Vote on 401(k) fee disclosure likely

Although Congress is expected to pass only few regulations this year focused on 401(k) retirement plans, fee disclosure is a priority that will likely see House votes this summer. Other than a few technical corrections to the Pension Protection Act, few bills are expected to make it through Congress that will impact retirement plans, said James Delaplane, partner in the Washington-based law firm Davis and Harman LLP, in videotaped remarks presented yesterday at the InvestmentNews Retirement Income Summit held in New York. More than 350 people attended the two-day conference. Among the technical changes to the PPA will be a mandatory plan provision that a non spouse beneficiary can roll money out of an inherited 401(k) into an IRA, Mr. Delaplane said. This will likely pass by late spring. While the House is expected to pass 401(k) fee disclosure legislation by early summer, the measure is not expected to make it through the Senate, Mr. Delaplane said. There are also several proposals which being introduced in the house which will likely be voted on in May or June. One bill, offered by Rep. George Miller, D-Calif., chair of the House Education and Labor Committee, would also require that retirement plans include passively managed index fund as part of its investment lineup. “That part of the bill has faced a lot of resistance,” Mr. Delaplane said. The U.S. Department of Labor also has three projects related to fee transparency. Hearings will be held March 31 and April 1 on the type of information that the plan service provider has to give an employer about fees. The issue of transparency also affects the disclosure about gifts from vendors, said Liz Valey, vice president and director of retirement policy at the Securities Industry and Financial Markets Association, a Washington-based industry organization. Many issues that Sifma is following include: proposed changes to Form 5500, which require the recording of gifts as well as proposals that affect materials distributed to plan participants. Sifma also weighed in recently on the SEC’s proposal for a short-form mutual fund prospectus. The organization joined with Investment Company Institute to request that the SEC not require quarterly reporting as part of this proposal, said Ms. Valey. Other regulatory issues that organizations are following include a recent Supreme Court decision which gives plan participants the ability to sue plan sponsors under certain conditions, said Dan Barry, director of government relations at the Financial Planning Association of Denver.