Winter 2011
The Four Major Regulatory Events Of 2010
The retirement plans industry saw a great deal of legislative action in 2010. The Department of Labor and the Securities Exchange Commission in particular have been active with proposed or final regulations that will affect how qualified plans are administered. Below are links to four of the major regulatory events of 2010.
Fee disclosures
Formalized, consistent disclosure of retirement plan service fees to both plan sponsors and participants has long been a goal of the Department of Labor. On October 14, 2010, the Department released two sets of regulations outlining rules regarding fee disclosures from:
- service providers to plan sponsors and
- plan sponsors to plan participants.
These regulations are expected to give both plan sponsors and plan participants a better understanding of the costs associated with their plan. In turn, the Department expects that this information will enable sponsors and participants to make better choices among the investment alternatives and service providers available to them. View the document.
Fiduciary definition
The Department of Labor has issued proposed regulations intended to broaden the definition of fiduciary to include individuals who significantly influence investment-related decisions of plan fiduciaries. Additionally, the Securities Exchange Commission is evaluating whether and how to impose the higher fiduciary standards applicable to investment advisors and to brokers who provide investment advice. The likely result of these changes, if enacted, is that in certain circumstances many brokers, dealers and associated persons will be deemed to be fiduciaries for the first time. Such individuals will need to understand and adapt to any new rules. View the document.
Roth In-Plan Conversions
In late September 2010, the Small Business Jobs and Credit Act was signed that allows certain retirement plan participants to convert part or all of their pre-tax plan account balances into after-tax Roth plan balances. This change in 401(k) and 403(b) plans (and 457(b) plans in 2011) allows in-plan conversions to Roth after-tax status of certain non-Roth pre-tax balances such as balances from employee deferrals, profit sharing (employer non-elective) and employer matching. Before the legislation, such a conversion could only be done outside the plan via rollover to a Roth IRA account. Since September, the IRS has provided guidance through additional releases. View the document.
Disclosures for Qualified Default Investment Alternatives and Target-Date Funds
On Nov. 30, 2010, the DOL issued proposed regulations with additional, more specific, disclosure requirements for both Qualified Default Investment Alternatives (QDIAs) and Target Date Funds (TDFs). These proposed regulations amended those currently in place for QDIAs and participant fee disclosures. View the document.
