The Department of Labor’s Employee Benefits Security Administration (EBSA) tried to play cleanup with the rulebook and instead found out that sometimes the “old” rules are still needed. After floating the idea of removing certain safe harbors — including guidance on selecting annuity providers and the definition of plan assets — EBSA has now backed off after receiving significant adverse comments.
The Attempt to Simplify
Back on July 1, EBSA published a direct final rule to wipe away a 2008 regulation that offered fiduciary safe harbor protections for selecting annuity providers for 401(k) benefit distributions. The thinking was that this rule had become redundant. After all, Congress already amended ERISA in 2019 through the SECURE Act to create a new statutory safe harbor for the same activity.
The DOL reasoned that the old regulatory safe harbor might actually be more confusing than helpful — what they called a “trap for the unwary.” The message was clear: Why keep two rules on the books when one streamlined statute should do the job?
But as is often the case in the retirement plan space, what regulators think is unnecessary can be vital to practitioners.
Industry Pushback
The comment period produced significant objections. Groups like the U.S. Chamber of Commerce and the Insured Retirement Institute (IRI) argued that the old regulatory safe harbor still matters. Why? Because the 2008 regulation covers both the provider and the contract selection. The SECURE Act’s safe harbor, by contrast, is narrower — it only applies to selecting the insurer.
As Robert Richter from the American Retirement Association pointed out, the SECURE Act safe harbor “isn’t as broad in scope as the regulatory safe harbor.” In other words, removing the old rule would have stripped fiduciaries of a wider protective umbrella.
The IRI put it bluntly: the regulatory safe harbor doesn’t conflict with the statutory one — it complements it. Together, they give plan fiduciaries more confidence when navigating annuity distribution options, an area already fraught with complexity and second-guessing.
Plan Assets and General Accounts
The other rule EBSA tried to toss concerned the definition of “plan assets” as it relates to insurance company general accounts. The DOL thought the guidance was outdated since it only applies to insurance contracts issued before 1999. Industry players said otherwise.
The Chamber of Commerce reminded the Department that many insurers and plan sponsors still rely on that safe harbor today. Some of those pre-1999 contracts are still in force and may be for years to come. Without the safe harbor, there could be real uncertainty over whether assets in an
insurer’s general account are ERISA plan assets — a classification that could trigger massive compliance headaches.
The Chamber’s point was simple: the regulation was designed with durability in mind. It’s not obsolete if people are still relying on it. And as long as those contracts exist, the safe harbor still serves a purpose.
Lessons Learned
What’s the takeaway? Regulators often want to streamline, simplify, and sweep away “old” rules. But in the retirement plan world, old rules have a way of sticking around for a reason. Plan fiduciaries crave certainty, not fewer pages in the Code of Federal Regulations.
The DOL may have thought it was clearing clutter, but in reality, it was removing tools that practitioners still need. The retirement plan system is already complex — stripping out guidance that has provided clarity for nearly two decades doesn’t make life easier. It just shifts the risk back onto plan sponsors and fiduciaries.
So EBSA blinked, and rightly so. The safe harbors live another day, and fiduciaries continue to have both belts and suspenders when it comes to annuity selection and insurance general account treatment.
And if you’ve been in this business long enough, you know one thing: in retirement plans, more protection is always better than less.