Defined Contribution Legislative and Regulatory Update

Transcription

1 Defined Contribution Legislative and Regulatory Update JUNE 2018 We are committed to providing you with the information and tools you need to help you meet your fiduciary responsibilities as a plan sponsor and offer your employees an exceptional retirement plan. This newsletter is designed to inform you about the latest legislative and regulatory developments that may affect your plan. IN THIS ISSUE From the Hill DOL fiduciary rule: Recent developments and what s next DOL publishes new semi-annual regulatory agenda Comparing SEC and DOL approaches to conflicts of interest From the Courts Seventh Circuit holds that ERISA does not preempt state slayer statute From the Regulatory Services Team It s that time of year again! Recent legislation and regulations impacting retirement plans

2 From the Hill DOL fiduciary rule: Recent developments and what s next On October 21, 2010, the Department of Labor (DOL) first issued a proposed rule to update the definition of fiduciary and more broadly define the universe of people who provide investment advice to plans for a fee or other compensation. The department s proposed rule amended a 1975 regulation that defined when a person providing investment advice becomes a fiduciary under ERISA. On March 16, ,703 days later the U.S. Fifth Circuit Court of Appeals, in a two-to-one decision, vacated the final regulations as issued by the DOL in April In the intervening 7½ years, we saw the original proposal pulled and a new proposal issued, two rounds of public hearings, numerous requests for public comment, implementation delays, legislative alternatives introduced, and a presidential memorandum directing the DOL to review their final rule and consider changes or rescission. Empower Retirement published an analysis of the Fifth Circuit s decision in March The DOL had until April 30, 2018, to request a rehearing but chose not to do so. The DOL also has until June 13 to file an appeal with the U.S. Supreme Court. AARP and the attorneys general of New York, California and Oregon had filed a motion to intervene in the absence of DOL action, but that motion was denied on May 2. The states filed a subsequent motion to have the request for intervention reviewed again or decided by the full Fifth Circuit, but this motion was denied on May 22. The question many in the industry are asking is what happens next? Once the Fifth Circuit issues its mandate finalizing its decision, the rule will be effectively eliminated. This would stop the DOL s current review of its rule, and presumably the definition of investment advice fiduciary would revert to the 1975 regulation that included a five-part test for determining fiduciary status (all five parts must be present to incur fiduciary status). This test required providing advice: Regarding the value of property or a recommendation regarding the purchase, sale or retention of property. On a regular basis. Pursuant to a mutual agreement or understanding (written or verbal). That will serve as a primary basis for the investment decision. That is individualized to the needs of the recipient. Of course it s not quite that simple. Service providers, consultants, advisors and plan sponsors had been reviewing and making changes to existing business models in preparation for compliance with the DOL rule. The Fifth Circuit ruling has inserted a good deal of uncertainty into the situation and begs the question what happens next? To further complicate things, the Securities Exchange Commission (SEC) has commenced its own rule-making project (see related story). The DOL attempted to address some of this uncertainty by releasing Field Assistance Bulletin (FAB) The FAB announced a temporary enforcement policy with respect to the fiduciary rule. The DOL had previously announced a delay of full implementation of the rule until July 1, 2019, while it completed the review mandated by the president. During the delay period the DOL had stated it would not pursue claims against fiduciaries who were working in good faith to comply with the fiduciary rule and applicable provisions of the prohibited transaction exemptions (PTEs), or treat those fiduciaries as being in violation of the fiduciary rule and PTEs. The temporary enforcement policy also mandated compliance with the impartial conduct standards, which include: Acting in the best interest of the customer. Charging no more than reasonable compensation. Making no misleading statements. FAB announced the DOL s decision to leave its enforcement policy in place and noted that this temporary enforcement relief is appropriate and in the interest of plans, plan fiduciaries, plan participants and beneficiaries, IRAs, and IRA owners. Two additional comments in the DOL s FAB are worth noting. First the DOL stated it is evaluating the need for other temporary or permanent prohibited transaction relief for investment advice fiduciaries, including possible prospective and retroactive prohibited transaction relief. It also noted that the FAB is an expression of a temporary enforcement policy and does not address the rights or obligations of other parties. This effectively served as notice that the temporary enforcement policy as it stands does not provide relief related to private lawsuits. 2

3 From the Hill With the Fifth Circuit decision, possible future DOL announcements and the SEC rule-making initiative, there is much to analyze and digest. At Empower Retirement we will continue to keep you posted of new developments and the potential impact on your clients and plan participants. DOL publishes new semi-annual regulatory agenda The Department of Labor (DOL) recently published its spring 2018 regulatory agenda. This is the first updated agenda since Preston Rutledge was installed as Assistant DOL Secretary for the Employee Benefits Security Administration (EBSA), the part of the DOL that regulates retirement plans. In his former role as Tax and Benefits Counsel to the Senate Finance Committee, Rutledge worked on legislative initiatives intended to enhance the defined contribution plan system in ways that the DOL could have accomplished on its own without Congressional action. Many were hoping to see some of these items on the agenda, but unfortunately none of them were included. The qualified retirement plan-related projects on the agenda were limited to finalizing a regulation expanding the scope of people who can serve as qualified termination administrators (QTAs) for abandoned plans and finalizing amendments to the Voluntary Fiduciary Correction Program (VFCP) to expand the types of transactions covered by the program. A number of items that had been on the fall 2017 regulatory agenda have been moved to long-term action status, which means resources will not be devoted to them at this time, but the door has been left open for future regulatory activity. These projects include: Requiring lifetime income projections on participant benefit statements. Creating a fiduciary safe harbor for the selection of annuity providers. Adding lifetime income products as a Qualified Default Investment Alternative (QDIA). Revisions to Form Creating a streamlined prohibited transaction exemption in connection with the fiduciary rule. Other issues Rutledge has supported in the past include making e-delivery the default for required participant communications (with the option to elect paper) and eliminating the commonality or nexus requirement that prevents many small employers from offering a plan through participation in an open multiple-employer plan (MEP). Since EBSA is also responsible for regulating health and welfare plans, and there are a lot of regulatory projects on the spring 2018 agenda related to healthcare, it s possible there were not sufficient resources to add these initiatives and they will be added to a future DOL regulatory agenda. However, given the amount of time it takes to move from defining a regulatory project to publishing a final rule, it is somewhat concerning that they were not included in this current regulatory agenda. Comparing the DOL and SEC approaches to dealing with conflicts of interest Both the Department of Labor s fiduciary rule and the Security and Exchange Commission s Regulation Best Interest focus on addressing conflicts of interest that may negatively impact investment advice provided to consumers. While the DOL rule was struck down by the Fifth Circuit Court of Appeals, many of the concepts and provisions dealing with conflicts, most of which were part of the Best Interest Contract (BIC) exemption and the Impartial Conduct Standards that went into effect in June of last year, found new life in the SEC s proposal. There are also, however, significant differences arising in part from the SEC s different jurisdictional focus and in part from its commitment to preserving access to a wide variety of products, services and payment options at all account sizes. This article compares key similarities and differences between the DOL and SEC solutions for dealing with conflicts. What s the same? 1. Both require formal, written conflict-of-interest policies. This would have been a new requirement under ERISA and is also new to broker-dealer regulations. 2. Both describe best interest as involving the exercise of reasonable diligence, care, skill and prudence. One of the questions raised by the SEC rule is whether this language essentially creates a fiduciary standard of care for broker-dealers. 3. Neither allows a waiver of the best interest obligation through client consent. Both the DOL and the SEC were concerned with protecting unsophisticated investors who may not understand the implications of a waiver. 4. Neither relies on disclosure alone as a solution to addressing material conflicts of interest. This was a significant departure from prior SEC policy. 3

4 From the Hill 5. Both rules reflect a particular concern with IRA rollover transactions and investment recommendations made to IRA investors. 6. Both rules are concerned with conflicts arising from both external compensation (such as third-party payments) and internal compensation practices (such as bonuses or awards). What s different? 1. The DOL rule impacted investment recommendations and other recommendations deemed to be fiduciary activity made by anyone to plan sponsors, plan participants and IRA investors. The SEC rule only impacts recommendations made by broker-dealers involving a securities transaction to a retail investor (which includes plan participants, IRA investors and non-retirement investors). 2. The DOL rule, through its requirement of a warranty and contracts with IRA investors, encouraged litigation as an additional enforcement mechanism. The SEC rule contains no such encouragement. 3. While both rules contain a disclosure requirement and both use a layered approach to disclosure, the SEC rule is more flexible and less onerous in terms of both content and delivery. 4. The DOL s Impartial Conduct Standards (the only BIC requirement that went into effect) required that compensation paid be reasonable and no materially misleading statements be made. The SEC rule does not contain these requirements although it is noted in the preamble that these issues are addressed in pre-existing SEC guidance. 5. The SEC rule is transaction-based with no duty to monitor a recommendation unless the parties expressly agree to a monitoring obligation basically an opt-in monitoring obligation. The DOL rule did allow parties to agree to limit monitoring but, since ERISA fiduciary rules assume an ongoing fiduciary relationship, it was essentially an opt-out monitoring obligation. a. No without regard to language: The DOL rule would have required fiduciaries to give advice without regard to their own interests, which suggested that any conflict was problematic regardless of disclosure or extent of mitigation. The SEC rule does not contain this language and in the preamble notes that if two products are apples to apples from the customer s viewpoint (value, price, suitability, etc.), then recommending the one that pays the broker-dealer more is not a violation of the best interest standard. b. List of practices not per se prohibited: The DOL rule called into question many common practices and compensation arrangements used by broker-dealers. The preamble to the SEC rule lists a number of situations involving conflicts that are not automatically prohibited. The preamble also provides a suggested list of material conflicts that would require mitigation or elimination and/or disclosure. Among the items listed as not per se prohibited are: i. Receiving commissions or other transaction-based fees or third-party compensation. ii. Receiving differential compensation based on the product sold (must mitigate or eliminate). iii. Recommending a limited range of products (must disclose). iv. Recommending proprietary products or products of affiliates (must mitigate or eliminate and disclose). There is much work yet to be done on the SEC s proposal and no certainty about when or even whether it will be finalized. While we at Empower recognize the proposal is a work in progress, we believe the SEC s efforts to incorporate the compliance practices financial institutions implemented as a result of the DOL rule, while also seeking a better balance between preserving access and addressing conflicts, is a good start. 6. The DOL rule was very focused on conflict elimination (versus mitigation), which resulted in some financial service firms restricting the availability of potentially advantageous investment products or services to investors, particularly those with smaller account balances. The SEC rule is more focused on conflict mitigation (although still recognizing that some conflicts should be eliminated) and on preserving access to a wide variety of products, services and payment options at all account sizes. Some examples of this are: 4

5 From the Courts Seventh Circuit holds that ERISA does not preempt state slayer statute We previously reviewed a state appeals court determination that ERISA preempted the state s slayer statute when determining the beneficiary of a life insurance policy held within an ERISA plan. In contrast, the Seventh Circuit U.S. Court of Appeals has recently held that ERISA does not preempt a state s slayer statute and that the wife of a participant who was convicted of killing the participant is barred from receiving spousal benefits from the participant s ERISA plan. Most states have laws known as slayer statutes that prohibit a person from inheriting from someone they have killed or caused substantial harm. As ERISA does not have a specific slayer-type restriction and as ERISA preempts any and all State laws insofar as they may now or hereafter relate to any employee benefit plan, state and federal courts have had to address whether or not a state slayer statute applies to benefits held in an ERISA plan. In this case, the terms of the ERISA plan provided that a participant s benefits under the plan are payable to the participant s spouse upon his or her death or, if not married, to the participant s child. Both the participant s wife, who was convicted of killing the participant, and the participant s child filed claims with the plan administrator for the participant s plan benefits. The plan administrator filed an interpleader action in federal district court to determine the proper beneficiary of the participant s account. The federal district court held for the child, and the wife appealed to the Seventh Circuit Court of Appeals. The Seventh Circuit Court, in review of the case, stated that ERISA preempts a state law to the extent the state law relates to an ERISA plan and requires the court to interpret or apply the terms of an ERISA plan. But, where the state law covers a traditional area of state regulation, there is a presumption that Congress did not intend to supplant such state laws when it passed ERISA. With respect to slayer statutes, the court remarked that the U.S. Supreme Court had previously stated in an unrelated case that slayer statues have been adopted by nearly every state and that the axiom that an individual who kills a plan participant cannot recover plan benefits is a well-established legal principal that predates ERISA. They also remarked that other courts have stated that Congress could not have intended ERISA to allow one spouse to receive benefits after intentionally killing the other spouse. Based on that, the court held that ERISA does not preempt the state s slayer statute. Practical considerations In this case, the court noted that the U.S. Supreme Court has not directly addressed the issue of whether ERISA preempts state slayer statutes and that no other federal courts of appeals have recently faced the question. It further noted that although many lower federal courts have addressed the question, the majority declined to resolve the issue. As a result of varying state and federal court decisions on the issue, the question remains open in many areas. Plan sponsors should proceed cautiously in these situations and review the matter with their plan advisors before making benefit determinations. In certain cases, the plan sponsor may consider filing an interpleader action with the court to determine the appropriate beneficiary as the plan administrator did in this case. 5

6 From the Regulatory Services Team It s that time of year again! Summer brings warm weather, family vacations and long days of sun and fun. Perhaps even more exciting, though it brings Form 5500 season! OK, so that last one may not bring you the same happy images, but it s nonetheless wise to spend a little time making sure everything is on track and running smoothly for this important filing. Likewise, it s a good time to talk about what to do if it s discovered that a prior filing wasn t made in a timely manner. (We ve thrown in some timely plan testing suggestions below, too.) So, what makes this Form 5500 season? We re glad you asked. Deadlines for Form 5500 filings are just around the corner (generally July 31, 2018, for plans filing for the 2017 calendar year without requesting a filing extension). Now that isn t true for all plans all the time for example, there are off-calendar plans, terminating plans and plans for which an extension has been filed but the sheer volume of plan sponsors, auditors, vendors, etc. with related deliverables coming up makes this a natural time to dig into the topic. If you have questions about your plans and the applicable timing of your filing deadlines, let us know and we can provide information on those particular situations. (By now, if you sponsor a calendar-year plan or plans, you should have received information applicable to your specific situation. If you haven t, or if you have questions, please do not hesitate to contact your Empower representative.) You may also wonder how plans could fall through the cracks in today s age of electronic filing and instant feedback. Granted, as technology has advanced over the years, the Form 5500 process has become more efficient, with easily searchable access to filings, filing status and related information. Gone are the days of paper filings for all but the smallest plans. Still, despite these advancements, sometimes a filing can and is still missed for myriad reasons (e.g., changes in staffing or responsibility in the plan sponsor s workforce or simple misunderstandings about filing requirements). Should that ever happen, it s important to know how to get your filing back on track. Getting a late filing back on track The first thing to know is that the DOL maintains a Delinquent Filer Voluntary Correction Program (DFVCP) for most common instances of missed/late filings. This can be a very useful program to remedy a late Form 5500 filing at a relatively low cost. Perhaps the important consideration is to make sure the plan sponsor meets the eligibility for this program namely that the sponsor has not already been notified by the DOL that a filing is late. Therefore, reacting quickly if a late filing situation is identified and completing filing of the late return under the DFVCP is key to being able to take advantage of the program. As with most governmental programs, a detailed procedure must be followed. In this case, that procedure involves two major steps. 1. Step one requires that a completed Form 5500 be filed electronically, similar to how timely filings are made via EFAST2. A critical difference for late Form 5500 filing is that the box identifying the filing as late must be checked effectively stating that the plan is filing under the DFVCP. 2. Step two requires the payment of a penalty amount. The penalty for the delinquent filing is capped at $750 per filing for small plans (those under 100 participants) and $2,000 per filing for large plans (those with 100 or more participants). Please note that if multiple filings are made at the same time for a single plan, an overall cap will apply to further limit the penalty to $1,500 for a small plan or $4,000 for a large plan. (The penalty can be paid electronically as part of the process.) Don t forget about testing While plans are wrapping up their 5500 filings and working with their auditors, an important component is to make sure a plan s non-discrimination testing has been completed for the year as well. The deadline for such testing depends on the type of test and the timing of when any corrective plan distributions must be made in the event of a failure. The distinction in timing generally breaks down between ADP/ACP testing vs. coverage/ general/benefits rights and features testing. ADP/ACP testing has some specific deadlines to keep in mind: If a plan is subject to ADP/ACP testing, refunds typically need to be made by 2½ months after the plan year being tested to avoid a 10% excise tax to the employer on the amount of the contributions refunded. So, for instance, for a plan with a December 31, 2017, testing year, the refunds for ADP/ACP testing would have needed to be made by March 15, 2018, to avoid the 10% excise tax to the employer. (Note this is extended to six months for certain plans that have an Eligible Automatic Contribution Arrangement [EACA] in place.) 6

7 From the Regulatory Services Team Additionally, keep in mind that all ADP/ACP refunds must be made within 12 months following the plan year being tested. So a plan year ending December 31, 2017, would need to have all ADP/ACP refunds made no later than December 31, 2018, to be considered timely. For coverage/general/benefits rights and features testing, the deadline to adopt a corrective retroactive amendment in response to a failure (to expand or increases benefits to nonhighly compensated employees and therefore pass the testing) is no later than 9½ months following the end of the plan year being tested. Practical considerations As you can see from the above, it is always important to stay on top of testing and filing deadlines for your plan(s). At Empower, we strive to help our clients understand and meet those deadlines. But if an issue arises in which a deadline does pass before the testing or filing is completed, we are here to help you rectify the situation. To that end, we welcome any and all questions you might have about the above or any other part of these important plan sponsor requirements. Please do not hesitate to contact your plan representative so we may help. Also, please enjoy your summer and remember the sunscreen! For example, if the plan had a December 31, 2017, plan year end that was being tested and failed coverage, general, or benefits rights and features testing, the corrective amendment and any resulting contributions would need to be made to the plan no later than October 15,

8 From the Regulatory Services Team Recent legislation and regulations impacting retirement plans There has been quite a bit of activity involving recent legislation and regulation changes related to retirement plans. The chart below is intended to help plan sponsors understand such changes, whether they are optional for a plan and if an amendment to a plan might be needed. Tax Cuts and Jobs Act of 2017 (H.R. 1) RETIREMENT PLAN PROVISION EFFECTIVE DATE OLD RULE NEW RULE AMENDMENT Loans 1/1/2018 Participants who separated from service with an outstanding loan have 60 days following a taxable distribution of the loan (due to a loan offset) to complete an indirect rollover of the loan offset to avoid taxation. Participants who separate from service with an outstanding plan loan balance that has been offset (creating a taxable distribution) have until the due date for the filing of their tax return for the year of the offset to complete an indirect rollover of the loan offset amount to an eligible retirement plan or IRA. Sponsors may need to update their loan policy/plan document if it specifies the 60-day indirect rollover rule specific to loan offset amounts. The Empower plan document does not need to be amended. Hardships 1/1/2018 The Treasury regulations provide that a hardship distribution for the repair of damages to a participant s principal residence that would qualify for the casualty deduction under IRC 165 is deemed to be on account of an immediate and heavy financial need. IRC 165 was amended to limit the casualty deduction to losses attributable to a disaster declared by the president under the Disaster Relief and Emergency Assistance Act. Because the Treasury regulations cross reference IRC 165, the effect of this change limits hardship distributions under the deemed hardship standards to casualty losses caused by a natural disaster specifically declared an emergency. This change affected the definition of a casualty loss in IRC 165. The Treasury regulations describing the deemed safe harbor hardship reasons did not change. Depending on whether a plan provides for the deemed safe harbor reasons for hardships and how it defines casualty loss, the plan may need to be amended. The Empower plan document does not need to be amended. Hardships Retroactively effective for 2016 Retroactive relief is provided for presidentially declared disaster areas for For people who have qualified for 2016 disaster distributions (of up to $100,000) the following applies: An optional amendment is needed to allow this change in a plan. If this provision is adopted, the plan would need to be amended by the end of the 2018 plan year. 1. The 10% premature distribution tax does not apply. (Since the relief is not considered eligible for a rollover, the mandatory 20% tax withholding also does not apply.) 2. Funds can be included in income ratably over a three-year period beginning with the year they are distributed. (Or the participant can elect to have all of the funds taxed in the distribution year.) 3. Funds may be recontributed to any retirement program accepting rollovers within a three-year period beginning on the day after the distribution was received. 8

9 From the Regulatory Services Team empowermyretirement.com Bipartisan Budget Act of 2018 (H.R. 1892) RETIREMENT PLAN PROVISION EFFECTIVE DATE OLD RULE NEW RULE AMENDMENT Hardships First plan year beginning after December 31, 2018 Plans may issue a hardship withdrawal based on the safe harbor reasons deemed to satisfy an immediate and heavy financial need described in the Treasury regulations; however, the regulations provide that the employee is prohibited from making elective deferrals and aftertax contributions for six months following the receipt of the distribution. The legislation directs the IRS to rewrite the Treasury regulations to remove the sixmonth suspension requirement. Plans that provide for hardship distributions based on the deemed hardship standards may require amendment depending on the language in the plan describing the suspension period. Empower is waiting on IRS guidance to determine whether our plan requires an amendment. Hardships First plan year beginning after December 31, 2018 Certain employer and employee contribution sources, such as QNECs and QMACs and safe harbor contributions, as well as earnings on these sources and earnings on elective deferrals are not available for hardship withdrawals. Plans may permit hardship withdrawals from previously unavailable contribution sources, including QNECs/QMACs (including safe harbor contributions), as well as earnings on these sources and earnings on elective deferrals. The IRS must rewrite the Treasury regulations. Plans may require an amendment to provide that these previously unavailable sources are available for hardship withdrawals. Empower is waiting on IRS guidance to determine whether our plan requires an amendment. Hardships First plan year beginning after December 31, 2018 The Treasury regulations provide that plans issuing hardship distributions under the deemed safe harbor standards must require a participant to take any plan loans available in order to qualify for a hardship. The IRS has been directed to rewrite the Treasury regulations to remove this requirement for plans utilizing the deemed hardship standards. Plans may require an amendment depending on the language that references this requirement. Empower is waiting on IRS guidance to determine whether our plan requires an amendment. 9

10 From the Regulatory Services Team empowermyretirement.com Bipartisan Budget Act of 2018 (H.R. 1892) (continued) RETIREMENT PLAN PROVISION EFFECTIVE DATE OLD RULE NEW RULE AMENDMENT Hardships/Loans See description California Wildfires Disaster Relief to individuals who had their principal place of residence from October 8, 2017, through December 31, 2017, in the California Wildfire Disaster Area is provided. Such individuals may qualify for an in-service distribution of up to $100,000 if taken from October 8, 2017, through December 31, The following applies: 1. The 10% premature distribution tax does not apply. Since the relief is not considered eligible for a rollover, the mandatory 20% tax withholding also does not apply; withholding is performed at a rate of 10% unless the participant makes an election to withhold at another rate or not to withhold. 2. The distribution may be included in income ratably over a three-year period beginning with the year they are distributed. (Or the participant can elect to have all of the funds taxed in the distribution year.) 3. Amounts distributed under this relief may be recontributed to any retirement program accepting rollovers within a three-year period beginning on the day after the distribution was received 4. Plans may also provide for loan relief for eligible participants. Loan limits may be increased to the lesser of 100% of the participant s vested account balance or $100,000 (as opposed to the otherwise applicable limit of 50% of vested account balance or $50,000). Also allows loan repayments due before January 1, 2019, to be delayed for up to one year. An optional amendment is needed to allow this change in a plan. If the amendment is adopted, the plan would need to be amended by the end of the 2019 plan year. Governmental plans have until the end of the 2021 plan year. Plans that utilize this relief in the interim should operate in compliance with these requirements prior to adoption of an amendment. Rollovers Tax years beginning after December 31, 2017 Amounts withdrawn from an employersponsored plan or IRA pursuant to a federal tax levy that are later returned to the taxpayer by the IRS may be contributed with interest. Any recontribution of the returned levy proceeds is treated as a rollover and will not count against any applicable contribution limits. The taxpayer must complete the recontribution prior to the tax filing deadline (not including extensions) for the taxable year in which the amount is returned. Sponsors should review their plan language, including the plan references to indirect rollovers, to determine if an amendment is needed. Empower plan documents do not need an amendment. 10

11 From the Regulatory Services Team empowermyretirement.com Changes to DOL Disability Claims Procedures under DOL Regulation RETIREMENT PLAN PROVISION EFFECTIVE DATE OLD RULE NEW RULE AMENDMENT Disability claims procedures under ERISA For claims filed after 04/01/2018 Different claims procedures applied up to 4/01/2018. The new claims procedures apply to plans that: 1. Are subject to ERISA; 2. Provide any benefits based on a determination of disability; and 3. Require the plan administrator to use discretion in making a disability determination in connection with benefits. An amendment may be needed if the DOL regulation applies to the plan. An amendment to the Empower plan document has already been adopted at the plan document provider level and a revised summary of material modifications detailing the new disability claims procedures have been provided to sponsors. Plan administrators need to follow the new disability claims procedures and provide a summary of material modifications or updated summary plan description to participants which describe the new claims procedures that are compliant with the DOL regulation. 11

12 Securities offered or distributed through GWFS Equities, Inc., Member FINRA/SIPC and a subsidiary of Great-West Life & Annuity Insurance Company. Great-West Financial, Empower Retirement and Great-West Investments TM are the marketing names of Great-West Life & Annuity Insurance Company, Corporate Headquarters: Greenwood Village, CO; Great-West Life & Annuity Insurance Company of New York, Home Office: New York, NY, and their subsidiaries and affiliates, including registered investment advisers Advised Assets Group, LLC and Great-West Capital Management, LLC. GWFS Equities, Inc. registered representatives may also be investment adviser representatives of GWFS affiliate, Advised Assets Group, LLC. Representatives do not offer or provide investment, fiduciary, financial, legal or tax advice or act in a fiduciary capacity for any client unless explicitly described in writing Great-West Life & Annuity Insurance Company. All rights reserved. ERMKT-BRO AM