DOL Believed To Be Examining New 403(b) Guidance

Sunday 05 September

On March 10, 2010, the U.S. Senate passed theAmerican Workers, State, and Business Relief Act of 2010 (H.R. 4213). This legislation includes ASPPA’s Roth conversion proposal – a key priority of ASPPA’s Government Affairs Committee. ASPPA’s proposal would permit plans to offer conversion of otherwise distributable 401(k) and 403(b) account balances to a Roth account in the plan instead of requiring transfer to a Roth IRA to complete a conversion.

DOL Believed To Be Examining New 403(b) Guidance - Emii.com

DOL Believed To Be Examining New 403(b) Guidance

04-26-2010 | Source: Fund Action

The Department of Labor may provide guidance on 403(b) sponsor fiduciary responsibilities regarding participant annuity investments, private sector ERISA lawyers predicted last week.

Speaking without attribution, one attorney pointed to DOL guidance already made available on 403(b) sponsors filing of Form 5500 via Advisory Opinion letter 2010-OIA sent to TIAA-CREF and said this could be followed up by departmental comments on what plan fiduciaries had to do about investment choices. Labor press staff did not return calls by press time.

Fiduciaries for 401(k) plans are required to offer investment options, monitor them and remove those which are not appropriate. In the altogether different 403(b) environment, workers have been accustomed to using their account assets to buy annuities in transactions with insurers without involvement by the plan sponsor. At the moment it is not clear what fiduciary role could exist.

The worst case scenario,said another lawyer, would be if Labor said the insurance company picked the annuity the participant bought so the insurance company is the fiduciary. Alternatively, he speculated, the department might come out with some kind of guidance that just directed the sponsor, in cases where an unsuitable annuity has been selected by the employee, to recommend that the worker try something else that would be more appropriate.