Evidently, less is not more when it comes to investment advice in 401(k) plans.
The comment period for the proposed, streamlined new rule that the Department of Labor came out with in March (see “DOL Rule Emphasizes Independent 401(k) Advice,” MME 3/8/10), has ended, and the Employee Benefits Security Administration will now examine the 70 comment letters it received and issue a new regulation on advice in 401(k) plans possibly as early as the fall.
That was the news from Phyllis Borzi, assistant secretary of labor, speaking at the Investment Company Institute’s General Membership Meeting in Washington on Friday.
Borzi noted that investment advice in defined contribution plans has been EBSA’s “most controversial regulation, having already been debated by two or three Congresses.”
Advice in 401(k) plans has proven so thorny, Borzi noted, that it was the final item in the Pension Protection Act, “with the debate focused on who should be able to provide investment advice—and that it be reliable, simple, understandable and relevant advice.”
Effectively, the PPA of 2006 changed ERISA, and since then, the “dispute has been as to the nature of the safeguards to provide advice that is independent of the plan,” Borzi said.
“This is a very controversial regulation. It was published on the day the new administration took office, and we took a fresh look. The comment period closed two, three days ago,” Borzi said on Friday. “We have received 70 comment letters and have promised Congress we will be faithful to the intent of the original statute.”