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The Department of Labor has withdrawn multiple regulations and interpretive bulletins related to employee benefit plans, saying the rules no longer serve a useful purpose and may create confusion for employers operating under the Employee Retirement Income Security Act (ERISA).
The repeals were issued Monday through direct final rules as part of Donald Trump’s executive order requiring federal agencies to eliminate ten regulations for every new one. The Department invited comments on the impact of the withdrawals.
One of the repealed rules addresses transitional regulations issued in 2000 concerning retirement benefit plans’ contracts with insurers in place on or before December 31, 1998. The rule defined which assets of an insurance company issuing a “guaranteed benefit policy” were considered plan assets under ERISA. The Employee Benefits Security Administration said it’s “not likely” that any impacted plan contracts remain in place today, so the rule “no longer serves any useful purpose.”
The original rule followed the 1993 Supreme Court ruling in John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, which determined an insurer’s contract qualifies as a guaranteed benefit policy only to the extent the insurer bears the investment risk.
Old interpretive bulletins also revoked
EBSA also rescinded three interpretive bulletins issued after ERISA’s 1974 enactment. The bulletins provided guidance on prohibited transactions and compliance responsibilities where ERISA and the Internal Revenue Code overlap.
IB 75-2 looked at whether someone connected to a benefit plan broke the rules by doing business with a company the plan had invested in. IB 75-6 dealt with whether it was okay to give money to plan managers to cover their expenses. IB 75-10 covered how to handle situations where both the Department of Labor and the IRS have authority over the same issue.
EBSA said the bulletins are “no longer needed” as they have been replaced with more recent rules and guidance.
Annuity safe harbor rule removed
In another direct final rule, the agency eliminated a 2008 fiduciary safe harbor regulation for selecting annuity providers for individual account retirement plans.
Congress created a “more streamlined” fiduciary safe harbor in 2019 through the SECURE Act to help fiduciaries offer lifetime income options. While EBSA noted the 2019 statute did not “technically nullify or repeal” the earlier regulation, it described the 2008 version as an “unnecessary and inefficient alternative and may inadvertently be a trap for the unwary.”
