From the Hill to the Summit
ASPPA News from the Field
2012 ASPPA 401(k) SUMMIT
NEW ORLEANS (March 19, 2012) – The American Society of Pension Professionals & Actuaries (ASPPA) held their Annual Sales Conference at the Ernest N. Morial Convention Center. Monday’s sessions kicked off with an update on current retirement plan legislation and regulations. Brian Graff, CEO of ASPPA, and Michael Davis, Assistant Secretary of Employee Benefits at the Department of Labor, teamed up to provide this update.
Mr. Davis noted that his agency is very excited about the recently finalized Fee Disclosure regulations which will require that service providers proactively disclose fees to plan sponsors. This is of particular importance to small employers which don’t have the leverage or expertise to gather this information from their retirement plan vendors. In addition, the regulations will provide participants with a chart that allows for an “apples-to-apples” comparison of their investment choices.
In anticipation of these upcoming disclosures, Mr. Davis explained that many plan sponsors have already replaced funds in their plans with lower cost options.
Brian Graff raised the concern that many service providers still have questions about how to comply with these 
new regulations. For example, it is not clear how Model Portfolios, a fund of funds, would comply with the new rules as it relates to past performance disclosures. Mr. Davis announced that a Frequently Asked Question (FAQ) document will be released in a few weeks that will answer this and many other questions.
Another issue that the retirement plan community is concerned about is Non-monetary Compensation. For example, how does an advisor who attends a conference paid for by a financial institution disclose this to his or her client? Mr. Davis suggested that the Form 5500 methodology provide an outline as to how to comply. However, if the DOL received a specific question on Non-monetary Compensation, his office would provide an answer as part of the upcoming FAQ document.
Brian Graff and Michael Davis also discussed the pros and cons of complying with the new Fee Disclosure requirements using a Summary versus a Roadmap. The Summary would provide plan sponsors with a summary of plan fees. The Roadmap would instead provide for directions on where to find fee information within investment documents, such as a Fund Prospectus. Mr. Davis office will soon be soliciting comments from the retirement provider community as to which methodology they prefer.
With regards to electronic disclosure to plan participants, Mr. 
Graff gave an example of a nursing staff company with 20,000 remote employees. Under the current rules, it would cost $50,000 for this company to comply with the new regulations as the current electronic disclosure rules would require them to mail paper disclosures to their employees. Mr. Graff requested that the DOL re-consider these rules. Mr. Davis noted that his agency is concerned about older participants that are not electronically literate and must approach this issue in a balanced way.
Brian asked about the enforcement of these fee disclosure rules. Mr. Davis explained that the DOL is focused on education and outreach right now and then enforcement will follow.
Other topics discussed included the definition of a fiduciary and Multiple Employer Plans.
—Daniel Kravitz, CPC
President, Kravitz, Inc. and Cash Balance Online Inc.
ASPPA member since 1997
Category: Member Focus
