[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3417 Introduced in Senate (IS)]
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116th CONGRESS
2d Session
S. 3417
To require pension plans that offer participants and beneficiaries the
option of receiving lifetime annuity payments as lump sum payments, to
meet certain notice and disclosure requirements.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 9, 2020
Mrs. Murray (for herself, Ms. Smith, and Ms. Baldwin) introduced the
following bill; which was read twice and referred to the Committee on
Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To require pension plans that offer participants and beneficiaries the
option of receiving lifetime annuity payments as lump sum payments, to
meet certain notice and disclosure requirements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Information Needed for Financial
Options Risk Mitigation'' or the ``INFORM Act''.
SEC. 2. NOTICE AND DISCLOSURE REQUIREMENTS WITH RESPECT TO CERTAIN LUMP
SUM OPTIONS.
(a) In General.--Part 1 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.) is
amended by adding at the end the following:
``SEC. 112. NOTICE AND DISCLOSURE REQUIREMENTS WITH RESPECT TO LUMP SUM
OPTIONS.
``(a) In General.--A plan sponsor of a pension plan that amends the
plan to provide a period of time during which certain participants or
beneficiaries who are receiving or will receive lifetime annuity
payments into a lump sum under section 401(a)(9)(A)(i) of the Internal
Revenue Code of 1986 shall provide notice--
``(1) to each participant or beneficiary offered such lump
sum amount, in paper form and mailed to the last known address
of the participant or beneficiary, not later than 90 days prior
to the first day on which the participant or beneficiary may
make an election with respect to such lump sum; and
``(2) to the Secretary, not later than 30 days prior to the
first day on which participants and beneficiaries may make an
election with respect to such lump sum.
``(b) Notice to Participants and Beneficiaries.--
``(1) Content.--The notice required under subsection (a)(1)
shall include the following:
``(A) Available benefit options, including the
estimated monthly benefit that the participant or
beneficiary would receive at normal retirement age (if
not already in pay status), whether there is a
subsidized early retirement option, the monthly benefit
amount if payments begin immediately, and the lump sum
amount available if the participant or beneficiary
takes the option.
``(B) An explanation of how the lump sum was
calculated, including the interest rate, mortality
assumptions, and whether any additional plan benefits
were included in the lump sum, such as early retirement
subsidies.
``(C) The relative value of the lump sum option
compared to the plan's lifetime annuity, in comparable
terms.
``(D) Whether it would be possible to replicate the
plan's stream of payments by purchasing a comparable
retail annuity using the lump sum.
``(E) The potential ramifications of accepting the
lump sum, including possible benefits, investment
risks, longevity risks, loss of protections guaranteed
by the Pension Benefit Guaranty Corporation (with an
explanation of the monthly benefit amount that would be
protected by the Pension Benefit Guaranty Corporation
if the plan is terminated with insufficient assets to
pay benefits), loss of protection from creditors, loss
of spousal protections, and other protections under
this Act that would be lost.
``(F) General tax rules related to accepting a lump
sum, including rollover options and early distribution
penalties with a disclaimer that the plan does not
provide tax, legal, or accounting advice and a
suggestion that participants and beneficiaries consult
with their own tax, legal, and accounting advisors
before determining whether to accept the offer.
``(G) How to accept or reject the offer, the
deadline for response, and whether a spouse is required
to consent to election.
``(H) Contact information for the point of contact
at the plan sponsor for participants to get more
information or ask questions about the option.
``(I) A statement that--
``(i) financial advisers may not be
required to act in the best interests of
participants and beneficiaries with respect to
determining whether to take the option; and
``(ii) participants and beneficiaries
seeking financial advice should get written
confirmation that the adviser is acting as a
fiduciary to the participant or beneficiary.
``(2) Plain language.--The notice under this subsection
shall be written in a manner calculated to be understood by the
average plan participant.
``(c) Notice to the Secretary.--The notice required under
subsection (a)(2) shall include the following:
``(1) The total number of participants and beneficiaries
eligible for such lump sum option and the number of such
participants and beneficiaries who are in pay status during the
limited period in which the lump sum is offered.
``(2) The length of the limited period during which the
lump sum is offered.
``(3) An explanation of how the lump sum was calculated,
including the interest rate, mortality assumptions, and whether
any additional plan benefits were included in the lump sum,
such as early retirement subsidies.
``(4) A copy of the notice provided to participants and
beneficiaries under subsection (b).
``(d) Post-Offer Report to the Secretary.--
``(1) In general.--Not later than 60 days after the
conclusion of the limited period during which participants and
beneficiaries in a plan may accept a plan's offer to convert
their annuity into a lump sum as generally permitted under
section 401(a)(9) of the Internal Revenue Code of 1986, a plan
sponsor shall submit a report to the Secretary that includes--
``(A) the number of participants and beneficiaries
who accepted the lump sum offer and a breakdown of the
number of those participants and beneficiaries who were
in pay status; and
``(B) the number and nature of questions that the
plan sponsor received from participants and
beneficiaries about the offer.
``(2) Civil penalties.--The Secretary may assess a civil
penalty of up to $1,000 a day from the date of any plan
administrator's failure or refusal to file a report required
under paragraph (1).
``(e) Public Availability.--The Secretary shall make the
information provided in the notice to the Secretary required under
subsection (a)(2) and in the post-offer reports submitted under
subsection (d)(1) publicly available.
``(f) Guidance and Regulations.--The Secretary--
``(1) not later than 180 days after the date of enactment
of the Information Needed for Financial Options Risk
Mitigation, shall issue guidance and model notices for plan
sponsors to use in providing the notice described in subsection
(b); and
``(2) may promulgate such other regulations as may be
necessary to carry out this section.
``(g) Biannual Report.--Not later than 6 months after the date of
enactment of the Information Needed for Financial Options Risk
Mitigation and every 6 months thereafter, the Secretary shall submit to
Congress a report that summarizes the notices and post-offer reports
received by the Secretary under subsections (c) and (d) during the
applicable reporting period.''.
(b) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 111 the following new item:
Sec. 112. Notice and disclosure requirements with respect to certain
lump sum options.
(c) Enforcement.--Section 502 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132) is amended--
(1) in subsection (c)(1), by striking ``or section 105(a)''
and inserting ``, section 105(a), or section 112(a)''; and
(2) in subsection (a)(4), by striking ``105(c)'' and
inserting ``section 105(c) or 112(a)''.
(d) Effective Date.--The amendments made by subsections (a), (b),
and (c) shall take effect on the date of enactment of this Act.
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