In May, I had the privilege of spending a one-on-one evening with Bradford P. Campbell. Brad was the Assistant Secretary for Employee Benefits Security of the United States Department of Labor (DOL), the official in charge of the Employee Benefits Security Administration (EBSA). Mr. Campbell was nominated by President George W. Bush as Assistant Secretary on May 3, 2007, and was unanimously confirmed by the United States Senate on August 3, 2007. He held the position until January 20, 2009.
Under Campbell’s leadership at EBSA, EBSA first proposed the recently finalized 408(b)(2) service provider disclosure and plan participant disclosure regulations addressing the transparency of 401(k) and other retirement plan fees. Campbell also issued the final QDIA regulation facilitating automatic enrollment of workers in their retirement plans, and a final regulation expanding participant access to professional investment advice. Earlier in his government service, Campbell assisted in developing and negotiating the Pension Protection Act of 2006, including provisions modernizing the prohibited transaction rules.
Fiduciaries in Focus:
Shielding Plan Fiduciaries from Participants’ Investment Losses
2012 is the year of a regulatory tsunami affecting plan sponsors at many different levels. As the dust settles, plan sponsors and consultants should refocus on the main issues at hand regarding defined contribution retirement plans: process and protection.
ERISA section 404(c) relieves the plan sponsor and other fiduciaries of defined contribution plans from liability for losses resulting from participants’ direction of their investments if certain conditions are met. Specifically, if the DOL 404(c) regulation is followed, an ERISA plan fiduciary will not be liable for the investment elections made by plan participants but will still be responsible for exercising prudence in the selection and monitoring of the investment products offered under the plan.
Compliance with ERISA section 404(c) regulation is voluntary. However, I have not met a plan sponsor, when properly explained the protection afforded under this section that did not want to take advantage of it.
2011 could prove to be a year of significant value for plan sponsors and their employees.
Summary: The reduction in Social Security payroll taxes is essentially a gain for American workers in their take-home pay. Sponsors of defined contribution retirement plans can take advantage of the reduced payroll deduction by encouraging employees to increase their plan contributions by a like amount, which could greatly improve their odds of saving enough for a secure retirement.
The U.S. Department of Labor (DOL) issued a final rule on July 13, 2011, under the Employee Retirement Income Security Act (ERISA) to extend and align the applicability dates for its retirement plan fee disclosure rules. The final rule extends by three months the applicability date of the DOL's interim final rule on fee disclosures by plan service providers to plan sponsors/fiduciaries (known as ERISA section 408(b)(2) disclosures), and aligns that regulation with its previously issued final rule on quarterly fee disclosures by plan sponsors to plan participants.
The final rule, published in the July 19, 2011, Federal Register, supersedes the DOL's interim final regulation under ERISA section 408(b)(2), published a year earlier in the July 16, 2010, Federal Register, which requires covered service providers of retirement plans to disclose comprehensive information about their fees and potential conflicts of interest to ERISA-covered plan fiduciaries. The regulation was to become effective with respect to plan contracts or arrangements for services in existence on or after July 16, 2011. The final rule moves the effective date to April 1, 2012.
On July 13, 2011, the U.S. Department of Labor (DOL) announced the extension of the fiduciary-level fee disclosure regulation issued under section 408(b)(2) of the Employee Retirement Income Security Act (ERISA). The new effective date is April 1, 2012, revised from Jan.1, 2012. The department's final rule, published in the July 19, 2011Federal Register, allows for coordination of the participant-level fee disclosure with the plan-level requirements under ERISA section 404(a)(5). (To learn more, see the SHRM Online article "DOL Aligns Deadlines for Retirement Plan Fee Disclosures.")