In a notice on its website, the U.S. Department of Labor announced the extension of the applicability date of the fiduciary-level fee disclosure regulation issued under ERISA section 408(b)(2) until April 1, 2012. The Department had previously proposed to extend the applicability date only until January 1, 2012.
The DOL also announced an amendment to the applicability date of the participant-level fee disclosure regulation. Initial participant-level disclosures must now be made no later than 60 days after the first day of the plan year beginning after November 1, 2011; or if later, 60 days after the effective date of the fiduciary-level fee disclosure regulation.
Previously, the Department had proposed a 120-day transition period to provide the initial participant disclosures. The final rule is available here. http://www.dol.gov/ebsa/pdf/extensionofapplicabilitydatesfinalrule.pdf
and a fact sheet for it here. http://www.dol.gov/ebsa/newsroom/fsimprovedfeedisclosure.html
This delay doesn't change our views on the matter. Ultimately consumers should know what they pay for all goods and services and Plan Sponsors who are engaged in a trust arrangement, which all Qualified Plans are, further have an obligation to determine the reasonableness of a contract or arrangement.
In the absense of knowing all compensation arrangements, how can one determine that an arrangement is reasonable? The delays, nonetheless, are frustrating, another small win for the lobbyists.
Thursday, July 14, 2011
Wednesday, July 6, 2011
MEP's - Mediocre Employer Protection.....Just Kidding
Actually, the purpose of this post is in response to those seeking some "opinions" on whether MEP's, Multiple Employer Plans, are a good idea or not. The pros/cons are out there, on the pro's side is potential economies of scale and, theoretically, increased fiduciary protection. It has been this author's contention that the MEP is not a silver bullet (as has been sold by various MEP sales people), but isn't a bad idea necessarily. There is a place for all creative designs in the marketplace.
We believe that with a contained, related group of employers and the proper service providers in place, that a MEP structure can work quite well. Think about that small group of franchise owners who are related, but don't have a good employee benefit while the main franchise has a very strong one. Assuming the vendors can work with the group to allow it to be feasible from a cost perspective, this group could benefit quite well from a MEP structure.
That said, although an Employer who adopts a MEP plan for their employees is giving up 'Named Fiduciary' status, meaning they will no longer be the named Plan Sponsor or the Named Administrator or Named Trustee, we believe they will still be a fiduciary under ERISA and will have some remaining obligations. Specificully, under the definition of a fiduciary, ERISA §3(21) has 3 parts. Two of those parts deal with the ability to or the actual excercising of discretion over plan assets. It is under this formal definition that an employer who adopts a MEP is still a fiduciary. Ultimately, at their discretion they are opting into and may opt out of the MEP and this is an excercise of control over plan assets. Therefore, they are still a fiduciary and still have quite a bit of residual responsibilities and risk.
Recently, a series of opinions and subsequent postings have appeared that provide the user with some cautionary advice on MEP programs. See these two links, one from ASPPA and one from The Law Offices of Ilene H. Ferenczy, LLC.
http://www.asppa.org/document-vault/pdfs/asaps/2011/11-22.aspx
https://app.e2ma.net/app/view:CampaignPublic/id:18861.7106427767/rid:fcf0ab2197415e4f2bd0df8fc3501b8c
Interestingly, these are more from the administrative point of view, but also site DOL opinions and a recent discussion held between members of the DOL and IRS with members of the Govt. Action Committee (GAC) of ASPPA. The result is a stated opinion that many of the so-called MEP programs out there wouldn't qualify as MEPs at all because many of the employers are unrelated and therefore fail to meet the qualification. Under those scenarios, if discovered, those plans would be required to file their own 5500's, test separately, have their own fiduciaries, etc. This is VERY different than the way that these increasingly popular "open-end" MEPs are being sold in the marketplace. I think this is a good case of 'Buyer Beware'. The employers are buying a Panacea or Cure-All for their responsibilities, but in reality they aren't gaining much, if anything.
As always, we welcome any differing view points or clarifications. Please, nothing commercial or it will not be posted.
We believe that with a contained, related group of employers and the proper service providers in place, that a MEP structure can work quite well. Think about that small group of franchise owners who are related, but don't have a good employee benefit while the main franchise has a very strong one. Assuming the vendors can work with the group to allow it to be feasible from a cost perspective, this group could benefit quite well from a MEP structure.
That said, although an Employer who adopts a MEP plan for their employees is giving up 'Named Fiduciary' status, meaning they will no longer be the named Plan Sponsor or the Named Administrator or Named Trustee, we believe they will still be a fiduciary under ERISA and will have some remaining obligations. Specificully, under the definition of a fiduciary, ERISA §3(21) has 3 parts. Two of those parts deal with the ability to or the actual excercising of discretion over plan assets. It is under this formal definition that an employer who adopts a MEP is still a fiduciary. Ultimately, at their discretion they are opting into and may opt out of the MEP and this is an excercise of control over plan assets. Therefore, they are still a fiduciary and still have quite a bit of residual responsibilities and risk.
Recently, a series of opinions and subsequent postings have appeared that provide the user with some cautionary advice on MEP programs. See these two links, one from ASPPA and one from The Law Offices of Ilene H. Ferenczy, LLC.
http://www.asppa.org/document-vault/pdfs/asaps/2011/11-22.aspx
https://app.e2ma.net/app/view:CampaignPublic/id:18861.7106427767/rid:fcf0ab2197415e4f2bd0df8fc3501b8c
Interestingly, these are more from the administrative point of view, but also site DOL opinions and a recent discussion held between members of the DOL and IRS with members of the Govt. Action Committee (GAC) of ASPPA. The result is a stated opinion that many of the so-called MEP programs out there wouldn't qualify as MEPs at all because many of the employers are unrelated and therefore fail to meet the qualification. Under those scenarios, if discovered, those plans would be required to file their own 5500's, test separately, have their own fiduciaries, etc. This is VERY different than the way that these increasingly popular "open-end" MEPs are being sold in the marketplace. I think this is a good case of 'Buyer Beware'. The employers are buying a Panacea or Cure-All for their responsibilities, but in reality they aren't gaining much, if anything.
As always, we welcome any differing view points or clarifications. Please, nothing commercial or it will not be posted.
Friday, June 3, 2011
Surprise! Another Delay - Fee Disclosure Revisited....again...
Over the last year or so, we’ve been keeping tabs on the rules surrounding fee disclosure in all of its forms current and newly proposed. Specifically, the new proposals are the final 408(b)(2) disclosures and the Participant fee disclosure rules under ERISA §404(a)(5). The 408(b)(2) rules have been delayed twice and are currently due to come into effect on January 1st, 2012. In a filing just published at the Federal Register, the U.S. Department of Labor has officially proposed the previously discussed extension for those 408(b)(2) regulations. The Federal Register filing formally effectuates that intent.
The new announcement in this filing is that the DOL stated it would propose an amendment to the participant level fee disclosure regulation which would provide a 120-day transition period (instead of 60 days) to provide the initial participant disclosures. However, it does not appear there will be any extension provided for quarterly expense disclosures. According to the DOL release , a calendar year plan would have to furnish the initial participant disclosures no later than April 30, 2012. The quarterly expense disclosures required by paragraphs (c)(2)(ii) and (c)(3)(ii) of the regulation (e.g., quarterly statement of fees/expenses actually deducted) would have to be furnished no later than May 15, 2012.
In essence, this gives the service providers an extra quarter to get into compliance. Not a big deal, but worth noting as in previous posts we referenced Q4, 2011 and now it will be Q1, 2012.
The new announcement in this filing is that the DOL stated it would propose an amendment to the participant level fee disclosure regulation which would provide a 120-day transition period (instead of 60 days) to provide the initial participant disclosures. However, it does not appear there will be any extension provided for quarterly expense disclosures. According to the DOL release , a calendar year plan would have to furnish the initial participant disclosures no later than April 30, 2012. The quarterly expense disclosures required by paragraphs (c)(2)(ii) and (c)(3)(ii) of the regulation (e.g., quarterly statement of fees/expenses actually deducted) would have to be furnished no later than May 15, 2012.
In essence, this gives the service providers an extra quarter to get into compliance. Not a big deal, but worth noting as in previous posts we referenced Q4, 2011 and now it will be Q1, 2012.
Thursday, May 19, 2011
Strong Words from EBSA Regarding 408(b)(2) Compliance
Fil Williams of the DOL's EBSA recently stated at the Mid-Atlantic Benefit Conference on May 5, 2011: “…for those employers to whom the new Section 408(b)(2) rules do apply, responsible plan fiduciaries ultimately will be obligated to terminate contracts or arrangements with service providers that do not comply.”
Even though the DOL has aready postponed the final 408(b)(2) regulations once, they are scheduled to become effective January 1, 2012. This along with the new participant disclosure regulation (effective in November 2011) will make for a busy Thanksgiving, end of year, for retirement plan services providers.
An associate of ours at Unified Trust, Pete Swisher, recently published a column in the ASPPA Summit Newsletter addressing the regulations and six ways to prepare your practice by November. It is available by clicking here.
Even though the DOL has aready postponed the final 408(b)(2) regulations once, they are scheduled to become effective January 1, 2012. This along with the new participant disclosure regulation (effective in November 2011) will make for a busy Thanksgiving, end of year, for retirement plan services providers.
An associate of ours at Unified Trust, Pete Swisher, recently published a column in the ASPPA Summit Newsletter addressing the regulations and six ways to prepare your practice by November. It is available by clicking here.
Tuesday, May 17, 2011
ERISA Trumps everything…..
In the latest edition of Investment News Weekly, they published an article called ‘401(k) rights trumped by ERISA', linked here http://www.investmentnews.com/article/20110515/REG/305159996.
This was an unusual article to see published in a general information publication like Investment News, unusual in that it deals with a highly specific legal ruling dealing with Participant, Spousal and Named Beneficiary rights in a death situation.
The gist of the article is that the participant named his three children as beneficiaries to his 401(k) Plan in the event of his death. He did so properly using a beneficiary form and did so after the passing of his first wife, so spousal consent was unnecessary at the time the form was completed. Flash forward some time later and he remarries, doesn’t update the form, and six weeks later passes away. The new wife (now a widow) is now in a legal battle as to who has rights to the 401(k) assets. The children say they do as they were named on the form, the spouse says she does because she never waived her rights to the assets. The court sided with the spouse and based on the facts/circumstances listed in the article seems to be the appropriate decision.
The important takeaway here is that ERISA (which is our rule book) trumps everything! It may have been the deceased participant’s wishes to award the assets to his children, but it doesn’t matter. The rules state that a spousal waiver must occur otherwise the wishes of the participant are irrelevant. It doesn’t stipulate in this rule as to whether or not the participant was, in fact, married when he/she filled out the form!
Often I’m asked by financial advisors where/how they can add value and earn their fee. This question is often posed in the context that my firm acts as a Discretionary Trustee and we make 100% of the Investment Decisions for plans which is often an area that financial advisors provide service.
This is a great example of how an advisor can add value to a plan. It isn't sexy, but it is very effective. If the advisor stays front and center with the participants of the plans that they are serving and understands the rules of the game, than they can ensure current and complete forms, that intentions are being followed and situations like the one above, however uncommon, don’t occur. This article can be a great sample of a scenario that can be presented to Plan Sponsors as to where/how advisors value is earned and there are a million other small ways like this that are part of the service.
By the way, aiding in this manner is not a fiduciary act, so for those Registered Reps out there who aren’t permitted to act as fiduciaries, there is still a way to build a value proposition and not provide fiduciary services directly yourselves.
This was an unusual article to see published in a general information publication like Investment News, unusual in that it deals with a highly specific legal ruling dealing with Participant, Spousal and Named Beneficiary rights in a death situation.
The gist of the article is that the participant named his three children as beneficiaries to his 401(k) Plan in the event of his death. He did so properly using a beneficiary form and did so after the passing of his first wife, so spousal consent was unnecessary at the time the form was completed. Flash forward some time later and he remarries, doesn’t update the form, and six weeks later passes away. The new wife (now a widow) is now in a legal battle as to who has rights to the 401(k) assets. The children say they do as they were named on the form, the spouse says she does because she never waived her rights to the assets. The court sided with the spouse and based on the facts/circumstances listed in the article seems to be the appropriate decision.
The important takeaway here is that ERISA (which is our rule book) trumps everything! It may have been the deceased participant’s wishes to award the assets to his children, but it doesn’t matter. The rules state that a spousal waiver must occur otherwise the wishes of the participant are irrelevant. It doesn’t stipulate in this rule as to whether or not the participant was, in fact, married when he/she filled out the form!
Often I’m asked by financial advisors where/how they can add value and earn their fee. This question is often posed in the context that my firm acts as a Discretionary Trustee and we make 100% of the Investment Decisions for plans which is often an area that financial advisors provide service.
This is a great example of how an advisor can add value to a plan. It isn't sexy, but it is very effective. If the advisor stays front and center with the participants of the plans that they are serving and understands the rules of the game, than they can ensure current and complete forms, that intentions are being followed and situations like the one above, however uncommon, don’t occur. This article can be a great sample of a scenario that can be presented to Plan Sponsors as to where/how advisors value is earned and there are a million other small ways like this that are part of the service.
By the way, aiding in this manner is not a fiduciary act, so for those Registered Reps out there who aren’t permitted to act as fiduciaries, there is still a way to build a value proposition and not provide fiduciary services directly yourselves.
Monday, May 9, 2011
Coming Soon.....Participant Fee Disclosure!!!! Get your helmets on....
What exactly is it that get’s Retirement Plan Professionals, advisors and service providers alike, so worried about when it comes to Fee Disclosure? That’s a bit rhetorical, as I suspect the answer is mostly obvious for those who read this blog. In the last year or two, the anxiety level regarding fee disclosure has been quite apparent. As a clarifying point for those who are unaware, there are TWO sets of fee disclosure rules. The implementation date of one of these, commonly referred to as the 408(b)(2) fee disclosure rules, has been postponed to 01/01/12 (at the time of this writing), and perhaps will be again. The other set of rules are the new rules under ERISA §404(a)(5), commonly referred to as ‘Participant Disclosure’. These rules are going to be effective for the 4th Qtr. of 2011, right around the corner. Surprisingly and confusing to me, even though these are the more difficult set of rules, these seem to be the one’s that fewer practitioners are worried about.
The 408(b)(2) rules are getting a lot more industry attention, perhaps this is due to how much the industry has historically done to disguise fees, that it is going to be incredibly difficult to accurately show clients how to follow the money trail. Perhaps it is because this is the rule that makes Broker/Dealers and Insurance Company’s a little squirmy due to that little requirement where the service providers have to declare if their acting as a fiduciary or not. Whatever the reason is, the practical reality is that some difficult discussions (and maybe decisions) will happen between service providers and clients. But this is a difficult business, and I believe that ultimately most of the good practitioners will get through it with most of their client relationships intact.
However, participant disclosure……that’s a whole other scenario, and it’s happening first!!!! This article, by David McCann from CFO Magazine does a good job of thousand footing the situation.
http://www.cfo.com/article.cfm/14570384/c_14570395
I, and most practitioners I know believe that the majority of participants have no idea what the retirement plan costs are and many think that they are getting a free benefit, that they pay nothing for their 401(k). This is a systemic issue. Most 401(k) mouse traps in the market, historically, have been designed to disguise fees from the participants. The group annuities (and Collective Funds) unitize the investments and thus are embedding fees into the unit prices. Many mutual fund platforms are often registered rep distributed, and their compensation is in the expense ratio, but also built into share prices, not to mention implicit revenue sharing arrangements. Even environments where the fees are deducted as line item expenses from participant accounts will often not be explicitly disclosed. For the participant to discover these charges, they will have to search for these deductions online in the form of a customized transaction report.
As a result, the new participant disclosure rules will 100% create a HUGE amount of phone calls, complaints to everyone and anyone associated with creating and managing their plan. Frankly, I think, it will cause a large quantity of plans, big and small, to search out new providers. For proactive practitioners, this is absolutely an opportunity. Advisors who aren’t in front of this are going to have to back pedal as the business owners and CFOs start getting questioned by staff. As Mr. McCann says in his article……..consider yourself warned!
The 408(b)(2) rules are getting a lot more industry attention, perhaps this is due to how much the industry has historically done to disguise fees, that it is going to be incredibly difficult to accurately show clients how to follow the money trail. Perhaps it is because this is the rule that makes Broker/Dealers and Insurance Company’s a little squirmy due to that little requirement where the service providers have to declare if their acting as a fiduciary or not. Whatever the reason is, the practical reality is that some difficult discussions (and maybe decisions) will happen between service providers and clients. But this is a difficult business, and I believe that ultimately most of the good practitioners will get through it with most of their client relationships intact.
However, participant disclosure……that’s a whole other scenario, and it’s happening first!!!! This article, by David McCann from CFO Magazine does a good job of thousand footing the situation.
http://www.cfo.com/article.cfm/14570384/c_14570395
I, and most practitioners I know believe that the majority of participants have no idea what the retirement plan costs are and many think that they are getting a free benefit, that they pay nothing for their 401(k). This is a systemic issue. Most 401(k) mouse traps in the market, historically, have been designed to disguise fees from the participants. The group annuities (and Collective Funds) unitize the investments and thus are embedding fees into the unit prices. Many mutual fund platforms are often registered rep distributed, and their compensation is in the expense ratio, but also built into share prices, not to mention implicit revenue sharing arrangements. Even environments where the fees are deducted as line item expenses from participant accounts will often not be explicitly disclosed. For the participant to discover these charges, they will have to search for these deductions online in the form of a customized transaction report.
As a result, the new participant disclosure rules will 100% create a HUGE amount of phone calls, complaints to everyone and anyone associated with creating and managing their plan. Frankly, I think, it will cause a large quantity of plans, big and small, to search out new providers. For proactive practitioners, this is absolutely an opportunity. Advisors who aren’t in front of this are going to have to back pedal as the business owners and CFOs start getting questioned by staff. As Mr. McCann says in his article……..consider yourself warned!
Tuesday, April 12, 2011
Stirring the Pot - Washington D.C........ugh
In case you weren't paying attention to what's happening in Washington these days as pertains to the Pension industry, I thought I'd post some information from my sources and some thoughts on it.
1.)Chairman Ryan’s proposed Budget Resolution On April 5, 2011 Chairman Paul Ryan (R-WI) introduced his 2012 budget resolution. The House Budget Committee’s Fiscal Year 2012 Budget Resolution as drafted is controversial to say the least. The resolution would privatize Medicare, turn Medicaid into block grants to states, repeal the health reform bill passed by the last Congress and cut $6.2 trillion in government spending over 10 years.
The budget resolution was passed out of the House Budget Committee on a party line vote last Wednesday after a marathon markup, and is scheduled to hit the floor of the House on Thursday of this week. A budget resolution is not a bill and will never be law. It is designed to be an outline or roadmap of what priorities and policies the author(s) want to further. This resolution is void of details on tax reform, although Ryan’s more detailed ‘Path to Prosperity” plan that underlies his budget proposal fills in some details. Most importantly for Retirement Plan practitioners, Ryan’s plan would eliminate capital gains taxes, perhaps unintentionally encouraging employers to invest outside of a 401(k) plan rather than incur the limits, cost and heavy regulations attached to qualified plans.
2.)Tax Reform Bill Introduced On April 7th, Senators Wyden (D-OR), Coats (R-IN) & Begich (R-AK) introduced the first official senate tax reform bill of the 112th Congress. The bill is a re-make of last year’s bill by Wyden and Senator Judd Gregg (R-NH), who has since retired, and includes RSA’s (with the current $5,000 IRA limit on contributions) and a $2,000 per year LSA-type account, plus a modest reduction in tax rates. The bill, S.727, also proposes to eliminate a number of tax expenditures including exclusion of benefits under cafeteria plans, fringe benefits, meals and lodging but none directly related to the employer provided retirement plans. Senator Wyden is on the Senate Finance Committee, but the Republican cosponsors are not, and so it is not expected that the Finance Committee will take up this specific proposal.
3.)Tax Reform, Aging and Retirement Plans Both Senate Finance and the Senate Special Committee on Aging held hearings in the last month on issues related to tax reform and retirement plans. On March 30th the Senate Finance Committee held a hearing titled “How Do Complexity, Uncertainty, and other Factors Impact Responses to Tax Incentives.” The hearing took a long distance look at the complexity of the entire tax code, saving more detailed examination of specific issues, such as retirement savings for a later date. The Aging Committee looked at the potential danger of securities lending of retirement investments, their lack of any reporting or oversight requirements and the fact that participants are not informed of this practice in a hearing titled “Securities Lending in Retirement Plans.”
Upcoming hearings include an April 12th hearing in the Senate to discuss what foreign tax codes might offer as examples as America changes its own code. Two hearings are scheduled for April 13th: A Senate Finance hearing titled “Perspectives on Deficit Reduction” and a House Ways and Means Committee hearing on the tax codes’ impact on individuals and families titled “How the Tax Code’s Burdens on Individuals and Families Demonstrate the Need for Comprehensive Tax Reform.”
O.K......
Some thoughts on the above govt. initiatives. Firstly, it is clear that this congress (like many before it) is highly focused on tax issues, balancing the budget and long term improvements in the tax system. Obviously, practicing retirement plan consultants, like myself, are intimately aware that Retirement Plans have a huge cost in current tax revenue for the U.S. Govt. In recent years, with a spotlight on the shortcomings of the system, Retirement Plans have become fertile ground for proposals to improve the system, some reasonable, some not-so-much (even a serious proposal to eliminate 401(k)s altogether). In this new batch of information, there are some potentially extreme and industry-damaging proposals including eliminating retirement plan deductions completely and/or limiting contributions to a $20k max from both employer and employee sources as well as the revitalized argument against Cross-testing (New Comparability) in Qualified Plans.
This author is against anything that would reduce benefits to participants or damage an industry that is continuously working hard to improve the services delivered and has written to his local congressman expressing opinions as to the usefulness of plan design features such as New Comparability. Further, as an American, I believe that the marketplace dictates what services/costs are necessary and reasonable, and am generally against anything that repeals benefits that are clearly good for working Americans even if they are being used as efficiently as they could be.
1.)Chairman Ryan’s proposed Budget Resolution On April 5, 2011 Chairman Paul Ryan (R-WI) introduced his 2012 budget resolution. The House Budget Committee’s Fiscal Year 2012 Budget Resolution as drafted is controversial to say the least. The resolution would privatize Medicare, turn Medicaid into block grants to states, repeal the health reform bill passed by the last Congress and cut $6.2 trillion in government spending over 10 years.
The budget resolution was passed out of the House Budget Committee on a party line vote last Wednesday after a marathon markup, and is scheduled to hit the floor of the House on Thursday of this week. A budget resolution is not a bill and will never be law. It is designed to be an outline or roadmap of what priorities and policies the author(s) want to further. This resolution is void of details on tax reform, although Ryan’s more detailed ‘Path to Prosperity” plan that underlies his budget proposal fills in some details. Most importantly for Retirement Plan practitioners, Ryan’s plan would eliminate capital gains taxes, perhaps unintentionally encouraging employers to invest outside of a 401(k) plan rather than incur the limits, cost and heavy regulations attached to qualified plans.
2.)Tax Reform Bill Introduced On April 7th, Senators Wyden (D-OR), Coats (R-IN) & Begich (R-AK) introduced the first official senate tax reform bill of the 112th Congress. The bill is a re-make of last year’s bill by Wyden and Senator Judd Gregg (R-NH), who has since retired, and includes RSA’s (with the current $5,000 IRA limit on contributions) and a $2,000 per year LSA-type account, plus a modest reduction in tax rates. The bill, S.727, also proposes to eliminate a number of tax expenditures including exclusion of benefits under cafeteria plans, fringe benefits, meals and lodging but none directly related to the employer provided retirement plans. Senator Wyden is on the Senate Finance Committee, but the Republican cosponsors are not, and so it is not expected that the Finance Committee will take up this specific proposal.
3.)Tax Reform, Aging and Retirement Plans Both Senate Finance and the Senate Special Committee on Aging held hearings in the last month on issues related to tax reform and retirement plans. On March 30th the Senate Finance Committee held a hearing titled “How Do Complexity, Uncertainty, and other Factors Impact Responses to Tax Incentives.” The hearing took a long distance look at the complexity of the entire tax code, saving more detailed examination of specific issues, such as retirement savings for a later date. The Aging Committee looked at the potential danger of securities lending of retirement investments, their lack of any reporting or oversight requirements and the fact that participants are not informed of this practice in a hearing titled “Securities Lending in Retirement Plans.”
Upcoming hearings include an April 12th hearing in the Senate to discuss what foreign tax codes might offer as examples as America changes its own code. Two hearings are scheduled for April 13th: A Senate Finance hearing titled “Perspectives on Deficit Reduction” and a House Ways and Means Committee hearing on the tax codes’ impact on individuals and families titled “How the Tax Code’s Burdens on Individuals and Families Demonstrate the Need for Comprehensive Tax Reform.”
O.K......
Some thoughts on the above govt. initiatives. Firstly, it is clear that this congress (like many before it) is highly focused on tax issues, balancing the budget and long term improvements in the tax system. Obviously, practicing retirement plan consultants, like myself, are intimately aware that Retirement Plans have a huge cost in current tax revenue for the U.S. Govt. In recent years, with a spotlight on the shortcomings of the system, Retirement Plans have become fertile ground for proposals to improve the system, some reasonable, some not-so-much (even a serious proposal to eliminate 401(k)s altogether). In this new batch of information, there are some potentially extreme and industry-damaging proposals including eliminating retirement plan deductions completely and/or limiting contributions to a $20k max from both employer and employee sources as well as the revitalized argument against Cross-testing (New Comparability) in Qualified Plans.
This author is against anything that would reduce benefits to participants or damage an industry that is continuously working hard to improve the services delivered and has written to his local congressman expressing opinions as to the usefulness of plan design features such as New Comparability. Further, as an American, I believe that the marketplace dictates what services/costs are necessary and reasonable, and am generally against anything that repeals benefits that are clearly good for working Americans even if they are being used as efficiently as they could be.
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