As regulatory requirements continue to evolve, a proactive and strategic approach is essential for plan sponsors, fiduciaries, and providers managing multiemployer employee benefit plans. At the recent International Foundation of Employee Benefit Plans (IFEBP) Conference, key insights were shared by leaders from the U.S. Department of Labor (DOL), highlighting crucial updates in compliance, enforcement, and regulatory changes. Below are some of the key takeaways from the conference that multiemployer plans should incorporate into their strategic planning efforts.
Increased Enforcement on Form 5500 Filings & Audit Quality
Ensuring compliance with Form 5500 reporting requirements remains a top priority for the DOL. Common deficiencies include missing audit reports, inaccurate financial reporting, and failure to correct past errors. Plans should proactively review their filings and engage qualified auditors to avoid enforcement actions. Qualified independent auditors in the eyes of the DOL are those that routinely audit over 75 multiemployer plans on an annual basis, met annual training requirements, are members of the AICPA Employee Benefit Plan Quality Center, and have a rigorous quality control program.
Audit quality continues to be a concern, particularly for smaller firms with limited benefit plan audit experience. The latest Audit Quality Study found that smaller-scale auditors had higher deficiency rates. As the number of auditors actively involved in auditing Taft-Hartley plans continues to decrease, the importance of engaging qualified auditors now increases. Working with qualified independent auditors now can save your Plan and the Board of Trustees from unnecessary expense, which can include the cost of a re-audit, legal fees, and significant penalties.
Mental Health Parity & Health Plan Regulations
One of the key regulatory priorities is the implementation of the Mental Health Parity and Addiction Equity Act (MHPAEA) final rule. The DOL remains committed to enforcing parity in mental health and substance use disorder benefits, with an upcoming enforcement report to Congress. Additionally, proposed rules on preventive services, including contraceptive coverage, are on the horizon.
Another area of focus is the No Surprises Act, which continues to see regulatory refinements, particularly regarding independent dispute resolution (IDR) fees and operational rules. Boards of Trustees should integrate these changes into their plans benefits strategy to ensure compliance with evolving healthcare mandates.
Retirement Plan Developments: SECURE 2.0 & Fiduciary Responsibilities
The SECURE 2.0 Act has introduced significant changes, including the auto-portability proposed rule, aimed at helping employees’ members seamlessly transfer retirement savings when changing jobs. Additionally, pension-linked emergency savings accounts (PLESA) are being refined, offering workers new tools to enhance financial security. The effects of this rule are determined to be minimal on multiemployer plans at this time as retirement savings remain with the members Fund Office.
Fiduciaries should also be aware of the final rule on prudence and loyalty to the participants, which clarifies considerations related to environmental, social, and governance (ESG) factors. The DOL is also preparing a proposed regulation on adequate consideration in valuing employer stock for ESOPs, underscoring the need for rigorous valuation practices in long-term financial planning. The direct effects of these rulings are yet to be determined on multiemployer plans.
Strategic Next Steps for Boards of Trustees
- Strengthen Form 5500 Compliance– Implement processes to ensure timely and accurate submissions to mitigate compliance risks.
- Improve Audit Quality Strategy– Engage experienced plan auditors to enhance financial reporting accuracy and reduce regulatory exposure.
- Incorporate Mental Health Parity Compliance into Your Plan– Ensure health plans align with MHPAEA final rules to avoid enforcement scrutiny.
- Align with SECURE 2.0 Developments– Understand how new rules on auto-portability and emergency savings accounts affect your long-term benefits strategy.
- Enhance Fiduciary Oversight– Stay ahead of evolving investment and valuation regulations, particularly related to ESOPs and ESG factors.
As regulations continue to shift, plans that take a strategic approach to planning and compliance will be better positioned to navigate these changes successfully. By staying informed and working closely with trusted advisors, plans can strengthen their benefits while ensuring long-term financial security for their members.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
