A new whitepaper by Fred
Reish, an Employee Retirement Income Security Act (ERISA) attorney with Drinker,
Biddle & Reath, argues participant
education and sponsors’ fiduciary knowledge are both critical to plan
The whitepaper, “Empowering Participants – Plan Distributions
and the Plan Sponsor,” is being released this week in collaboration with
Empower Retirement. In the publication, Reish guides plan sponsors through the key issues that
participants face when comparing and choosing retirement options, with a
particular focus on regulatory activity related to educating participants on
The whitepaper finds one general concern among regulators is
that participants do not always understand and are not consistently receiving clear,
complete and unbiased information about their distribution alternatives when
they leave their jobs. Generally, participants have four choices, Reish says.
These are “leave their money in the employer’s plan; transfer their money to a
successor employer’s plan; roll their savings into an IRA [Individual
Retirement Account]; or take a taxable distribution.”
Not a big surprise, Reish says “clear and comprehensive
information” helps participants understand these approaches and feel more
confident in making distribution decisions. Included in the paper is a
discussion of regulatory goals including Financial Industry Regulatory
Authority rules governing the development of robust policies and supervisory
controls for provider call centers and representatives; Government Accountability
Office warnings about overly vague or technical information and aggressive IRA
marketing; and Department of Labor concerns about distribution and rollover
information, among other topics.
The authors of the paper explain that employers sponsoring
non-ERISA plans, such as governmental entities with 401(a), 403(b) and 457(b)
plans, as well as church plan sponsors, are also subject to fiduciary standards
under state law instead of ERISA. Non-ERISA fiduciaries also must be prudent in
their decisions and oversee their vendors and providers, Reish says, given that
many states have enacted specific statutes to impose requirements of fiduciary
conduct for governmental plans.
The paper also includes a sponsored review of Empower’s call
center procedures, performed by Drinker, Biddle & Reath. The examination
considered call center training and supervisory procedures. The paper contains
an in-depth look at the assessment of those functions.
For more information, visit www.empower-retirement.com.