Headlines about "Ret plan investments - costs"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] Industry Groups Seek Modifications to Proposed Fee Disclosure Regs
Excerpt: "The ERISA Industry Committee (ERIC), the American Society of Pension Professionals and Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR), representing plan sponsors, service providers and recordkeepers, have submitted comments to the Department of Labor (DOL) outlining the changes they seek to the regulations proposed on July 23, 2008 regarding the disclosure of plan and investment-related information to participants in participant-directed plans . . . ." (Wolters Kluwer)
[Guidance Overview] Update on 401(k) Fee Litigation
Excerpt: "Over the past several years, more than two dozen lawsuits have been filed relating to 401(k) plan fees and, more specifically, 'revenue sharing' arrangements with plan service providers. . . . In addition to the lawsuits against plan sponsors, lawsuits have been brought against 401(k) plan service providers. [The target page has links to an outline and chart of the litigation.]" (Groom Law Group)
[Guidance Overview] Proposed Regulations Regarding 401(k) Plan Disclosures (PDF)
2 pages. Excerpt: "By beginning the review process now, employers and plan administrators will be able to react quickly when final DOL disclosure regulations are issued. We recommend the following steps: Review the time periods for distributing currently required notices. Carefully review the proposed DOL regulations regarding plan fee disclosures. Create forms and procedures for complying with the new disclosure requirements. Discuss the foregoing points with third-party administrators to address their compliance with the proposed disclosure requirements." (Porter Wright Morris & Arthur LLP)
Courts Divide on Fiduciary Status of 401(k) Plan Service Providers
Excerpt: "As the 401(k) fee lawsuits progress, the federal district courts continue to grapple with the issue of whether the defendant service provider qualifies as an ERISA fiduciary. The courts were particularly busy last week, issuing two decisions on this point. In Charters v. John Hancock Life Insurance Company, the court held that John Hancock qualifies [as] an ERISA fiduciary and allowed the case to proceed on the issue of whether John Hancock breached its fiduciary duties. In contrast, in Columbia Air Services, Inc. v. Fidelity Management Trust Company, the court granted Fidelity's motion to dismiss, concluding that the plaintiff failed to allege facts sufficient to demonstrate that Fidelity may qualify as an ERISA fiduciary. Copies of the Charters and Columbia Air decisions, as well as our summary of the decisions, are [linked from the target page]." (Groom Law Group)
[Guidance Overview] Disclosure of Service Provider Compensation: Final 408(b)(2) Regulation Will be Issued Soon (PDF)
2 pages. Excerpt: "Whatever form the final regulation takes, we . . . know that every service agreement for every broker-dealer, RIA, recordkeeper, third party administrator and other covered service providers will need to be amended to comply with the regulation before the effective date." (Reish Luftman Reicher & Cohen)
[Guidance Overview] ERISA Revenue-Sharing Litigation Update (PDF)
4 pages. Excerpt: "Recently, class certification was denied in one ERISA revenue-sharing case directed against a financial service provider but granted in two such cases directed against plan sponsors. In a third plan sponsor case, a motion to dismiss was denied. Below is a summary of the decisions and a brief summary of the current state of the litigation." (Sutherland)
Stock-Drop Plaintiffs Win Skirmishes in Fifth Third Case
Excerpt: "Plaintiffs in a January 2005 stock-drop and excessive fee case have won two legal skirmishes with a federal judge's rulings certifying the case as a class action and refusing a request to throw out the lawsuit. A news release from the Scott and Scott law firm said the rulings came in a suit filed by Benjamin Shirk seeking to represent participants and beneficiaries in the Fifth Third Master Profit Sharing Plan. The case charged the bank and a number of its executives with mismanaging the plan and breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA)." (planadvisor)
[Guidance Overview] DOL's Proposed Participant Fee Disclosure Rules (PDF)
3 pages. Excerpt: "To give plan sponsors an opportunity to prepare for the implementation of these new rules (whether in 2009 or 2010), we are providing a summary of the DOL's proposals. However, plan sponsors need to be aware that they cannot rely on these proposed rules. If a plan sponsor takes action now and the final rules depart from the proposals, the plan will have to change course in order to comply with those final rules." (Prudential Retirement)
[Opinion] Disclosure in Participant-Directed Individual Account Plans - The 'Anti-Participant Rule' (Part 2)
Excerpt: "Many of the special-interest groups and the vendors they represent that provide products and services to qualified retirement plans are no doubt quite happy with the 'anti-participant rule.' And why shouldn't they be? That rule allows them to continue hiding their high costs (if these costs weren't high, they wouldn't be hidden) from plan sponsors and, in turn, plan participants." (Morningstar)
International Paper Fee Suit Certified as Class Action
Excerpt: "The U.S. District Court for the Southern District of Illinois has granted class action certification to plaintiffs suing International Paper Co. for fiduciary breaches. . . . As for International's argument that the class lacked commonality, the court pointed out that the plaintiffs have focused their claims on the excessive fees paid by the plans and the fiduciaries' decision to maintain Company Stock Fund as an imprudent investment by forcing participants to hold company stock when the fiduciaries had dumped the stock from the pension fund. 'It is this injury, rather than direct injury to their individual accounts, that the putative class members assert." (PLANSPONSOR.com; free registration required)
[Opinion] American Benefits Council Statement for Senate HELP Committee Hearing on 401(k) Fee Disclosure (PDF)
3 pages. Excerpt: "The Council supports fee transparency as a critical means of assisting participants in this regard. In the same time, we all must bear in mind that unnecessary burdens and costs imposed on these plans will reduce participants' benefits, thus undermining the very purpose of the plans. In addition, our voluntary retirement plan system depends on the willingness of employers to maintain plans; excessive burdens on employers will undercut their commitment to a system that millions of Americans rely on for their retirement security." (American Benefits Council)
Boeing 401(k) Fee Case Sanctioned as Class Action
Excerpt: "A federal judge in Illinois has sanctioned an excessive 401(k) fee lawsuit against Boeing Co. as a class action. U.S. District Chief Judge, David R. Herndon, of the U.S. District Court for the Southern District of Illinois said the class action litigation would be made up of nearly 190,000 plan participants." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Proposed Regs Require Defined Contribution Plans to Disclose Fee and Investment Information to Participants Beginning January 1, 2009 (PDF)
7 pages. Excerpt: "The proposed effective date of the new requirements is plan years beginning on and after January 1, 2009. While it's possible the DOL may defer this effective date, the DOL has indicated it intends to finalize the regulations before the end of this year. It's likely that final regulations will be similar to the proposed version in many respects." (Alston & Bird LLP)
[Guidance Overview] Federal Court Denies Class Certification In Major ERISA Revenue Sharing Class Action Suit
Article by Sidley Austin's Insurance Class Action Defense and ERISA Litigation Practices; originally published on 5 September 2008. Excerpt: "In a first-of-its-kind victory for the financial services industry, a federal district court in Iowa has denied class certification in an ERISA class action suit that challenged so-called 'revenue sharing' associated with retirement plans. Ruppert v. Principal Life Ins. Co.,No. 4:07-cv-0344-JAJ (S.D. Iowa Aug. 27, 2008). The case concerned whether 'revenue sharing' payments from mutual funds violated the Employee Retirement Income Security Act of 1974 (ERISA)." (Mondaq)
[Guidance Overview] How New DOL Fee Disclosure Rules Could Affect You
Excerpt: "The proposed regulations suggest disclosures to participants and their beneficiaries on both plan fees and on the investments in their plan. This Regulatory Brief offers more details and Vanguard perspectives on the disclosures that would need to be provided to participants in the categories of general plan information, administrative expenses, and individual expenses. The brief can also help pinpoint disclosures with respect to 'designated investment alternatives' that should be part of your summary plan description." (The Vanguard Group)
[Opinion] Group Letter to DOL Regarding Effective Date of 408(b)(2) Regulations (PDF)
2 pages. Excerpt: "We want to emphasize one key issue at this time: the effective date of the regulation addressing disclosure by service providers. It is essential that the regulations not be effective earlier than the first plan year beginning after at least 12 months after the final regulations are published. Accordingly, if, for example, the final regulations are published in November of 2008, the regulations should not be effective prior to January 1, 2010 in the case of a calendar year plan." (American Benefits Council)
[Guidance Overview] Disclosure of Fees Charged by Plan Service-Providers: Some Practical Implications
Excerpt: "In this ErisaALERT we will discuss [information which must be provided by the service provider to a responsible plan fiduciary especially where fees will be paid from plan assets] referred to as the Reasonable Contract or Arrangement Under Section 408(b)(2) -- Fee Disclosure guidance and its impact on Plan Sponsors. This guidance touches on some very important basics of fiduciary responsibility." (ERISAdiagnostics, Inc.)
[Guidance Overview] DOL Proposed Regulations on Investment Advice and Proposed Class Exemption from the ERISA Prohibited Transaction Rules (PDF)
6 pages. Excerpt: "These regulations are proposed to be effective 60 days after publication of the final regulations in the Federal Register. To be considered, written comments on the proposed regulations must be submitted to the DOL by October 6, 2008." (Transamerica Center for Retirement Studies)
[Opinion] Plan Sponsors and the Effort to Meet New Obligations Concerning 401(k) Fees
Excerpt: "The U.S. Department of Labor is working on three significant regulatory projects regarding 401(k) fees . . . . These involve the Form 5500 (Annual Report), especially Schedule C; the ERISA section 408(b)(2) regulations; and the recently released amendments to the participant disclosure requirements in the ERISA section 404(a) and 404(c) regulations. All of these involve extraordinarily complex issues. However, the biggest issue plan sponsors and service providers are facing is time (or the lack thereof)." (PLANSPONSOR.com; free registration required)
[Opinion] Disclosure of Expenses to Participants - Response to Question from a Reader
Excerpt: "My response focuses primarily on two issues. The first is that there is a way to disclose that is both meaningful and understandable. The second is that there is no 'universal' participant; that is, the 401(k) world is made up of participants of all sizes and shapes." (Fred Reish via PLANSPONSOR.com; free registration required)
Advice, Participant Fee Disclosure Proposals Covered in EBSA Web Cast
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) will host a free web cast next week to help employers and plan administrators understand recent regulatory and interpretative guidance under the Employee Retirement Income Security Act (ERISA). [You can register for the September 25 Webcast at https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=120366&sessionid=1&key=64151CDCA7A9BDA7C16C84EB5F1D4E30&sourcepage=register.]" (PLANSPONSOR.com; free registration required)
[Guidance Overview] In Jeopardy: The Future Role of an Advisor after PPA and 408(b)(2)
Excerpt: "[This powerpoint presentation highlights] the challenges the future holds for advisers in the retirement industry." (Fiduciary Risk Assessment LLC)
[Opinion] Vanguard Comment Letter to the DOL in Support of Fee Transparency
Excerpt: "Vanguard has always been strongly committed to the principle of straightforward, useful disclosure of plan fees and expenses to participants. This fee comment letter reflects that commitment by supporting the DOL's proposal to require fiduciaries to disclose fees, returns, and other relevant information in a format that enables participants to easily compare fee and expense information." (The Vanguard Group)
[Opinion] ASPPA/CIKR Comments to Senate HELP Committee's Hearing: '401(k) Fee Disclosure: Helping Workers Save for Retirement (PDF)
8 pages. Excerpt: "While the DOL's proposed ERISA §408(b)(2) rules (relating to whether a contract or arrangement is reasonable between a service provider and plan fiduciary) would require enhanced disclosures for service providers to 401(k) plan fiduciaries, the proposed regulation would require only an aggregate disclosure of compensation and fees from bundled service providers, with narrow exceptions, and would not require a separate, uniform disclosure of the fees attributable to each part of the bundled service arrangement. While we appreciate the DOL's interest in addressing fee disclosure, we do not believe that any requirement that benefits a specific business model is in the best interests of plan sponsors and participants." (American Society of Pension Professionals & Actuaries/Council of Independent 401(k) Recordkeepers)
[Opinion] Pension Rights Center Testimony on Improving the Disclosure of 401(k) Fees (PDF)
5 pages. Excerpt: "For fee disclosure to truly benefit plan participants, it must occur at two levels: disclosures from service providers to plan sponsors on fees assessed to the plan, and from plan sponsors to plan participants on the fees participants are paying. Disclosure to sponsors at the plan level is critically important to participants because it is the sponsor who makes the determination of what services to provide and what investment alternatives to include in the plan. The sponsor has a fiduciary duty to ensure that these decisions are made prudently and for the sole and exclusive benefit of the participants." (Pension Rights Center)
[Guidance Overview] New Proposed Disclosure Requirements for Retirement Plan Fees and Investment Expenses: Part II (PDF)
2 pages. Excerpt: "The U.S. Department of Labor ('DOL') proposed ERISA 404(a) and (c) regulations would require disclosure in two main categories: plan information and investment information. The first part of this Alert discussed the onerous plan information disclosures. Here, we discuss the investment information disclosures. The DOL's new proposed regulations would require detailed disclosure of investment expenses in participant directed individual account plans like 401(k) plans and IRAs. Investment expense disclosures would be required upon eligibility, and at least annually, to each participant . . . ." (Holme Roberts & Owen LLP)
Regulator Warns Senators Not to Impede DOL Fee Disclosure Rulemaking
Excerpt: "A federal regulator on Wednesday urged U.S. Senate lawmakers not to interfere with the U.S. Department of Labor's (DoL) regulatory scheme for retirement plan fees through additional legislation. The warning came from Bradford Campbell, the Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) and the Bush Administration's point person on fee disclosure reform, during testimony before the U.S. Senate Committee on Health, Education, Labor and Pensions." (PLANSPONSOR.com; free registration required)
[Opinion] Links to Comments Received by DOL on Proposed Regs on Fee Disclosure for Self-Directed Retirement Plans
91 comments. (Employee Benefits Security Administration, U.S. Department of Labor)
[Guidance Overview] Text of DOL EBSA Chief's Testimony on Legislative Proposals for More Fee Disclosure
Excerpt: "The regulatory process currently underway ensures that all voices and points of view will be heard and provides an effective means of resolving the many complex and technical issues presented. I hope that as Congress considers this issue, it recognizes the Department's existing statutory authority and takes no action that could disrupt our current efforts to provide these important disclosures to workers. My testimony today will discuss in more detail the Department's activities related to plan fees. Also, I will describe the Department's regulatory and enforcement initiatives . . . ." (Employee Benefits Security Administration, U.S. Department of Labor)
[Opinion] The Committee on Investment of Employee Benefit Assets Comments on Fee Disclosure (PDF)
Excerpt: "[CIEBA] members have identified several areas of concern in the proposed regulation and we encourage the Department to revisit these issues prior to finalizing the regulation." (The Committee on Investment of Employee Benefit Assets)
Determining Whether 401(k) Plan Fees are Reasonable: Are Disclosure Requirements Adequate?
Excerpt: "The fees of 401(k) plans can be complex, and the information on them that participants receive tends to be fragmentary and hard to understand. The unsatisfactory state of fee disclosure reflects the failure of the current regulatory framework to require plan sponsors to provide comprehensive information on fees and to require the plans' service providers to disclose needed information to sponsors. Under the circumstances, it is not surprising that most plan participants lack even a basic understanding of the fees they pay." (AARP)
[Opinion] ASPPA/CIKR Filed Comments on Proposed Regulation Regarding Participant Disclosures (PDF)
Excerpt: "On September 15, 2008, ASPPA and CIKR submitted supplemental comments to the DOL on the participant fee disclosure proposed regulation, suggesting a disclosure alternative to the proposed quarterly statement requirement." (American Society of Pension Professionals & Actuaries/Council of Independent 401(k) Recordkeepers)
DOL Proposal Requires Plan Fiduciaries to Disclose Basic Information and Expenses
Excerpt: "Almost from the moment federal regulators announced they intended to beef up required plan disclosures, the message they heard most often from retirement services industry members was simple: One size disclosure does not fit all. In response, the Department of Labor's Employee Benefits Security Administration (EBSA) announced it was developing a sweeping three-part regulatory scheme addressing disclosures from plans to regulators and the public. The new rules also would cover disclosures from providers to plan sponsors and, finally, from plan sponsors to participants." (PLANSPONSOR.com; free registration required)
[Opinion] Disclosure of 401(k) Plan Expenses to Participants
Excerpt: "I recently received a question from a reader about one of my articles concerning disclosure of expenses to participants. I thought you might like to see his question and my answer. Taken together, they provide a good overview of some of the most important issues about fee disclosures to participants." (Fred Reish via PLANSPONSOR.com; free registration required)
[Opinion] Can Brokers Be Fiduciaries?
Excerpt: "Judging by newly proposed regulations on investment advice, it looks as if the Department of Labor is trying hard to engineer a sharp turn from the course established by Congress. On Aug. 22, the Labor Department released its long-awaited guidance to implement the investment advice provisions of the Pension Protection Act of 2006. But the DOL simultaneously proposed a new class exemption to allow commission-based registered representatives to become fiduciary advisers and give advice to participants and beneficiaries of participant-directed retirement plans and individual retirement accounts." (Investment News; free registration required)
Justifying 401(k) Fees: A Challenge for Fiduciaries (PDF)
11 pages. Excerpt: "Underlying the current spate of lawsuits over 401(k) fiduciary misconduct (particularly fee levels, revenue sharing, self-dealing, and active versus passive management) is a simple question: Are participants getting their money's worth for the fees they pay? That seemingly simple question gives rise to a multitude of other questions which are anything but simple." (Richard D. Glass via Investment Horizons)
According to New Survey, Nearly One in 10 Plan Sponsors Still Believes That They Pay No Fees for Their Retirement Plan
Excerpt: "On the other hand, the Spectrem Group survey of an undisclosed number of plan sponsors . . . claims that nearly one in four plan sponsors was of that opinion as recently as 2005. Not that they aren't getting that information. Overall, 84% of sponsors responding to the Spectrem Group survey receive a written fee disclosure statement from their plan providers, and 88% receive one from their advisers and consultants." (planadvisor)
[Guidance Overview] Presentation: Proposed Fee Disclosure Requirements for Participant-Directed Individual Account Plans (PDF)
25 pages. (Morgan, Lewis & Bockius LLP)
[Guidance Overview] Enhanced Fee Disclosure by ERISA Plan Sponsors and New Reporting for Plan Service Providers (PDF)
4 pages. Excerpt: "This update examines these [proposed] regulations as well as the impact they may have on ERISA plan sponsors." (Dechert LLP)
[Opinion] U.S. Chamber of Commerce Comments on Proposed Rule on Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans (PDF)
6 pages. Excerpt: "The Chamber supports disclosure and transparency of information that allows participants to make informed decisions about their investments. In order to be beneficial to participants, however, such information should be useful and easily understood. Moreover, it is equally important that disclosure requirements are not unduly burdensome to the employer – particularly if they do not provide meaningful information to the participant. We believe that the proposed regulation strikes a reasonable balance between these requirements." (U.S. Chamber of Commerce)
Trade Groups Comment on Fee Disclosure Proposal
Excerpt: "The ERISA Industry Committee (ERIC), Investiment Company Institute (ICI), and the SPARK Institute all gave the Department of Labor (DoL) opinions on its recent fee disclosure proposal." (planadvisor)
[Opinion] SPARK Institute Comments on Participant Fee Disclosure Proposed Regulation (PDF)
11 pages. Excerpt: "Some of the specific provisions that The SPARK Institute supports include, but are not limited to: (1) the flexible concept based approach that allows plan fiduciaries, service providers and investment providers flexibility in making participant disclosures, (2) the absence of a mandated one-size fits all disclosure form or format, (3) the targeted approach that focuses on providing clear, concise and meaningful disclosure, including investment option comparisons . . . ." (The SPARK Institute)
[Opinion] Investment Company Institute Comment Letter on Participant Fee Disclosure Proposal
Excerpt: "The Department should enhance the ability of plans to use electronic delivery and web-based disclosure. Although the proposal contemplates the use of a website for layered disclosure, it otherwise simply incorporates the Department's current electronic disclosure rules. Benefits of the layered approach to disclosure in the proposal can best be realized if the Department updates its electronic disclosure rules." (Investment Company Institute)
[Opinion] ERIC Comments on Proposed Regulation on Disclosure Requirements for Participant-Directed Individual Account Plans (PDF)
29 pages. Excerpt: "The Department has proposed to make the regulation effective for plan years beginning on or after January 1, 2009. This proposed effective date is not realistic. As explained . . ., fiduciaries will need substantially more time to comply with the new disclosure requirements. ERIC recommends that the requirements become effective no earlier than the first plan year beginning at least 12 months after the final regulation is published in the Federal Register." (The ERISA Industry Committee)
[Opinion] American Society of Pension Professionals & Actuaries and Council of Independent 401(k) Recordkeepers Comments on Participant Fee Disclosure Proposed Regulation (PDF)
26 pages. Excerpt: "ASPPA and CIKR have serious concerns regarding the timing, cost and burden of the proposed disclosures, and we strongly urge the Department to delay adoption of a final regulation to enable the service provider community to create the systems that will assist fiduciaries in complying with the new requirements." (American Society of Pension Professionals & Actuaries/Council of Independent 401(k) Recordkeepers)
Comparison of 401(k) Participants' Understanding of Model Fee Disclosure Forms Developed by DOL and AARP
Excerpt: "AARP developed an alternative disclosure form through consultations with experts and revised it through extensive interviews with 401(k) participants." (AARP)
[Guidance Overview] Department of Labor Proposed Regulations on Participant Fee Disclosure (PDF)
4 pages. Excerpt: "The proposed regulations address the types of information that must be disclosed, the timeframes for providing the information and the form in which information may be disclosed." (Transamerica Center for Retirement Studies)
[Opinion] PSCA Comments on Proposed Rule for Fee Disclosure in Participant-Directed Individual Account Plans (PDF)
6 pages. Excerpt: "We recommend that the final rule require initial disclosures to participants under paragraphs (c) and (d) on or before the date of participation in the plan, not the date of plan eligibility. Requiring initial disclosure on or before participation in the plan, prior to the actual selection of a designated investment alternative, provides many advantages. It will result in incorporating the disclosures required under the proposed rule into the plan enrollment process, when the employee's attention is focused on the plan features and the investment selection process." (Profit Sharing / 401k Council of America)
[Guidance Overview] Fiduciary Focus: The 'Anti-Participant Rule' (PDF)
4 pages. Excerpt: "Any discussion about the regulatory effort (i.e., proposed rule §2550.404a-5 set forth by the Department of Labor) or the legislative effort (i.e., HR 3185) to disclose fees associated with qualified retirement plans such as 401(k) plans must begin with citation to the relevant portion of section 404(a)(1)(A) of the Employee Retirement Income Security Act (ERISA): '[A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.'" (W. Scott Simon via Morningstar)
Summary of 401(k) Fee Cases Pending as of September 2, 2008 (PDF)
The 3-page table presents the complaints filed against major companies and service providers. (Spencer Fane Britt & Browne LLP)
Judge Turns Away Principal Revenue Sharing Case Class Action Bid
Excerpt: "Faced with overseeing a class action lawsuit that could have represented as many as 57,000 401(k) plans at the Principal Financial Group, a federal judge in Iowa has refused to certify the plaintiffs as a class." (PLANSPONSOR.com; free registration required)
[Opinion] Important 401(k) Fee Rulings on the Horizon
Excerpt: "Many of the lawsuits that challenge retirement plan fee practices are nearing critical decision points. After languishing for months in what were often heated procedural battles, several of these cases are fast approaching discovery cutoffs and summary judgment deadlines. Rulings on those summary judgment motions could widen the existing schism among the courts about the extent to which ERISA governs the inner workings of the 401(k) industry." (Spencer Fane Britt & Browne LLP)
[Guidance Overview] Proposed DOL Regulations Would Implement PPA Investment Advice Exemption; Proposed PTE Would Significantly Expand Relief
Excerpt: "EBIA Comment: Although the proposed regulations break little new ground on the level-fee exemption, they do provide more detail regarding how the computer-model exemption is to work. Unfortunately, they leave some significant concepts (for example, the concept of an eligible investment expert) largely unexplained, requiring fiduciaries to make decisions based on general fiduciary principles." (Employee Benefits Institute of America)
[Guidance Overview] New Proposed Disclosure Requirements for Retirement Plan Fees and Investment Expenses, Part I of II (PDF)
2 pages. Excerpt: "Plan administrative disclosure of the following information would be required upon eligibility and at least annually to each participant: Plan investment procedures, availability of investments, and any investment restrictions; Plan-level expenses by category – legal, accounting, recordkeeping, etc.– and how these expenses are allocated to each participant, namely whether pro rata or per capita, with additional quarterly disclosures of the actual dollar amount charged to each participant's account; and Specific individual-level expenses chargeable for particular individual administrative functions, such as loan processing or review of domestic relations orders (not like the plan-level expenses above), with additional quarterly disclosures of the actual dollar amount charged, if any, to each respective participant." (Holme Roberts & Owen LLP)
[Opinion] DOL Investment Advisory Proposals
Excerpt: "Overall, the intent of these proposals is to make 'quality' and 'affordable' investment advice more available and more broadly utilized by DC plan participants The proposals were designed to address what the DOL understands to be the primary reasons why plan sponsors have not adopted investment advisory offerings in any meaningful way. Namely, that they have fiduciary concerns about the conflicts of interest associated with many prospective advice providers and that the costs to both sponsor and participants in finding and monitoring purely independent advice could be prohibitive." (Fiduciary Investor)
[Guidance Overview] Motion for Class Certification Denied in 401(k) Fee Case Against Plan Service Provider
Excerpt: "There are a number of lawsuits currently pending in the federal courts in which sponsors of 401(k) retirement plans are challenging their plans' recordkeepers' receipt of so-called 'revenue sharing' payments from mutual fund companies in which the plans' participants invest. In several of these, the plaintiffs are seeking class certification on behalf of all of the plans to which a specific recordkeeper provided services. On August 27, the United States District Court for the Southern District of Iowa issued the first of several anticipated rulings on these motions, denying the plaintiff's motion for class certification. A summary of the decision, and a copy of the decision itself, are attached [to the target page]." (Groom Law Group)
New Disclosure Regimen and the Difference Between Planners and Brokers
Excerpt: "Planners are facing considerable competition from brokers in the arena of retirement plans, and the reality that brokers typically don't work as fiduciaries is a thorn in planners' sides. Most clients aren't aware of this distinction; many of those who are don't seem to care. More clients might care if they were aware of differences in the sources of compensation behind the advice they receive. In the coming months, these differences between the two types of advice will probably become crystal clear. Under a proposed Department of Labor regulation pertaining to ERISA Section 408(b)(2), anyone who provides services to qualified pension or profit-sharing plans must provide significantly expanded financial disclosure." (Financial Planning)
[Guidance Overview] DOL's Proposed Regulations on Required Disclosures to Plan Participants (PDF)
4 pages. (Dechert LLP)
Fee Disclosure to Pension Participants: Establishing Minimum Requirements (PDF)
61 pages. Excerpt: "This analysis of fee disclosure takes into account insights from behavioral economics in assessing the usefulness of different approaches. Standardizing types of fees and formats in which they are presented would facilitate comparisons across different investment options. The report proposes a model fee disclosure. It creates a score card assessing the current fee disclosure in six countries: Australia, Canada, Chile, Sweden, the United Kingdom, and the United States. While the cost of greater disclosure has been raised as an issue, the evidence indicates that the cost borne by participants would be small." (Rotman International Centre for Pension Management)
[Guidance Overview] DOL's Proposals Under PPA Investment Advice Provisions (PDF)
8 pages. Excerpt: "DOL concluded that there are computer model programs available to IRA's that (i) utilize relevant information about the IRA beneficiary; (ii) take into account the 'full range of investments, including equities and bonds,' in recommending options for the IRA investment portfolio; and (iii) allow the IRA beneficiary sufficient flexibility in obtaining advice to evaluate and select investment options." (Sutherland)
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