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Retirement Investments: Agencies Can Better Oversee Conflicts of Interest Between Fiduciaries and Investors
GAO-24-104632
Aug 28, 2024
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2 Open Recommendations
Agency Affected Recommendation Status
Internal Revenue Service The Commissioner of the IRS should develop and implement a process independent of DOL referrals for identifying non-exempt prohibited transactions involving firms or financial professionals who are fiduciaries to IRAs and assessing applicable excise taxes. For example, IRS could check Form 5330 filing compliance during income tax audits of financial services firms. (Recommendation 1)
Open
IRS agreed with this recommendation and stated that it would examine the processes and consider implementing additional measures to identify prohibited transactions as appropriate. We await progress on these efforts.
Internal Revenue Service The Commissioner of the IRS should coordinate with DOL through a formal means, such as a memorandum of understanding, on non-exempt prohibited transactions involving firms and financial professionals who are IRA fiduciaries and owe excise tax. (Recommendation 2)
Open
IRS agreed with this recommendation. IRS stated it will explore opportunities to develop more formal means for coordination between IRS and DOL for prohibited transactions related to investment advice provided to IRA owners from financial services firms. We await progress on these efforts.

Thrift Savings Plan: Investment Board Needs to Greatly Improve Acquisition Management and Contractor Oversight
GAO-24-106319
Aug 01, 2024
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7 Open Recommendations
Agency Affected Recommendation Status
Federal Retirement Thrift Investment Board The FRTIB Executive Director should develop a process to ensure that any future requirements developed for the new TSP recordkeeping system are consistent with the board's objectives, including applicable federal requirements, defined for the system. (Recommendation 1)
Open
In January 2025, FRTIB informed us that all contract modifications for the new TSP recordkeeping system will include a compliance check performed by the Office of General Counsel before those modifications are deployed. The agency did not provide an estimated date for implementing this change. We will continue to follow up on FRTIB's progress in completing this action.
Federal Retirement Thrift Investment Board The FRTIB Executive Director should develop a process that requires FRTIB to review testing documentation to ensure planned testing is complete, the evidence for testing outcomes is clear, and that the solution meets the desired outcome for participants for any new system enhancements or upgrades. (Recommendation 2)
Open
In January 2025, FRTIB informed us that it will perform better monitoring of testing documentation to confirm that all testing is completed before they approve contract milestones. Additionally, the agency stated that it will build user acceptance testing milestones that demonstrates the final solution into the acquisition phase. FRTIB did not provide an estimated date for implementing these changes. We will continue to follow up on FRTIB's progress in completing these actions.
Federal Retirement Thrift Investment Board The FRTIB Executive Director should develop a process that requires FRTIB to review milestone-related documentation to ensure that it fully addresses the milestone requirement. (Recommendation 3)
Open
In January 2025, FRTIB informed us that it was developing standard operating procedures to describe documentation that will be required for each milestone to be approved. The agency stated that the procedures will be for all new initiatives and projects, but did not provide an estimated date for implementing this change. We will continue to follow up on FRTIB's progress in completing this action.
Federal Retirement Thrift Investment Board The Executive Director of FRTIB should expedite negotiations with its contractor to modify, where feasible, the TSP services contract to ensure that all pertinent data necessary for performance oversight is provided by the contractor. (Recommendation 4)
Open
In January 2025, FRTIB informed us that it is now receiving all pertinent data to conduct performance oversight of the Accenture Federal Services contract for TSP services. According to the agency, additional data sets beyond what the initial contract required have been codified in the contract as of July 2024. The agency also stated that additional data that it needed to conduct oversight of compliance with regulations, statutory authority, and the contract were codified in the contract in November 2024. We have requested documentation of these contract changes from FRTIB and will review the documentation once received to determine if the recommendation has been implemented.
Federal Retirement Thrift Investment Board The FRTIB Executive Director should negotiate with its contractor to modify, where feasible, the TSP services contract to include a requirement that FRTIB is notified of any new staff assigned to the contract, including the name and title of the staff, to help ensure appropriate background investigations are conducted. (Recommendation 5)
Open
In January 2025, FRTIB informed us that it was working to finalize a contract modification and revise a standard operating procedure to ensure proper vetting of staff assigned to the TSP services contract. The agency did not provide an estimated date for completing these actions. We will continue to follow up on FRTIB's progress in completing these actions.
Federal Retirement Thrift Investment Board The Executive Director of FRTIB should establish a documented procedure to ensure any future third parties providing services for the TSP are able to provide transactional data needed for oversight prior to performing these services. (Recommendation 6)
Open
In January 2025, FRTIB informed us that it was updating its Contracting Standard Operating Procedures to include contractor requirements for future oversight activities, to include access to third-party data. According to the agency, the necessary oversight data will be incorporated into a future quality assurance surveillance plan modification to ensure ongoing oversight of the current TSP services vendor. FRTIB did not provide an estimated date for completing these actions. We will continue to follow up on FRTIB's progress in completing these actions.

401(k) Retirement Plans: Department of Labor Should Update Guidance on Target Date Funds
GAO-24-105364
Apr 29, 2024
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2 Open Recommendations
Agency Affected Recommendation Status
Department of Labor The Secretary of Labor should ensure that the Assistant Secretary of the Employee Benefits Security Administration updates the 2013 guidance for plan sponsors, "Target Date Retirement Funds—Tips for ERISA Plan Fiduciaries," to provide information that reflects recent TDF developments. This should include the use of collective investment trusts and differences between "to" and "through" TDF glide paths. (Recommendation 1)
Open
As of October 2024, DOL officials continue to disagree with this recommendation, stating that they believe the guidance document is balanced and provides basic information that plan fiduciaries can use to improve retirement outcomes, regardless of whether the TDF is structured as a mutual fund or collective investment trust. Our recommendation is also aimed at improving retirement outcomes and we believe that providing updated information on fundamental features of TDFs, which are the most widely used investment option in 401(k) plans, would help DOL meet this goal. For example, DOL could add targeted references to collective investment trust disclosures and include links to OCC resources to complement the specific references to mutual funds and mutual fund disclosures and help ensure that plan fiduciaries understand the applicable disclosures to inform their TDF selection and monitoring process. DOL officials also stated that this guidance notes the issue of investment risk when discussing the significance of differences between "to" and "through" TDF glide paths based on substantial evidence that many plan sponsors and participants had not understood the extent to which TDFs were exposed to this risk, including during market turbulence in 2008. While we understand DOL's focus on investment risk at the time it published this guidance document, we believe that a targeted update to add inflation risk to the discussion of the differences of "to" and "through" TDF glide paths would help plan sponsors improve retirement outcomes for their participants.
Department of Labor The Secretary of Labor should ensure that the Assistant Secretary of the Employee Benefits Security Administration, in consultation with the SEC and OCC as appropriate, updates the 2010 guidance for plan participants, "Investor Bulletin: Target Date Retirement Funds," to provide information that reflects recent TDF developments. This should include the use of collective investment trusts. (Recommendation 2)
Open
As of October 2024, DOL officials continued to disagree with this recommendation, stating that they believe the guidance document is balanced and provides basic information that plan participants can use to improve their retirement outcomes, regardless of whether the TDF is structured as a mutual fund or collective investment trust. Our recommendation is also aimed at improving retirement outcomes, and we believe that providing updated information on fundamental features of TDFs, which are the most widely used investment option in 401(k) plans, would help DOL meet this goal. For example, DOL could add targeted references to collective investment trust disclosures and include links to OCC resources to complement the specific references to mutual funds and mutual fund disclosures and help ensure that participants are able to identify and understand disclosures for collective investment trust TDFs in which their retirement savings are invested, particularly since even seemingly small fees can significantly reduce 401(k) plan retirement savings.

401(k) Plans: Additional Federal Actions Would Help Participants Track and Consolidate Their Retirement Savings
GAO-24-103577
Feb 20, 2024
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6 Open Recommendations
Agency Affected Recommendation Status
Pension Benefit Guaranty Corporation The Director of the PBGC should assess and report to Congress on the feasibility of amending current law to allow active 401(k) plans to transfer small inactive account balances subject to forced-transfers to the PBGC's program, currently known as the Missing Participants Program for terminated defined contribution plans. (Recommendation 1)
Open
PBGC agreed with this recommendation and initially anticipated completing a study before 2025. As of December 2024, PBGC indicated the study is underway and expects to complete it by September 30, 2025. We commend the agency's efforts and will continue to monitor its progress to implement this recommendation.
Department of Labor The Secretary of Labor should take action to implement the ERISA Advisory Council's 2016 recommendation by issuing a Request for Information to explore how the agency can encourage and support the adoption of secure electronic data standards to facilitate the processing of plan-to-plan rollovers. (Recommendation 2)
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As of April 2024, DOL indicated it is waiting for Treasury to issue guidance pursuant to SECURE 2.0 Act of 2022 section 324 before DOL can more meaningfully assess whether and how to best encourage and support the adoption of electronic data standards, including formal public engagement with stakeholders. SECURE 2.0 section 324 prompts Treasury to issue guidance in the form of sample forms to simplify, standardize, facilitate, and expedite the completion of rollovers to eligible retirement plans and trustee-to-trustee transfers from individual retirement plans. In January 2024, DOL issued a proposed regulation pursuant to section 120 of SECURE 2.0 to implement a statutory prohibited transaction exemption for "automatic portability providers" who administer programs under which an employee's retirement savings that has been transferred by their employer to an IRA can be automatically rolled over to a new employer's plan, as applicable. As part of this initiative, DOL indicated it is exploring possible standards for such providers to safeguard portability data and to promptly remedy potential security breaches. As of April 2024, DOL is reviewing comments in response to the proposal. We commend DOL's actions and maintain that an initiative to develop secure standards to safeguard data for automatic IRA-to-plan rollovers would be enhanced if conducted alongside a Request for Information for secure electronic data standards for plan-to-plan rollovers. Without continued progress towards developing secure electronic standards to facilitate efficient plan-to-plan rollovers, participants will likely continue to find the process challenging and may avoid consolidating their savings altogether. We will continue to monitor the agency's progress to implement this recommendation.
Department of the Treasury The Secretary of the Treasury should take action, such as amending the 402(f) Notice requirements and Model Notice, or providing clarifying information to the Notice to: (1) include clear information about participants' option to leave their savings in their old plan; (2) provide clearer and more concise information on each of the four distribution options and their associated tax consequences; and (3) address the timing requirements for plans to provide the 402(f) Notice, to ensure the Notice is provided to participants when they leave their job and become eligible to take a distribution. (Recommendation 3)
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Treasury stated that an update to the 402(f) Notice is currently in process and will reflect legislation and guidance issued since the last update. However, regarding the part of the recommendation that address the timing requirements for plans to provide the 402(f) Notice, Treasury stated that there is no statutory authority to require a notice to a participant upon separation from service. Our recommendation states that Treasury should take action to address the timing issue; and Treasury can seek any venue it deems appropriate, including seeking statutory authority from Congress to address the timing. Without such action, Treasury will continue to miss an opportunity to ensure that participants are receiving easily-understandable information about all distribution options-at the point in time when a participant is facing an important decision about their retirement savings. We will monitor the agency's action.
Department of Labor The Secretary of Labor should ensure that plan participants, at the time they leave their job and become eligible to take a retirement plan distribution, receive easily-understandable information about all four distribution options and their associated tax consequences. Actions that could be taken include implementing the ERISA Advisory Council's 2015 recommendation, exploring a joint-agency effort with Treasury to update the 402(f) Notice, or other steps that would help plans develop clear and concise communications to inform participants. (Recommendation 4)
Open
As of April 2024, DOL indicated it is engaged in joint-agency efforts with the Treasury, IRS, and the Pension Benefit Guaranty Corporation pursuant to section 319 of the SECURE 2.0 Act to review and obtain feedback from interested parties about the effectiveness of all disclosures to retirement plan participants required under ERISA and the IRC. A Request for Information was published in the Federal Register in January 2024, which includes a broad range of questions about the information that is disclosed to participants, including the format, delivery, comprehension, and retention of such information. DOL noted the agencies will review such comments in preparing a required report to Congress with recommendations for potential improvements to required disclosures. As part of that tri-agency process, DOL said it will also consider our report recommendation. Also, DOL indicated in April 2024 that it has begun implementing the directive in section 342 of the SECURE 2.0 Act, which amended ERISA to require DOL develop regulations to require retirement plans to provide advance notice to participants and beneficiaries who are permitted to take lump sum distributions. In developing regulations, and any subsequent outreach and education materials, DOL said it will take into account our recommendation that participants should receive easily understandable, timely, and comprehensive information to help them make more informed decisions when separating from employment. We commend DOL's progress in working with Treasury and IRS and will continue to monitor the agency's efforts towards implementing our recommendation.
Congress Congress should consider enacting legislation to assign and grant authority to a federal agency to establish and oversee a secure website, commonly known as a pension dashboard, that allows plan participants to view in one place information about all of their employer-sponsored retirement savings plans. (Matter for Consideration 1)
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As of February 2025, Congress has taken no action on this matter.
Congress Congress should consider legislative amendments to assign and grant authority to DOL and IRS to establish an electronic plan-to-plan rollover system that, when an individual changes jobs, automatically transfers the savings from their old employer-sponsored retirement account plan to their new employer's plan (provided that their new plan accepts rollovers and that individuals can opt-out). (Matter for Consideration 2)
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As of February 2025, Congress has taken no action on this matter.
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