WASHINGTON BUREAU — Insurance industry and benefits groups are trying to change a retirement plan fee disclosure section now in H.R. 4213.
The provision, proposed by Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, is part of the Promoting American Jobs, Closing Tax Loopholes and Preventing Outsourcing Act of 2010, which is now being debated in the House.
The Miller proposal would expand the U.S. Department of Labor’s fee disclosure authority over all types of self-directed retirement savings plans, according to officials at the National Association of Insurance and Financial Advisors, Falls Church, Va. Today, the department has jurisdiction over 401(k) plans, but not over 403(b) plans and 457 plans.
The bill would impose new fee disclosure obligations on defined contribution plan service providers, and it would expand the range of plan investment and fee information that defined contribution plan administrators must give plan participants.
The current version of the bill does not include provisions that would require inclusion of an index fund in defined contribution plan investment menus and or revise defined contribution plan investment advice rules. The current version also leaves out a proposal that could have let state and local government 457 plans include a traditional-to-Roth conversion feature. That feature could have let plan participants pay taxes on plan assets today but receive distributions later free of federal income taxes.
The requirements in the bill would take effect for plans years beginning after Dec. 31, 2011, and for existing contracts in effect Jan. 1, 2012.
The effective date for adoption of these new rules is unworkable given the need for extensive regulatory guidance, according to officials at the American Benefits Council, Washington.
The Labor Department has spent years developing fee disclosure regulations. NAIFA says Congress should give the department time to complete its regulations before stepping in.
“Our understanding is that many members of Congress would have preferred to wait to see the DOL fee disclosure regulations that are in the works to come out before determining whether legislation was needed to address shortcomings,” NAIFA President Thomas Currey says.
“Since we are not privy to the substance of the DOL regulation currently under study, we are not able to address differences in Rep. Miller’s proposed legislation and the proposed DOL regulation,” Currey says.
H.R. 4213 as a whole could pass in the House as early as Wednesday, but observers say it may stall in the Senate. Backers want the Senate to pass the bill by Friday.
That deadline is important because Congress leaves for a 10-day Memorial Day recess Friday. H.R. 4213 contains extensions of small business tax cuts that expired in December 2009, as well as long-term extensions of programs such as the 65% COBRA health benefits continuation subsidy.