Hosting an industry conference? Ask us about including it in this ticker?
What do you think of our site upgrade?

ICI Memo Reveals What the Industry Wants the ERISA/401k Fiduciary to Disclose

September 30
01:59 2009

The ERISA/401k fiduciary may think they want more disclosure from the industry, but an industry group is telling the U.S. Department of Labor (DOL) to require the fiduciary to disclose more to plan participants. Oddly enough, by encouraging the DOL to more strictly define such disclosure, fiduciary liability may be decreased.

The DOL’s ERISA Advisory Council, seeking testimony with regards to Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries, recently heard from Lisa Hund Lattan of American Century Investments, who is the incoming chair of the Pension Committee of the Investment Company Institute (ICI).

The ICI issued this written statement making the following recommendations:

• DOL and IRS, working together, should find ways to streamline and consolidate existing notices in a way that will focus participants on the key information they need to make the decisions required of them under the plan while ensuring more detailed information is available and can be referenced when needed.
• DOL should consolidate information as much as possible in the Summary Plan Description (SPD), which should serve as the “owner’s manual” for the plan.
• Regulators should encourage use of a “quick start” guide upon enrollment, which provides key information from the SPD together with information about investment options, in plain language.
• DOL should modernize its electronic delivery rules to allow plans and service providers to harness the “layered” structure of the Internet so that participants can access exactly the level of information that suits them. The effort should be done jointly with IRS to harmonize the electronic disclosure rules of both regulators.

One of the biggest liability risks facing the ERISA/401k plan fiduciary derive from the inability to properly disclose and educate plan participants. The primary reason for this gap may be due to lack of specifics from the DOL regarding plan document contents and distribution of key information to participants. The suggestions offered by the ICI should help remedy this gap.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Only registered users can comment. Login is sponsored by…

Order Your From Cradle to Retirement book today!

Vote in our Poll


The materials at this web site are maintained for the sole purpose of providing general information about fiduciary law, tax accounting and investments and do not under any circumstances constitute legal, accounting or investment advice. You should not act or refrain from acting based on these materials without first obtaining the advice of an appropriate professional. Please carefully read the terms and conditions for using this site. This website contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that may be provided by or through such websites.