Congress Urged To Avoid Knee-Jerk Reaction In Enron’s Wake
Insurance agents and business groups are urging Congress to avoid placing undue restrictions on defined contribution plans in the wake of the collapse of Enron Corp., Houston.
“The Enron situation has certainly focused attention on 401(k)s and the general issue of retirement security,” said Dave Evans, vice president of retirement and financial planning for the Independent Insurance Agents of America, Alexandria, Va.
“However, we urge Congress to be careful because the devil is in the details,” Evans said at a recent House Education and Workforce Subcommittee hearing.
From IIAA’s perspective, he said, the major issue is a proposal to cap a “blackout” period for 401(k) plans. The blackout period involves a specified time following a change in 401(k) plan recordkeepers in which participants cannot change the account investments.
Evans noted that the blackout period exists so that the new recordkeeper can fully reconcile participant balances as reported under the previous recordkeeper with the information provided by the bank or investment managers’ statements.
The problem, Evans said, is that an artificial cap on the length of the blackout period would create a serious burden for smaller plans.
Larger retirement plans, he said, given the sophistication of their resources, can complete the reconciliation task in about two weeks.
However, for smaller employers, the task can take several weeks, Evans said.
In separate testimony before the House Ways and Means Subcommittee on Oversight, James A. Klein, president of the American Benefits Council, Washington, agreed (see D.C. Dispatch on p. 34.)
Reproduced from National Underwriter Life & Health/Financial Services Edition, March 11, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.