Compliance July 18, 2008

House Panel OKs Auto Enrolling New Fed Workers

A House Committee approved a measure to auto enroll new federal workers in the Thrift Savings Plan with a 3% deferral.
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The bill approved by the House Oversight and Government Reform Committee would also designate the TSP’s Government Securities Fund, known as the G Fund, as the default investment option. As is typically the case in auto enrollment, federal workers would have the opportunity to opt out of the plan.

Chairman Henry Waxman (D-California) sponsored the Thrift Savings Plan Enhancement Act (H.R. 6500), which also provides for a Roth IRA option within the TSP and gives the Federal Retirement Investment Board the authority to add new investment options without additional Congressional approval.

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Some board members have contended they would prefer the historical checks-and-balances arrangement with required prior approval by Congress.

In addition, the measure would require the TSP to include a Roth Individual Retirement Account option.

At a June 30 joint meeting of the board and the Employee Thrift Advisory Council (ETAC), participants expressed support for automatic enrollment of new federal employees into the TSP.

Compliance July 18, 2008

Law Firm Gears Up for Potential IndyMac Suit

Class action law firm Keller Rohrback kicked off an investigation of allegations that IndyMac Bancorp executives breached their fiduciary duties by keeping company stock in their 401(k) plan when doing so was no longer prudent.
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A Keller Rohrback news release said the probe of potential Employee Retirement Income Security Act (ERISA) violations focuses on the IndyMac Bank, F.S.B. 401(k) Plan.

The firm said it is looking into “specifically, (whether) IndyMac continued to make and maintain investment in IndyMac stock despite the company’s apparent mismanagement of the risk of assets held by the company and its gross failure to maintain adequate capital and liquidity.”

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The U.S. Office of Thrift Supervision (OTS) closed the Pasadena, California.-based IndyMac and turned it over to the Federal Deposit Insurance Corp. (FDIC).

The move represented the biggest bank failure in years, as IndyMac is the second-largest mortgage lender in the United States and the seventh-largest savings and loan, with $32-billion in assets and $19-billion in deposits.

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