LOS ANGELES--Given a relatively tight deadline, the Department of Labor has not yet decided whether to put out proposed regulations or proceed directly to final regulations for the significant changes the Pension Protection Act of 2006 made to rules governing the individual benefit statements that retirement plans send to participants, a senior department official said Jan. 26.

Speaking on a panel at the annual Los Angeles Benefits Conference, Jeffrey J. Turner, chief, Division of Regulations, Office of Regulations and Interpretations at the department’s Employee Benefits Security Administration, said his office had issued interim guidance on the matter in the form of a field assistance bulletin, FAB 2006-03 (243 PBD, 12/21/06).

However, the PPA calls for final regulations on the individual statements to be in place in August, leaving the department uncertain whether to proceed with proposed regulations, or to move directly to final regulations, Turner later told BNA.

The new requirements mark a significant change for plan sponsors, since they require plans that prior to passage of the PPA needed only to provide members with such a statement “on request,” to now automatically furnish statements to all members, and in the case of some defined contribution plans, on a quarterly basis, Turner said.

The PPA also increased the information required in each statement, he added.

In response to a question, Turner said the department would issue final regulations on the PPA’s “safe harbor” for plan fiduciaries who invest in qualified default investment alternatives (QDIA) for participants who are automatically enrolled in plans pursuant to the PPA, by mid-February, as required by the act, but probably not any earlier.

The proposed rule was issued Sept. 27, 2006 (189 PBD, 10/2/06; 33 BPR 2327, 10/3/06) and the department has received more than 100 comments, many raising multiple concerns, Turner told the audience. In fact, a good portion of Turner’s presentation at the Los Angeles conference was taken up by questions from practitioners on the automatic enrollment regulations.

Possible Guidance Timelines.

Turner also said he expected the Labor Department to issue within days some interpretive guidance on another PPA provision that provides an exemption to restrictions contained in Section 408 of the Employee Retirement Income Security Act covering financial advice to ERISA plans.

Specifically the PPA permits financial advisers to advise plans, if the advice in question is “eligible advice,” Turner noted.

One such category of “eligible advice” is that which is pursuant to certain qualified computer models; however, the department must devise a process to certify experts who qualify to determine which computer models fit the statutory requirements, he added.

Turner said he expects proposed regulations on that certification process to be issued in March or April. However, Turner told BNA that some tax attorneys have asked for clarification to what they perceive as contradictions between the PPA exemption for computer models and an earlier advisory opinion, ERISA Advisory Opinion 2001-09A (238 PBD, 12/21/01; 29 BPR 8, 1/2/02).

The guidance, which Turner said was due very soon, will clear up the matter, he added.

On other topics, Turner said the department was “pretty far along” with final regulations establishing statutory exemption for cross-trading by plan sponsors. In an outline that accompanied his talk, Turner estimated those final regulations would be issued in January or February.

Turner emphasized that the list was not an official department schedule, but rather an estimated timeline put together by his office.

The January-February period also listed interim final regulations on the timing of qualified domestic relations orders, and on the publication of annual reporting Form 5500 changes.

The list suggested that proposed regulations covering the statutory exemption for investment advice (ERISA Section 408(b)(14), and 408(g)); and interim final regulations for defined benefit funding notices (ERISA Section 101(f)), would be out in May or June.

In the July-August time period, the list included final regulations on access to multiemployer plan information (Section 101(k)); interim final regulations on the individual benefit statements (Section 105(a)) with model statements; and furnishing summary plan information to employers and employee representatives of multiemployer plans (Section 104(d)), also with a model form.

By Tom Gilroy