FR 2021-02325

The Department of Labor (DOL) is requesting approval from the Office of Management and Budget (OMB) for a submission regarding the compliance of Simplified Employee Pensions (SEPs). This document, appearing in the Federal Register, seeks public comments on whether the collection of information is necessary for the effective functioning of SEPs. These pensions are organized under the Employee Retirement Income Security Act of 1974 (ERISA) and require employers to provide specific information to employees participating in these plans.

Summary of Document

The submission is in line with the Paperwork Reduction Act of 1995 and aims to ensure that eligible employees receive detailed written information about their SEP commitments. Key areas of focus include participation requirements, employer contribution formulas, and any specific terms related to the recommended IRAs, such as withdrawal restrictions and rates of return. The DOL is advocating for public feedback until March 8, 2021, and seeks a three-year approval for this information collection protocol.

Significant Issues and Concerns

One primary concern is the lack of detailed breakdown regarding the estimated annual other costs burden of $3,223. Without clear itemization, it is challenging to assess whether this financial estimation is accurate or justified. Additionally, the document is laden with technical jargon and legal references, such as "PRA," "ERISA," and "ICR," which may not be easily understood by individuals unfamiliar with these terms.

The figures presented in the document, such as the total estimated number of respondents (35,660) and the anticipated number of responses (67,930), appear significant when juxtaposed with the minimal costs, potentially indicating an underestimation of the burden on respondents.

Moreover, the necessity of having an alternative compliance method for SEPs is not elaborated upon, especially since SEPs are already governed by the Internal Revenue Code. This requires clarification to understand the underpinning rationale. The use of complex language might also hinder comprehension among small business owners, who are typically responsible for administering SEPs.

Broad Public Impact

Overall, this information collection request could improve the transparency and understanding of SEP plans for employees. Ensuring that participants are properly informed helps uphold the integrity and effectiveness of retirement schemes. However, the lack of clarity and detailed explanation may result in confusion or disengagement among the general public, which the agency seeks to educate and involve.

Impact on Specific Stakeholders

For small businesses, which constitute a significant portion of stakeholders in SEPs, there may be a burden associated with fulfilling the reporting requirements specified in this request. While automation and enhanced means of data collection can mitigate this, the clarity of information and ease of compliance are critical. If simplified and clearly articulated, this submission could foster better understanding and compliance among employers, thereby leading to more efficient pension plan administration. Conversely, failure to address these issues might result in inadvertent non-compliance and potential penalties for small businesses.

Conclusion

In summary, while the DOL's effort to improve SEP transparency is commendable, it is imperative that the concerns regarding cost estimations, the necessity for alternative compliance, and language complexity be addressed. Greater clarity and simplification of language can empower all stakeholders to better understand and engage with the information collection process, thereby enhancing the overall efficacy of this federal initiative.

The Federal Register document submitted by the Department of Labor specifically addresses an information collection request (ICR) pertaining to an alternative method of compliance for Simplified Employee Pensions (SEPs). Financial references in this document are few, but they are significant in understanding the context of its requirements and potential impact.

The document outlines that the total estimated annual other costs burden for this compliance effort is $3,223. This figure represents the additional expenses anticipated for entities subject to this information collection activity. It is important to note that the mention of $3,223 does not delve into a detailed breakdown of what constitutes these other costs, leaving room for questions regarding its comprehensiveness and adequacy.

One issue identified is the apparent disparity between the number of respondents and the modest financial estimate. With 35,660 estimated respondents generating 67,930 responses, the question arises as to whether the $3,223 is an adequate reflection of actual costs. This discrepancy suggests that other costs may have been underestimated, raising a potential concern for businesses, particularly smaller entities that might not have the resources to absorb unanticipated financial burdens.

The document does not provide ample clarification on how this estimated amount relates to specific operational or transactional costs incurred by the affected parties. Without clear delineation of expenses, evaluating the justification for such estimates becomes challenging. Additionally, since SEPs are already subject to the Internal Revenue Code, additional costs due to a new compliance method should be justified with evidence of necessity and reimbursement.

Overall, while the document specifies a modest financial allocation for other costs, it would benefit from transparency and clarity regarding how these expenses are justified and calculated. Providing this level of detail would aid stakeholders in understanding potential financial impacts and planning accordingly.