[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4087 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4087
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
April 26, 2022
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 Act'' or the ``INFORM Act''.
SEC. 2. NOTICE AND DISCLOSURE REQUIREMENTS WITH RESPECT TO LUMP SUM
WINDOWS.
(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
WINDOWS.
``(a) In General.--A plan sponsor of a pension plan that amends the
plan to provide a period of time during which a participant or
beneficiary may elect to receive a lump sum under clause (i) of section
401(a)(9)(A)(i) of the Internal Revenue Code of 1986, instead of future
monthly payments under clause (ii) of such section, shall provide
notice--
``(1) to each participant or beneficiary offered such lump
sum amount, in the manner in which the participant and
beneficiary receives the lump sum offer from the plan sponsor,
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 and the Pension Benefit Guaranty
Corporation, 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,
whether there is a subsidized early retirement option
or qualified joint and survivor annuity that is fully
subsidized (in accordance with section 417(a)(5) of the
Internal Revenue Code of 1986), 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) In a manner consistent with the manner in
which a written explanation is required to be given
under 417(a)(3) of the Internal Revenue Code of 1986,
the relative value of the lump sum option for a
terminated vested participant compared to the value
of--
``(i) the single life annuity, (or other
standard form of benefit); and
``(ii) the qualified joint and survivor
annuity (as defined in section 205(d)(1));
``(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 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 the election.
``(H) Contact information for the point of contact
at the plan sponsor for participants and beneficiaries
to get more information or ask questions about the
options.
``(2) Plain language.--The notice under this subsection
shall be written in a manner calculated to be understood by the
average plan participant.
``(3) Model notice.--The Secretary shall issue a model
notice for purposes of the notice under subsection (a)(1),
including for information required under subparagraphs (C)
through (F) of paragraph (2).
``(c) Notice to the Secretary and Pension Benefit Guaranty
Corporation.--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.
``(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 sample of the notice provided to participants and
beneficiaries under subsection (b).
``(d) Post-Offer Report to the Secretary and Pension Benefit
Guaranty Corporation.--Not later than 90 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 and
the Director of the Pension Benefit Guaranty Corporation that includes
the number of participants and beneficiaries who accepted the lump sum
offer and such other information as the Secretary may require.
``(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 in a form that protects the
confidentiality of the information provided.
``(f) Guidance and Regulations.--The Secretary--
``(1) not later than 180 days after the date of enactment
of this section, 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 this section and every 6 months thereafter, so long as the
Secretary has received notices and post-offer reports under subsections
(c) and (d), the Secretary shall submit to Congress a report that
summarizes such notices and post-offer reports 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 lump sum
windows.
(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.
(e) Regulatory Authority.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury and the Secretary
of Labor shall jointly issue regulations to implement section 112 of
the Employee Retirement Income Security Act of 1974, as added by
subsection (a). Such regulations shall require plan sponsors to comply
in good faith with the regulations beginning not later than 1 year
after issuance of a final rule with respect to subsections (a)(1) and
(b) of such section 112, and beginning not later than 6 months after
issuance of a final rule with respect to subsections (a)(2), (c), (d),
and (e) of such section 112.
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