenue Code's requirements in these circumstances. (Recommendation 2)

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

Comments: IRS agreed to review taxation issues relating to distributions involving incorrect participant addresses and uncashed benefit checks and to clarify for the public the Internal Revenue Code's requirements in these circumstances. We will consider closing this recommendation when the agency provides evidence that it completed these efforts.

Recommendation: The IRS Commissioner should consider revising the letter forwarding program in a cost-effective manner to again provide information on behalf of plan sponsors on unclaimed retirement accounts to participants. (Recommendation 3)

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

Comments: IRS disagreed with this recommendation, noting that the IRS address of record for a participant would likely be of no greater value than addresses available through alternatives such as commercial locator services. However, our report does not cite the accuracy of IRS addresses, but rather other benefits that make a program revision worth considering, specifically the likelihood that individuals will open IRS correspondence, and the trust DOL places in the service as way for plan fiduciaries to meet their obligations. IRS also stated that the limited number of IRS staff and resources impact the feasibility of reinstating this program for plan participants. We continue to believe that expanding the letter forwarding program would be beneficial, and we encourage IRS to consider cost-effective ways to do so.

Recommendation: The IRS Commissioner should clarify how U.S. individuals are to report their foreign retirement accounts. The clarification could include addressing how these accounts should be designated and how the taxpayer should report contributions, earnings, and distributions made from the account. (Recommendation 4)

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

Comments: IRS agreed with this recommendation. We encourage IRS to take the necessary steps to dispel any confusion U.S. individuals may have over how to properly classify and report their foreign retirement accounts on a U.S. tax return-such clarification should help ensure that these taxpayers can meet their tax reporting obligations.

Recommendation: The IRS Commissioner should systematically analyze data reported through Form 8938 filings on foreign retirement accounts owned by U.S. individuals with the goal of developing an evidence-based understanding of how these accounts change over time and what level of risk these accounts pose for tax evasion. To assist with this analysis, IRS should consider revising Form 8938 to more clearly distinguish between retirement accounts and other types of accounts or assets being reported by taxpayers under current reporting requirements. (Recommendation 5)

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

Comments: IRS disagreed with this recommendation but not on its merits, citing a lack of resources to implement it. Specifically, IRS noted that although the modification to the Form 8938 suggested in this recommendation may seem minor, systemically collecting and analyzing the data would require resources beyond those currently available to IRS. However, our report notes that IRS indicated that they already collect foreign account filing data through the Form 8938 and that the current reporting requirements help the agency to "keep a line of sight" on U.S. individuals' foreign pension arrangements. IRS told us that without such data being reported, U.S. individuals with foreign retirement accounts may seek to avoid proper reporting on their tax returns when distributions are made. However, without agreeing to take steps to analyze these data reported by taxpayers, the question remains why the agency continues to collect such information-which we show in the report to present a substantial reporting burden on taxpayers-if the agency has no plan to analyze the data in order to make an informed decision about the risk for tax evasion that such accounts present. It is also unclear how IRS would maintain a line of sight on foreign retirement accounts belonging to U.S. individuals without analyzing the data reported by taxpayers on such accounts. We recognize that resources are limited. When staff and resources become available, IRS should modify the form and conduct a systematic analysis of these data-data that current law requires taxpayers to report-in order to assess the risk of tax evasion that foreign retirement accounts pose. Such an analysis can provide a basis to reach an evidence-based understanding of how these accounts change over time and what level of risk they pose for tax evasion, and U.S. individuals owning foreign retirement accounts will continue to face these substantial reporting burdens without the knowledge that the data they are required to provide will be put to good use by the federal government.

Recommendation: The IRS Commissioner should take steps to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, for example, by working with the Social Security Administration as necessary. (Recommendation 6)

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

Comments: IRS agreed with this recommendation. The agency indicated it would work to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, and agreed to take steps to ensure that the data reported on Form 8955-SSA are accurate and to advise plan sponsors of any changes to reporting these data.

Recommendation: The Social Security Administration Commissioner should take steps to improve the likelihood that the Notice of Potential Private Pension Benefit Information corresponds to actual retirement benefits in the future, for example, by working with IRS as necessary. (Recommendation 7)

Agency: Social Security Administration
Status: Open

Comments: SSA agreed with this recommendation. In November 2019, SSA stated that the agency is meeting with the IRS regularly to discuss Form 8955-SSA, which provides the basis for the information shown in the "Potential Private Retirement Benefit Information" notice. The IRS agreed to incorporate SSA's suggestion to update Form 8955-SSA to explain that the filer should include the individual pension plan participant's full social security number (SSN) on the form. SSA reported that it is working with the IRS to clarify coding instructions for Form 8955-SSA and institute a new edit to its paper processing to ensure accuracy. They are also considering potential data exchanges with filers. We will monitor the agency's progress in completing these tasks.

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 assist IRA owners in addressing challenges associated with investing their retirement savings in unconventional assets, the Commissioner of Internal Revenue should provide guidance to IRA owners and custodians on how to determine and document fair market value (FMV) for certain categories of hard-to-value unconventional assets. For example, IRS could consider updating Form 5498 instructions to custodians on how to document FMV for hard-to-value assets (e.g., last-known FMV based on independent appraisal, acquisition price) and provide guidance directed at account owners that provides examples of how to ascertain FMV for different types of unconventional assets.

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

Comments: IRS agreed that guidance should be provided to IRA owners and custodians. In 2018, IRS stated that it had discussed this issue with Counsel and Treasury, and it was agreed that fair market value would be a part of the IRA guidance project under the 2017 Priority Guidance Plan. IRS officials said that these new regulations would address FMV for certain categories of hard-to-value unconventional assets. IRS further noted that it would be premature to modify instructions and guidance to custodians on how to determine and document FMV for hard-to- value assets until the new regulations are issued. In their October 2019 update of planned guidance projects, Treasury's Office of Tax Policy and IRS still listed planned IRA regulations. GAO will not close this recommendation as implemented until the new valuation guidance is issued.

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.

Recommendation: To better protect the retirement savings of individuals who change jobs, while retaining policies that provide 401(k) plans relief from maintaining small, inactive accounts, Congress should consider amending current law to repeal the provision that allows plans to disregard amounts attributable to rollovers when determining if a participant's plan balance is small enough to forcibly transfer it.

Agency: Congress
Status: Open

Comments: There has been no congressional action as of March 2020. Although bipartisan legislation proposed in February 2018 discussed changes to the amount of vested savings that could be forced out of a 401(k) plan, it did not address whether or not the definition of vested savings for this purpose would continue to exclude rollovers. As we reported in GAO-15-73, rollover savings are always vested when they are transferred into a plan account. If Congress looks further at amending rules related to the threshold for forced distributions, and particularly if that threshold is raised, it bears consideration whether all of an individuals' vested savings--including rollover amounts--should be included in the calculation of that threshold.

Recommendation: To ensure that individuals have access to consolidated online information about their multiple 401(k) plan accounts, the Secretary of Labor should convene a taskforce to consider establishing a national pension registry. The taskforce could include industry professionals, plan sponsor representatives, consumer representatives, and relevant federal government stakeholders, such as representatives from Social Security Administration, Pension Benefit Guaranty Corporation, and Internal Revenue Service, who could identify areas to be addressed through the regulatory process, as well as those that may require legislative action.

Agency: Department of Labor
Status: Open
Priority recommendation

Comments: As of December 2019, the Department of Labor (DOL) has not allocated staff or other resources to look at convening a task force of stakeholders to consider the need for a national pension registry. The agency previously noted the PBGC's expansion of its registry of accounts left in closed defined benefit plans to include accounts in 401(k) plans. However, PBGC's expansion included only transfers from terminating 401(k) plans, not from active plans. In February 2018, bi-partisan legislation was proposed to create a national, online registry for much of Americans' retirement savings account information, particularly those accounts which might otherwise become lost. To create the proposed "Retirement Savings Lost and Found" or something similar would require coordinated regulatory action on the part of multiple agencies, which could only benefit from the initial work and findings of a pension registry task force. The need for access to consolidated online information about multiple 401(k) plan accounts is only growing. Therefore, we continue to recommend that DOL facilitate a task force of stakeholders to identify and discuss legal and other logistical issues critical to the potential creation of a national pension registry.

Recommendation: To ensure that 401(k) plan participants have timely and adequate information to keep track of all their workplace retirement accounts, the Social Security Administration's Acting Commissioner should make information on potential vested plan benefits more accessible to individuals before retirement. For example, the agency could consolidate information on potential vested benefits, currently sent in the Potential Private Retirement Benefit Information notice, with the information provided in the Social Security earnings and benefits statement.

Agency: Social Security Administration
Status: Open

Comments: SSA disagreed with this recommendation, but did seek legal guidance to determine if it is permissible to include a general statement encouraging potential beneficiaries to pursue any external pension benefits in its benefit Statement. SSA's Office of the General Counsel determined that it would be permissible as long as it includes information required by law and the information is accurate. However, as of March 2020, SSA continues to believe that adding such information would place SSA in a position to respond to issues or questions about ERISA and private pension plans, which SSA considers to be outside its mission and about which the agency has no firsthand legal or operational knowledge. While we appreciate SSA's concern about providing information or advice about private pension plans, the agency already has a procedure for responding to such inquiries. The agency's Notice of Potential Private Retirement Benefit Information directs recipients to contact DOL with any questions about private retirement savings. We would expect that any increase in individuals asking SSA about their retirement savings, which could result from making information on vested benefits more accessible, could be handled in the same way. SSA said it also believes that the current benefit Statement adequately covers the fact that people need other savings, pensions, and investments and the agency sends notices to people who may quality for other pensions. We welcome SSA's efforts to raise awareness about the role of private retirement savings in ensuring financial security and in to notify individuals of potential benefits. However, these efforts do not supplant the need for individuals to have early and ongoing access to complete information on their potential plan benefits. In February 2018, bipartisan members of Congress introduced legislation that would make this possible. The Retirement Savings Lost and Found Act of 2018 (S. 2474) would house SSA's data on potential private retirement benefits in a secure database, which would be searchable online by participants and beneficiaries prior to retirement. Whether the legislation is enacted or not, we continue to believe that SSA should work to make its valuable data on potential vested plan benefits more accessible to individuals before retirement.

Recommendation: To prevent forced-transfer IRA balances from decreasing due to the low returns of the investment options currently permitted under the Department of Labor's safe harbor regulation, the Secretary of Labor should expand the investment alternatives available. For example, the forced-transfer IRA safe harbor regulations could be revised to include investment options currently under the qualified default investment alternatives regulation applicable to automatic enrollment, and permit forced-transfer IRA providers to change the investments for IRAs already established.

Agency: Department of Labor
Status: Open

Comments: As of April 2020, DOL had not taken action on this recommendation. In 2019, DOL noted that it was engaged more generally with a range of stakeholders on issues surrounding missing and unresponsive participants with the goal of helping plans to locate and pay retirement benefits to missing participants and beneficiaries. We continue to encourage DOL to expand the safe harbor for IRAs created for forced transfers to include investment alternatives more likely to preserve principal and even increase it over time, such as what is permitted for qualified default investment alternatives under the safe harbor for automatic enrollment.

Recommendation: As DOL continues to review regulatory barriers to lifetime income options for 401(k) plan participants it should consider other countries' approaches to plans offering annuities, such as their reliance on existing solvency requirements and insurance industry standards to provide assurances rather than place responsibility on plan sponsors to make an assessment of an annuity provider's financial stability. As DOL considers the approaches of other countries and continues to work with the National Association of Insurance Commissioners, which facilitates interactions between insurance companies and state insurance regulators, DOL may wish to consult with the Federal Insurance Office, which coordinates federal efforts on prudential aspects of international insurance matters.

Agency: Department of Labor
Status: Open

Comments: DOL worked with the National Association of Insurance Commissioners (NAIC) in 2013 and 2014 to consider possible options for easing plan sponsor concerns about the requirement to assess the financial solvency of annuity providers. DOL reported they will continue to work with NAIC, as well as the National Organization of Life & Health Insurance Guaranty Associations and Treasury's Federal Insurance Office as they consider potential regulatory approaches in this area. DOL also worked with the Federal Insurance Office in developing guidance on the selection and monitoring of annuity providers under the current annuity selection safe harbor regulation. In October 2017, Treasury recommended DOL work with Treasury to develop proposals on how establish or certify one or more expert, independent fiduciary entities to assess the long-term financial strength of annuity providers. Plan sponsors could use these assessments as a safe harbor in selecting annuity providers for their plan. As of 2017, DOL continued to cite its other regulatory and guidance priorities as taking precedence. In April 2018, DOL reported that in the development and clearance of the Spring 2018 regulatory agenda, the agency decided to continue to classify this project as a long-term action. We commend DOL's efforts on a more workable safe harbor, but continue to encourage DOL to review alternative approaches taken by other countries, such as their reliance on existing solvency requirements and insurance standards, which can ease the burden on plan sponsors.