Trump Targets Employee Benefits Guidelines in Deregulatory Push

The Department of Labor is rescinding what it says are outdated regulations and guidance documents on employee benefit plans in a bid to streamline standards for employers under the Employee Retirement Income Security Act.

The repeals issued Monday through direct final rules follow President Donald Trump’s January executive order to nix 10 regulations for every new one. The Department of Labor invited comments on the impacts of the withdrawals.

One final rule withdraws transitional regulations from 2000 for retirement benefit plans’ contracts with insurers established on or before December 31,1998, that outline which assets of an insurance company issuing a “guaranteed benefit policy” are considered part of a plan’s assets for ERISA purposes.

The DOL 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 relevant regulations had been issued following the US Supreme Court’s 1993 John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank decision that said an insurer contract qualifies as a guaranteed benefit policy only to the extent the insurer shoulders the investment risk.

The second direct final rule EBSA released Monday repeals three interpretive bulletins issued following ERISA’s enactment in 1974. The withdrawals include guidance on prohibited transactions through IB 75-2, which tackled whether a party in interest to a benefits plan engaged in conduct disallowed by ERISA if it had done business with an entity in which that plan had invested.

EBSA also revoked IB 75-6, which addressed advancing funds to plan fiduciaries to cover expenses, and IB 75-10, which dealt with compliance questions on split jurisdiction between DOL and the IRS where Title I of ERISA and IRS code present parallel regulations.

The bulletins are “no longer needed” because they have been largely replaced with other guidance and regulations, EBSA said.

Another final rule from the Trump administration removes a 2008 fiduciary safe harbor for selection of annuity providers for individual account retirement plans.

Congress enacted a “more streamlined” but similar safe harbor in 2019 through the SECURE Act for fiduciaries looking to offer plan participants lifetime income options. While EBSA acknowledged the statute didn’t “technically nullify or repeal” the existing rule, the agency said the rule is an “unnecessary and inefficient alternative and may inadvertently be a trap for the unwary.”

All three direct final rules from EBSA will be published in the Federal Register on July 1.