1 April 22, 2024 Office of Regulations and Interpretations Employee

April 22, 2024

Office of Regulations and Interpretations

Employee Benefits Security Administration

U.S. Department of Labor

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

Electronic Submission

Re: Request for Information—Secure 2.0 Section. 319—Effectiveness of Reporting and

Disclosure Requirements

Dear Ms. Zarenko, Ms. Dvoretzky, and Mr. Simonetti,

We appreciate the opportunity to comment on your recent request for information regarding the

effectiveness of existing reporting and disclosure requirements for certain Employee Retirement

Income Security Act of 1974 (ERISA) governed and Internal Revenue Code qualified retirement

plans. Samantha Prince is an Assistant Professor of Law at Penn State Dickinson Law whose

research and teaching has focused on promoting disclosure of 401(k) plan details and other

employee benefits. Alyssa Boob, who has researched and shares Professor Prince’s interest in

these areas, joins in this comment.

In her article Benefits Transparency, forthcoming in Marquette Law Review, Prof. Prince

discusses the necessity for detailed disclosure of specific 401(k) plan benefits and the value of

such disclosure to a wide range of stakeholders.

You and your colleagues may find this article of

interest. This correspondence amplifies the Benefits Transparency recommendations to improve

the existing ERISA disclosure framework: requiring detailed disclosure of a select list of 401(k)

plan features.

Retirement benefits are complex. Many people are unfamiliar with the intricacies of 401(k) plan

features and are unaware that these features vary across employers. As such, they unknowingly

sacrifice their opportunity to participate in more valuable retirement plans. Mandating

standardized, simplified, and easily accessible disclosures ensures that participants and

jobseekers understand the information they need to prepare for retirement, while imposing

minimal administrative burden on employers. Transparency through disclosure regarding

Samantha J. Prince, Benefits Transparency, 108 MARQUETTE L. REV. (forthcoming 2024)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4784385.

retirement benefits should change the behavior of several stakeholders—normalizing the

importance of retirement savings for jobseekers and plan participants and even nudging or

shaming employers into providing better benefits. Detailed disclosures should also help

participants and jobseekers make informed employment and retirement planning decisions.

As shown below, this correspondence is organized to reflect the dual goals of your request for

information. The specific questions posed by the request for information that we addressed are

also identified.

I. Introduction

II. Ensuring Stakeholder Understanding

A. Standardizing Disclosures: Mandatory 401(k) Plan Disclosures are Detailed,

Timely, and Accessible (Q: 2, 3, 6)

B. Simplifying Disclosures: Mandatory 401(k) Plan Disclosures Foster Widespread

Retirement Benefits Understanding (Q: 4, 5)

III. Addressing Compliance Concerns

A. Furnishing Disclosures: Mandatory 401(k) Plan Disclosures Impose Minimal

Administrative Burden (Q: 10, 11, 13)

B. Publicly Available Information: Mandatory 401(k) Plan Disclosures Do Not

Implicate Security or Confidentiality Concerns (Q: 21)

IV. Additional Recommendations

V. Conclusion

I. Introduction

Picture it. You are on the job market and are considering working for either Lowe’s or Home

Depot. You see on their company websites that they both offer 401(k) plan benefits. And you

consider such benefits important as you know you need to save for retirement. You choose Home

Depot. Little do you know that while Home Depot is contributing matching contributions to the

401(k) plan on your behalf, you are not vested in any of them until or if you have stayed there for

three years of service. Had you chosen Lowe’s, you would enjoy immediate vesting of the

matching contributions Lowe’s would put into the 401(k) plan on your behalf. If only you had

known…

Unfortunately, this scenario illustrates a harsh reality faced by many Americans. It highlights a

troubling inadequacy in the current ERISA disclosure framework: jobseekers and participants do

not have, or understand, the information they need to choose the optimal way to save for

retirement. Because companies are not required to be transparent about retirement plan details

where the public often looks for such information, people lack relevant knowledge for decision

The above scenario is presented in Benefits Transparency and only takes into consideration vesting once an

employee starts participating in the respective plan. To have a more complete picture, one would also want to know

when they are eligible to start participating. Home Depot has a one-year (1,000 hours) of service requirement before

participating, and Lowe’s has a six-month requirement. As this letter points out, the 401(k) plan details matter.

Benefits Transparency, supra note 1, at 4.

making.

To address this problem, detailed disclosure of specific features of companies’ 401(k)

plan benefits should be mandated. Specifically, the recommended mandatory 401(k) plan

disclosures would include information regarding the following features: participant eligibility,

employer contributions, vesting schedules, auto-enrollment, and loans, hardship withdrawals,

and emergency savings accounts.

Disclosures should be written in plain language, be presented in a user-friendly manner, and be

easily accessible when jobseekers and participants face employment decisions. Such disclosure is

essential to normalizing the value of retirement savings, facilitating informed stakeholder

decision making, and increasing retirement savings. The benefits of the proposed disclosures are

not exclusive to jobseekers and participants. Impacted stakeholders also include companies,

ethical consumers, investors, and society as a whole.

This correspondence will first discuss the advantages of the recommended disclosures described

herein, such as detail, timeliness, and accessibility. It will then explain how the recommended

disclosures will inspire widespread retirement benefits understanding. Next, the letter will

address administrative concerns such as operational expenses and security and confidentiality

issues. Finally, it will present how disclosure requirements may be simplified by simplifying

plans themselves, e.g., through the elimination of vesting schedules.

II. Ensuring Stakeholder Understanding

A. Standardizing Disclosures: Mandatory 401(k) Plan Disclosures are Detailed, Timely, and

Accessible

Question(s): 2, 3, 6

Mandating detailed disclosure of specific 401(k) plan features is paramount to improving the

effectiveness of the existing ERISA retirement benefits disclosure framework. There is a need for

disclosure beyond the current framework, where detailed, yet streamlined, online disclosures are

made easily accessible on company websites.

Ideally, this information would be presented in job

postings that discuss benefits as well.

The recommended disclosures are detailed, timely, and

accessible.

Companies are required to provide such details in their annual report on Form 5500, but this is not user-friendly

and it is likely that most people do not know the report exists. Even if they did, it is likely they would not understand

how to read it. See Part III. B herein.

We recognize and appreciate that recent rulemaking efforts have been made to facilitate access to retirement plan

information. See 29 CFR § 2520.104b-31 (allowing plan administrators to fulfill their disclosure obligations via

electronic media). This “safe harbor rule allowing retirement plan disclosures to be posted online” was the

Department of Labor’s response to Executive Order 13847 mandating a review of disclosures required under ERISA

and the Internal Revenue Code of 1986.

Peter J. Wiedenbeck, Unbelievable: ERISA’s Broken Promise, Washington

University Law Legal Research Paper Series, Paper No. 21-08-01, 24-25 (2021) [hereinafter Unbelievable].

However, we feel more can be done to provide all stakeholders with critical retirement benefits details.

The recommended “checkbox regime” is discussed in further detail infra p. 6-8 and in Benefits Transparency,

supra note 1, at 35 and Appendix.

While some company websites and job postings already disclose offered benefits, they do not

disclose important details. Quite often the language that companies provide relative to benefits—

particularly 401(k) plan benefits—is overbroad. Like in the scenario above, a company website

may say “401(k) plan benefits” are offered with no additional information about those benefits.

Such disclosures lack the specificity critical to participant and jobseeker understanding of

retirement benefits. This lack of specificity may also promote the notion that retirement benefits

are not as important as others, or that such benefits are the same across all employers. This is far

from the case, considering the complex and varying features of 401(k) plans.

If employees and

jobseekers succumb to the mistaken belief that features of 401(k) plans are identical across

employers, they are likely to miss plan aspects which may be critical for them to “derive

maximal advantage” from retirement benefits.

As such, they may choose an employer with less

favorable retirement benefits, or at least one that has features that are less favorable to the

individual given their personal circumstances.

Jobseekers and participants need benefits information when considering employment changes.

Incomplete information exacerbates situations where jobseekers do not know which jobs

currently have the benefits that are most valuable to them or the features of a 401(k) plan that

would mean most to them.

Jobseekers deserve to be aware of the entirety of a compensation

package, at the time that they must make an employment decision.

Absence of reliable and

locatable disclosure robs jobseekers and participants of the ability to engage in meaningful

“career planning” efforts such as “compar[ing] the benefits packages associated with alternative

employment opportunities.”

Moreover, the current disclosure framework does not impose on companies any legal obligation

to supply comparable detailed benefits information online. Companies have wide discretion in

determining what information they publicize regarding their employee benefits. As a result,

Such features include but are not limited to, vesting schedules, employer contribution amounts and computations,

eligibility to participate, and whether loans and hardship withdrawals are permitted. See Benefits Transparency,

supra note 1, at 36.

Unbelievable, supra note 4, at 9. Not only is this mistaken belief detrimental to employee and jobseeker career

planning, but it may also have the effect of degrading retirement plan quality. See id. at 15 (citing George A.

Akerlof, The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, 84 Q.J. E

CON. 488 (1970)). “If

retirement savings plan disclosures are considered untrustworthy or incomprehensible by plan participants, workers

would act on the assumption that all such plans offer only some baseline value. If workers do not put a premium on

a better plan, it becomes uneconomic for an employer to offer a more costly higher-quality program, and soon only

baseline value plans subsist.” Id.

Michele Belot, Philipp Kircher & Paul Muller, Providing Advice to Jobseekers at Low Cost: An Experimental

Study on Online Advice, 86 T

HE REVIEW OF ECONOMIC STUDIES 1411, 1412, (July 2019).

See Benefits Transparency, supra note 1, at 11. Without comprehensive benefits disclosure, jobseekers fall victim

to “information asymmetry.” See Stephanie Bornstein, The Enforcement Value of Disclosure, 72 D

UKE L. J. 1771,

1778 (2023).

Peter J. Wiedenbeck, Refining Mandatory Disclosure: Statement Presented to the ERISA Advisory Council, June

6, 2017, Washington University Law Legal Research Paper Series, Paper No. 17-06-01, 2 (2017). “Career planning”

efforts might also include “determin[ing] when a job change could be made without forfeiting accrued pension

benefits (vesting); or . . . evaluat[ing] the financial consequences of alternative retirement dates.” Id. See also

Unbelievable supra note 4, at 10.

companies may provide very little information, or they may engage in benefits washing.

Given

the variance and complexity of 401(k) plan features, voluntary disclosure is not only insufficient,

but inefficient. A stakeholder simply cannot compare one company’s 401(k) plan to another, if

the companies’ disclosure is limited to vague language such as they “offer 401(k) benefits.”

The recommendations described herein would require companies to post detailed disclosures of

certain 401(k) plan benefits, disclosures that describe important distinct plan features and allow

jobseekers and participants to compare plans across employers. Mandatory disclosures would

include (at a minimum) varying features such as participant eligibility, a description of company

contributions including how they are calculated and whether they are subject to a vesting

schedule (and if so, what that vesting schedule is); whether the plan permits loans and hardship

withdrawals; and, whether the plan offers auto-enrollment.

Well-placed, online disclosures, once posted, are constantly available and visible. Unlike

existing disclosure requirements, online disclosures are not conditioned upon specific plan or

participant action, nor are they produced only on a scheduled or recurring basis. As such, they

are readily available to jobseekers and participants when making important employment

decisions.

Additionally, online disclosures are opportune, because they are easily accessible by all, not just

plan participants. Mandatory disclosures clearly advantage participants, parties ERISA protects,

because disclosures provide information necessary to understanding their retirement benefits.

But online disclosures reach an even wider audience, inuring the benefits of disclosure to more

than just ERISA protected parties. For example, such stakeholders include jobseekers, ethical

consumers, pro-worker organizations, investors, and society. These disclosures even provide

companies the opportunity to showcase the 401(k) plans they expend so much to maintain,

helping them establish “a strong reputation of positive employee treatment” with investors and

consumers.

Facially, it may seem like informing other stakeholders would not benefit participants, however,

that is not the case. With more stakeholders informed, companies may be nudged or shamed into

“Benefits washing” is a term Professor Prince uses to refer to misleading or vague information provided by a

company to make their employee benefits package seem better than it is. The consequences of lacking mandatory

disclosures in the employment benefits space, may mirror those of unregulated consumer markets. Voluntary

disclosures are not enough to protect employees. See Jeff Sovern, Six Scandals: Why We Need Consumer Protection

Laws Instead of Just Markets, 11 M

ICH. BUS. & ENTREPRENEURIAL L. REV. 1, 46 (2021) (arguing that “markets

cannot be relied upon by themselves to effect consumer protection. . .therefore regulation and regulators are needed

to protect consumers”).

Unbelievable supra note 4, at 10.

The main reason for such variety is to allow employers to have flexibility in their plan provisions. The Internal

Revenue Code and ERISA provide parameters that qualified plans must stay within. Certainly, there are other

provisions that employers should divulge in detail. These represent the minimum. See Benefits Transparency, supra

note 1, at 36.

Matthew A. Maxwell-Smith, Tiffany Barnett White & Denise Lewin Loyd, Does perceived treatment of

unfamiliar employees affect consumer brand attitudes? Social dominance ideologies reveal who cares the most and

why, 109 J

OURNAL OF BUSINESS RESEARCH 468 (2020).

providing participants with better 401(k) and other benefits.

Knowledge of competitor

offerings forces employers to reevaluate how they compare and where they need to improve their

benefits structure. This notion of “better benefits” certainly aligns with both ERISA and

retirement policy goals.

B. Simplifying Disclosures: Mandatory 401(k) Plan Disclosures Foster Widespread

Retirement Benefits Understanding

Question(s): 4, 5

To ensure stakeholders have a clear understanding of the retirement benefits provided by

different employers, a checkbox or checklist regime could be used for disclosures provided on

company websites. Such a regime would streamline and simplify important plan features,

providing stakeholders with a clear, uniform overview of a company’s specific retirement

benefits. Checkbox or checklist disclosures are short but pack a punch. The recommended

disclosures strike an important balance between supplying comprehensive information necessary

for jobseekers and participants to understand their retirement benefits and overwhelming these

parties with simply too much information. Stakeholders “will not research, sift, and analyze an

avalanche of detailed technical” 401(k) plan “information—instead they will rationally ignore

it.”

A checkbox or checklist regime would help to avoid this unfortunate result.

The proposed mandatory disclosures will present retirement benefits information in a succinct

and easily understandable manner. Knowing more about the key features of 401(k) plans will

help normalize the value of retirement saving. In an age where retirement insecurity is a salient

issue, this normalization is particularly important. Retirement insecurity exists for many, and it

See Bornstein, supra note 9, at 1771; Matthew S. Johnson, Regulation by Shaming: Deterrence Effects of

Publicizing Violations of Workplace Safety and Health Laws, 110 T

HE AM. ECON. REV. 1866, 1866 (2020).

See Benefits Transparency, supra note 1, at 50.

Unbelievable, supra note 4, at 57-58.

One example of the proposed checkbox disclosures, highlighting the participant eligibility feature of 401(k) plans,

is provided below. Benefits Transparency, supra note 1, at Appendix.

Participation

Eligibility to participate in salary deferrals. Employees can start participating in the plan for purposes of salary

deferral:

 Immediately on one’s start date

 After completing 500 hours of service in the same year

 After completing 1,000 hours of service in the same year

 Other ______

Eligibility to participate in employer contributions. Employees can start participating in the plan for employer

contributions:

 Immediately on one’s start date

 After completing 500 hours of service in the same year

 After completing 1,000 hours of service in the same year

 Other ______

disproportionately impacts women and people of color.

In her statement before the ERISA

Advisory Council Working Group, Nari Rhee asserted: “Resulting gaps in [retirement plan]

coverage interact with labor market segmentation and broader social and economic

inequalities—for instance in employment opportunity, generational wealth, and responsibility for

care work—to produce inequalities in retirement assets by race, gender, and income.”

Also note

that “in all age groups, Black and Hispanic families are far less likely to have [IRAs or defined

contribution] retirement accounts. For example, among middle-aged families—who have the

highest rates of account ownership—65 percent of White families have at least one retirement

account, compared to 44 percent of Black families, and just 28 percent of Hispanic families.”

The recommendation to mandate detailed disclosures on company websites and in job postings

will improve understanding of retirement benefits offerings. Anyone who seeks retirement

benefits information should be able to understand it.

Therefore, checkbox or checklist regime

401(k) disclosures should also be required to adhere to an important aspect of existing disclosure

regulation: the SPD plain language requirement,

i.e., written “in a manner calculated to be

understood by the average plan participant and shall be sufficiently comprehensive to apprise the

plan’s participants and beneficiaries of their rights and obligations under the plan.”

The

regulations further encourage the use of “clarifying examples and illustrations” and “clear cross

references.”

Mandatory detailed disclosures should not include “technical jargon” and refrain

from using “long, complex sentences.”

But if SPD regulations strive to ensure participant understanding, why aren’t SPDs enough? At

one point in time, they were. SPDs were the prime vehicle for informing participants about

complex plan details, because the plan document was voluminous and confusing. However,

despite plain language regulations, many SPDs still fail to be sufficiently user-friendly. SPDs are

Statement of Nari Rhee before the ERISA Advisory Council Working Group on “Gaps in Retirement Savings

Based on Race, Ethnicity and Gender” 2 (June 24, 2021).

Id.

Neil Bhutta, Andrew C. Chang, Lisa J. Dettling & Joanne W. Hsu, Disparities in Wealth by Race and Ethnicity in

the 2019 Survey of Consumer Finances, F

ED. RESERVE, https://www.federalreserve.gov/econres/notes/feds-

notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.htm

[https://perma.cc/XBM8-F6WD].

A startling number of American adults are financially illiterate. See Jack Flynn, 20+ Compelling Financial

Literacy Statistics [2023], ZIPPIA:

THE CAREER EXPERT (Aug. 16, 2023) https://www.zippia.com/advice/financial-

literacy-statistics/ (finding “only 57% of American Adults are financially literate”). “Americans lose an average of

$1,819 annually due to financial illiteracy” and “38% of adults lost at least $500 [in 2022] due to a lack of financial

literacy.” Id. While these amounts are not exorbitant, they “can still mean the difference between affording an

important car repair, or being able to buy groceries.” Id. Americans are losing real money, because they lack

important financial knowledge. As such, complex retirement benefits information must be presented in a manner

which is understandable to all, lest the effects of financial illiteracy be perpetuated.

This letter will use the term “plain language” rather than “plain English” because the former is more inclusive by

accounting for additional languages as well as English. Additionally, using “plain language” is consistent with the

federal government’s terminology use. https://www.plainlanguage.gov/about/definitions/. See also, Michael Blasie,

The Rise of Plain Language Laws, 76 U. MIAMI L. REV. 447, 462 (2022).

29 C.F.R. § 2520.102-2(a) (1977).

Id.

too lengthy, so many individuals are unlikely to read them. SPDs also miss the mark in numerous

ways pertaining to understandability and accuracy.

Sadly, they have “evolved from an

understandable summary into a bloated inscrutable disclaimer of warranties.”

But including

hyperlinks to the SPD within the proposed disclosures could serve as a supplement for

stakeholders pursuing information beyond that provided by the recommended checkbox

disclosures presented on company websites and job postings. As a complement to these

disclosures, the SPD can still be of significant value.

If stakeholders can decipher the features of company 401(k) plans, understanding of the value of

these benefits will hopefully follow. Mandatory disclosure of retirement benefits, which is both

accessible to and understandable by all, would raise awareness of the importance of these

benefits. Presenting retirement benefits in an approachable way, using simple and clear-cut

language, may also increase engagement with 401(k) plans.

III. Addressing Compliance Concerns

A. Furnishing Disclosures: Mandatory 401(k) Plan Disclosures Impose Minimal

Administrative Burden

Question(s): 10, 11, 13

While the recommendations provided herein would require disclosures be furnished beyond that

of the existing framework, administrative burden would be minimal. Today, most people learn

about benefits from sources such as job sites, company websites, press releases, and social

media.

The recommendation is to extend existing ERISA disclosure requirements in response

to how the modern world accesses information: through the internet.

As noted above, succinct and focused transparency through mandated disclosures on company

websites and in job postings is recommended. In particular, a checkbox or checklist regime could

be used, in which specific plan features are presented and supplemented by prefatory language

provided by the IRS or DOL.

Mandatory checkbox regime disclosures would require minimal

effort and generate only minute costs.

If companies adopt model checkbox disclosures, they

See Unbelievable, supra note 4, at 10.

Id. at 6. (stating that SPDs are now written more with a goal toward protecting plan fiduciaries rather than for

providing information to participants and beneficiaries.). See also id. at 18 (“Employers issue opaque liability-shield

disclosures because they’re able to use other methods of publicizing the advantages of the plan via non-SPD

communications, and in doing so they face minimal risk of liability for [benefits washing]”). See also Yonathan A.

Arbel, The Readability of Contracts: Big Data Analysis 16 (2023) (unpublished manuscript) (on file with author)

(asserting “bloated forms are themselves a readability hazard”).

Matthew A. Maxwell-Smith, Tiffany Barnett White & Denise Lewin Loyd, Does perceived treatment of

unfamiliar employees affect consumer brand attitudes? Social dominance ideologies reveal who cares the most and

why, 109 J

OURNAL OF BUSINESS RESEARCH 461, 461 (2020).

A sample of a checkbox is presented in fn 18. More examples exist in Benefits Transparency, supra note 1, at

Appendix.

Moreover, any de minimis expenses arising from mandated detailed disclosures would be incurred by the

employer, not by the plan.

need only check applicable boxes to supply a sufficient plan description. This method not only

provides a uniform system that would allow jobseekers and participants to easily compare

features across plans, but it does so with de minimis burden on employers.

Hyperlinks to SPDs could be available on company websites and in job postings as well, for all

stakeholders who desire information beyond succinct online disclosures.

Requiring information

be posted online is neither costly nor burdensome to implement.

As noted herein, companies

already have this information; divulging it to society in the spirit of transparency is not a burden.

This recommendation puts the onus on companies/employers (not plan administrators) to

disclose 401(k) plan details. Any minimal costs arising from disclosure rightfully belong to the

company, because these expenses are tied to hiring, employee retention, and even investor and

consumer relations.

Any resulting costs would neither directly nor indirectly impact the plan.

Therefore, plan participants who are oft saddled with covering plan administrative expenses will

not be negatively impacted by costs of producing these disclosures.

B. Publicly Available Information: Mandatory 401(k) Plan Disclosures Do Not Implicate

Security or Confidentiality Concerns

Question(s): 21

The proposed disclosures do not implicate security or confidentiality concerns. The information

plans would be required to display is already available through two existing ERISA mandatory

disclosure mechanisms: the Form 5500 and the Summary Plan Description (SPD). Here, focus

will be placed on the Form 5500, as it is the vehicle available to all stakeholders.

Annually filed Form 5500s disclose information pertaining to the plan and participants, including

plan operating details, eligibility, financial statements, and employer contributions.

All of the

information suggested to be disclosed in uniform, easy-to-understand checkbox language exists

in the Form 5500. And the Form 5500 may be searched free-of-charge on the Department of

Labor’s EFAST site.

Therefore it is already publicly available. While it may be publicly

“A summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries as

provided in section 1024(b) of this title.” 29 U.S.C. § 1022(a).

See Cynthia Estlund, Just the Facts: The Case for Workplace Transparency, 63 STAN. L. REV. 351, 398 (2011).

See Benefits Transparency, supra note 1, at 23-26; see also Readout of White House Listening Session on

Leveraging the Workplace to Improve Financial Resilience: Emergency Savings & Student Loan Matches, T

WHITE HOUSE (Jan. 17, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/17/readout-

of-white-house-listening-session-on-leveraging-the-workplace-to-improve-financial-resilience-emergency-savings-

student-loan-matches/ (finding that emergency savings programs, a feature of some 401(k) plans, benefits employers

by helping them “retain their workforces and increase productivity”).

See Benefits Transparency, supra note 1, at 26.

See Form 5500 Search, DEP’T OF LABOR https://www.efast.dol.gov/5500Search/ (last visited Feb. 4, 2024).

available, the Form 5500 is lengthy and intimidating.

And it is certainly not drafted for the

layperson.

As noted above, the recommended mandatory 401(k) plan disclosures would include information

regarding participant eligibility, employer contributions, vesting schedules, auto-enrollment, and

loans, hardship withdrawals, and emergency savings accounts—all features which are disclosed

in the Form 5500. The proposed disclosures would not uncover any new plan information, they

would simply consolidate information which has already been deemed acceptable for participant

and public viewership. Providing one place for stakeholders including jobseekers and

participants to view retirement benefits information which is already available does not generate

security concerns; it merely makes it easier for them to access this information. Stakeholders

should not have to search high and low for the details they need to make informed decisions and

to adequately understand retirement benefits. The proposed disclosures consolidate 401(k) plan

information for jobseekers and participants, without invoking any security or confidentiality

issues.

IV. Additional Recommendations

In the quest to improve the effectiveness of existing disclosure requirements, attention should not

only be paid to disclosure mechanisms. Simplifying aspects of retirement plans themselves will,

in turn, simplify the information which must be disclosed to stakeholders. Disclosures are easier

to understand when plans are easier to understand. One way to simplify 401(k) plans, and thus

simplify corresponding mandatory disclosures, is to eliminate a facet of these plans which

perpetuates retirement insecurity: vesting schedules.

Participants in 401(k) plans that utilize vesting schedules are at a severe disadvantage in the

context of retirement wealth accumulation.

If such participants terminate their employment,

either voluntarily or involuntarily, they must forfeit any unvested employer contributions.

Essentially, these participants are robbed of compensation/retirement savings that would have

been theirs if vesting requirements had been fulfilled. With less retirement savings accrued,

participants are that much further from achieving financial well-being.

Currently, vesting schedules are permitted for employer contributions under ERISA and the IRC.

Legally permissible vesting schedules vary. Some examples include cliff schedules, where

participants do not vest at all in employer contributions until a certain number of years of service

is met, and graded schedules, where participants incrementally vest a percentage after a certain

The Form 5500 is intimidating, often weighing in at over 300 pages. For example, Amazon’s 401(k) plan 2022

Form 5500 is 683 pages. Amazon.com Servs., Inc., Annual Return/Report of Employee Benefit Plan (Form 5500)

(Oct. 6, 2022). See Benefits Transparency, supra note 1, at 26.

Vesting schedules require that an employee stay with an employer for a certain amount of time in order to “vest”

in—be entitled to—the employer (likely matching) contributions made on their behalf. If the employee leaves prior

to vesting, they forfeit such employer contributions. See generally Samantha J. Prince, Megacompany Employee

Churn Meets 401(k) Vesting Schedules: A Sabotage on Workers’ Retirement Wealth, 41 Y

ALE L. & POL. REV. 1, 1

(2022).

See id.

number of years of service.

While vesting schedules are required to be disclosed under the

current disclosures framework, in the Form 5500 and SPDs, they are complex and often difficult

for employees and the general public to understand.

Eliminating vesting schedules, eliminates complexity and confusion for several stakeholders.

Jobseekers with inadequate financial literacy are unlikely to understand vesting schedule

nuances; expecting them to choose an employer with such limited understanding of benefit

features is unreasonable (assuming they have access to such information).

Participants in plans

that use vesting schedules have more complex participant statements; those who lack financial

literacy are also unlikely to understand these statements. If the Department of Treasury and the

Department of Labor are looking for ways to simplify retirement plan disclosures, eliminating

vesting schedules would certainly be a viable option. Not only would this alleviate existing

administrative disclosure burden, but it would also serve as a powerful step toward promoting

financial security for all.

V. Conclusion

Requiring detailed disclosure of 401(k) plans is crucial to achieving widespread understanding of

retirement benefits and illuminating both the impact and value of such benefits. Ensuring

retirement benefits information is accessible at all times will facilitate informed stakeholder

decision making. Mandatory 401(k) disclosures will present stakeholders with the information

they need to accumulate retirement wealth and security, while imposing minimal administrative

burden on plans and employers. If governmental bodies prioritize increased retirement benefits

disclosure, they will effectuate substantial positive change.

Respectfully,

Samantha J. Prince

Assistant Professor of Law, Penn State Dickinson Law

LL.M. Tax Georgetown University Law Center; J.D. Widener Commonwealth Law; B.S. Muhlenberg College

Alyssa K. Boob

Penn State Dickinson Law; B.S. Pennsylvania State University

See Samantha J. Prince & Ana Maria Matovic, Letter to the U.S. Dept. of Treasury Addressing How Vesting

Schedules Exacerbate Financial Inclusion (Feb. 20, 2024),

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4735367.

Note that vesting schedules are not a line item within the Form 5500 but are presented deep within the numerous

pages of supplementary notes to financials.

See Samantha J. Prince, Megacompany, supra note 38, at 60-61.

Eliminating vesting schedules would also likely reduce plan administrative fees. See Samantha J. Prince,

Megacompany, supra note 38, at 57-58. See also the staggering numbers reflected in Samantha J. Prince, Timothy

Azizkhan, Cassidy R. Prince & Luke Gorman, The Effects of 401(k) Vesting Schedules—in numbers, 134 Y

ALE L. J.

F. (forthcoming), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4784276