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 distribution success.
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 various options.
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.