Title: INFORM Act
Policy area: Labor and Employment

Summary:
Information Needed for Financial Options Risk Mitigation or the INFORM Act
This bill requires pension plan sponsors to provide certain information to participants and beneficiaries when the sponsor makes an offer to pay the plan's lifetime annuity as a lump sum. This includes the relative value of the lump sum option compared to the lifetime annuity and the general tax rules for accepting such lump sum.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3417 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  2d Session
                                S. 3417

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

                             March 9, 2020

 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'' or the ``INFORM Act''.

SEC. 2. NOTICE AND DISCLOSURE REQUIREMENTS WITH RESPECT TO CERTAIN LUMP 
              SUM OPTIONS.

    (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 
              OPTIONS.

    ``(a) In General.--A plan sponsor of a pension plan that amends the 
plan to provide a period of time during which certain participants or 
beneficiaries who are receiving or will receive lifetime annuity 
payments into a lump sum under section 401(a)(9)(A)(i) of the Internal 
Revenue Code of 1986 shall provide notice--
            ``(1) to each participant or beneficiary offered such lump 
        sum amount, in paper form and mailed to the last known address 
        of the participant or beneficiary, 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, 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 (if 
                not already in pay status), whether there is a 
                subsidized early retirement option, 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) The relative value of the lump sum option 
                compared to the plan's lifetime annuity, in comparable 
                terms.
                    ``(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 possible benefits, investment 
                risks, 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 election.
                    ``(H) Contact information for the point of contact 
                at the plan sponsor for participants to get more 
                information or ask questions about the option.
                    ``(I) A statement that--
                            ``(i) financial advisers may not be 
                        required to act in the best interests of 
                        participants and beneficiaries with respect to 
                        determining whether to take the option; and
                            ``(ii) participants and beneficiaries 
                        seeking financial advice should get written 
                        confirmation that the adviser is acting as a 
                        fiduciary to the participant or beneficiary.
            ``(2) Plain language.--The notice under this subsection 
        shall be written in a manner calculated to be understood by the 
        average plan participant.
    ``(c) Notice to the Secretary.--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 and the number of such 
        participants and beneficiaries who are in pay status during the 
        limited period in which the lump sum is offered.
            ``(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 copy of the notice provided to participants and 
        beneficiaries under subsection (b).
    ``(d) Post-Offer Report to the Secretary.--
            ``(1) In general.--Not later than 60 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 that includes--
                    ``(A) the number of participants and beneficiaries 
                who accepted the lump sum offer and a breakdown of the 
                number of those participants and beneficiaries who were 
                in pay status; and
                    ``(B) the number and nature of questions that the 
                plan sponsor received from participants and 
                beneficiaries about the offer.
            ``(2) Civil penalties.--The Secretary may assess a civil 
        penalty of up to $1,000 a day from the date of any plan 
        administrator's failure or refusal to file a report required 
        under paragraph (1).
    ``(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.
    ``(f) Guidance and Regulations.--The Secretary--
            ``(1) not later than 180 days after the date of enactment 
        of the Information Needed for Financial Options Risk 
        Mitigation, 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 the Information Needed for Financial Options Risk 
Mitigation and every 6 months thereafter, the Secretary shall submit to 
Congress a report that summarizes the notices and post-offer reports 
received by the Secretary under subsections (c) and (d) 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 certain 
                            lump sum options.
    (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.
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