PLANSPONSOR - August/September 2018 - 16

Upfront
Sifting Through Plan Regulations
HOW can plan sponsors or their advisers
be expected to do the hard work of practically
interpreting the different levels of
regulations put out by entities such as the
Department of Labor (DOL) and IRS-
from Field Assistance Bulletins (FABs)
and Interpretative Bulletins to " guidance
letters " and " private letter rulings. "
David Levine, a principal with Groom
Law Group, and Jodi Epstein, a partner
with Ivins, Phillips and Barker, say much
of the perennial regulatory uncertainty
comes from the simple fact that the core
beliefs and priorities of presidential
administrations tend to swing dramatically
over relatively short periods of time.
" In the latest case concerning
ESG [environmental, social and governance]
issues under ERISA [Employee
Retirement Income Security Act], we
now have a new Field Assistance Bulletin,
2018-01, which was crafted and published
by the Trump administration, " Epstein
says. " While the Field Assistance Bulletin
is lengthy and detailed, it technically does
not carry as much weight as the previous
Interpretative Bulletin on the topic, which
is actually still in effect and known as
Interpretive Bulletin 2015-01. "
Roughly speaking, one can generally
say that Interpretative Bulletins are
higher up on the totem pole than FABs.
And both of these fall below bona fide
rulemaking. While it may not be obvious
at first, by paying close attention to the
language of each new regulatory release,
one can approximate where it fits into the
broader picture.
" The Field Assistance Bulletins
are important, but they do not technically
create a new interpretation of what
the underlying regulations are, " Epstein
explains. " In fact, Field Assistance
Bulletins are just that-they are created
not as a new regulation but instead to help
DOL staffers, literally in the field, understand
how to do their job. "
Epstein emphasized the related
point that Interpretive Bulletins-or any
regulation, for that matter-can never
really supersede the law upon which they
are based. So, neither a Field Assistance
Bulletin nor an Interpretative Bulletin will
affect the deeper requirements of ERISA.
As Levine observes, ERISA always
requires fiduciaries to act with the care,
skill, prudence and diligence a hypothetical
prudent person would use, and to act
" solely " in the interest of a plan's participants
and beneficiaries.
It is not just the DOL or the IRS
that has a hand in creating regulatory
16 PLANSPONSOR.com August-September 2018 Art by Meg Hunt
uncertainty. Congress has played its own
part and continues to do so-for example,
in the way it intervened last year to undo
Obama-era DOL regulations that sought
to expand states' ability to create ERISAexempt
defined contribution (DC) plans to
cover private-sector workers.
The rules, adopted in 2016, were
designed to assist states that had already
enacted laws requiring employers without
workplace savings arrangements to automatically
enroll their employees in payroll
deduction individual retirement accounts
(IRAs) that the states administered. It also
applied to states now with laws creating a
marketplace of retirement savings options
geared toward employers with no workplace
plan. At that time, nearly a dozen
states had enacted these kinds of laws.
The Obama-directed DOL yielded
some full-fledged rulemaking to provide
a safe harbor from ERISA coverage and to
reduce the risk of ERISA pre-emption litigation.
The rulemaking also ensured that
workers had the choice to opt out of automatic
enrollment arrangements.
In the spring and summer of 2017, a
bill advanced through Congress and earned
President Trump's signature to undo the
safe harbor and revoke the Obama-era rulemaking.
-John Manganaro
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PLANSPONSOR - August/September 2018

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