Gramm-Leach-Bliley Privacy Notices and 401(k) Plans

[Guest T C Farnam]

Has anyone seen anything granting a blanket exemption from "Privacy Notices" under GLB to qualified plans ?

It seems to us that all 401(k) plans MIGHT be covered by these rules, and it seems VERY likely that any plan which is obtaining financial information to support applications for loans and hardship distributions could be covered.

Thanks for your thoughts.

TCF

[Jon Chambers]

At a PSCA conference in San Jose yesterday, they indicated that it is likely, but not certain, that retirement plans are exempt from the requirement. Rationale was that GLLB is intended to apply to retail relationships, and retirement plans generally aren't classified as retail arrangements (I'm paraphrasing here). They indicated that neither DOL nor IRS intend to issue clarifying regs. They recommended that vendors sit tight for now, and do nothing, and see how things develop.

[Guest T C Farnam]

Of course the DOL and IRS aren't going to issue Regs. - this is a Federal Trade Commission issue, so they have no jurisdiction.

The problem is, how willing are we to expose our clients over this issue? Do you have ANY authority for the "wait and see" approach?

TCF

[Jon Chambers]

I'm just reporting what I heard. The way the PSCA guy positioned it was that since the issue was unclear, the PSCA had asked DOL and IRS for clarifying guidance, and that the response was that none would be forthcoming. It's pretty clear that as far as PSCA was concerned, there is no blanket exemption, and hence the issue is unclear. But their point was that it is likely that the industry's operational practices will be accepted to the extent that they don't obviously conflict with the law. If noone in the industry provides GLB notices, and the notices aren't definitively required, it is highly unlikely that everyone will be determined to be in violation of the law.

Their argument, not mine, but it seemed reasonable enough. Then again, I'm not an attorney. I'd follow up with PSCA (www.psca.org) if you have more questions.