Compliance December 11, 2012

DOL Proposes Abandoned Plan Use in Bankruptcy

The Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) proposed a rule to help Chapter 7 bankruptcy trustees distribute retirement plan assets.
Reported by

The proposal would allow such trustees to use EBSA’s existing Abandoned Plan Program to terminate, wind up and distribute benefits from such plans.

The existing Abandoned Plan Program provides streamlined termination and distribution procedures for abandoned individual account plans, including 401(k) plans, under which benefits may be distributed in a manner that can substantially reduce fees charged to participants’ accounts for things such as annual reporting, legal compliance and other administrative services, including termination costs. By making this streamlined process available to Chapter 7 bankruptcy trustees, the time and resources required to wind up a bankrupt company’s retirement plan can be reduced. As a result, plan participants likely will see fewer administrative and termination fees charged to their accounts and should have access to their money sooner.  

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“The rule we’re proposing today is designed to help workers and retirees of bankrupt companies gain access to their retirement money sooner,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “Far too often, the retired workers of these companies are unable to obtain their hard-earned retirement savings in a timely way. The legal status of a former employer should not impede retirees’ access to their own funds, especially at the very time they need them most.”

Under amendments in 2005 to federal bankruptcy law, if a company in liquidation administered an individual account retirement plan, the company’s Chapter 7 bankruptcy trustee must perform those functions. The Abandoned Plan Program, established in 2006, provides specific guidance on when a plan may be considered abandoned, who may make that determination, and exactly how to terminate the affairs of the plan and make benefit distributions. The program also limits potential fiduciary liability of financial institutions that step in to terminate and wind up plans that have been abandoned by their sponsors.

Read the proposed rule at http://www.dol.gov/find/20121211.

Products December 11, 2012

Lower Investment Minimums and Costs at Fidelity

Fidelity Investments dropped the investment minimums for 22 equity, fixed-income and enhanced index funds.
Reported by

Effective January 1, 2013, Fidelity also will reduce total net expenses on eight of its Spartan Index funds:  Spartan 500 Index Fund, Spartan Total Market Index Fund, Spartan Emerging Markets Index Fund, Spartan Global ex U.S. Index Fund, Spartan Mid Cap Index Fund, Spartan Real Estate Index Fund, Spartan Small Cap Index Fund and Spartan U.S. Bond Index Fund.   

For Fidelity’s 14 Spartan index funds, the Investor Class investment minimum will be lowered from $10,000 to $2,500, while the Fidelity Advantage Class will be lowered from $100,000 to $10,000.The Investor Class and Fidelity Advantage Class are retail share classes available to retail investors and retirement plans.   

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Investment minimums also were lowered for eight other Fidelity funds from $10,000 to $2,500. Those funds are the Fidelity Four-in-One Index Fund, Nasdaq Composite Index Fund, International Enhanced Index Fund, Large Cap Core Enhanced Index Fund, Large Cap Growth Enhanced Index Fund, Large Cap Value Enhanced Index Fund, Mid Cap Enhanced Index Fund and Small Cap Enhanced Index Fund.

«