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GAO Issues Plan Fiduciary Report

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Officials at the U.S. Government Accountability Office says vague fiduciary responsibility guidelines may lead to gaps in 401(k) plan oversight.

When picking and overseeing plan investment menus, sponsors have to comply with Employee Retirement Income Security Act fiduciary obligation requirements, Barbara Bovbjerg, a GAO director, writes in a letter describing the GAO’s views sent to Rep. George Miller, D- Calif., chairman of the House Education and Labor Committee.

“Plan sponsors face challenges in fulfilling their obligations when fiduciary roles are not clearly defined or when sponsors lack important information about arrangements between service providers,” Bovbjerg writes.

In some cases, Bovbjerg says, plan sponsors and service providers have disagreed about whether the sponsors have successfully delegated investment selection fiduciary responsibility to the providers.

The U.S. Labor Department wants sponsors to get information about service providers’ compensation arrangements and potential conflicts of interest, Bovbjerg notes.

The Labor Department has tackled fiduciary concerns by investigating reports of questionable 401(k) plan practices, collecting information from plan sponsors, and making efforts to educate plan sponsors about their responsibilities, Bovbjerg writes.

Bovbjerg points to a recently proposed Labor Department rule concerning service provider disclosure requirements as another example of the department’s attempts to address fiduciary concerns.

The GAO is not making new fiduciary responsibility recommendations at this time, Bovbjerg writes.

“We previously suggested that Congress amend ERISA to (1) explicitly require 401(k) service providers to disclose to plan sponsors the compensation they receive from other service providers and (2) give Labor authority to recover plan losses against certain types of service providers,” Bovbjerg writes.


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