WASHINGTON BUREAU – James Klein today visited Capitol Hill to continue the battle against a looming “accidental fiduciary” problem.
The U.S. Department of Labor has proposed a definition of the term “retirement plan fiduciary” that is far too broad and could expose plan service providers to the risk of becoming plan fiduciaries without intentionally agreeing to take on fiduciary responsibility, Klein warned lawmakers.
If implemented as written, the definition could inhibit efforts to provide investment education and guidance for plans and plan participants, raise plan costs, and reduce the number of service providers willing to offer participants investment education and guidance, Klein testified.
The “increased cost and confusion attributable to the proposed regulation is a source of significant concern for our plan sponsors,” Klein said.
Klein, president of the American Benefits Council, Washington, spoke at a hearing organized by a subcommittee of the U.S. House Education and Workforce Committee.
The subcommittee organized the hearing to look at the challenges facing retirement plan sponsors, workers and retirees.
The Labor Department began drafting a new plan fiduciary definition that has been in place since the 1970s. Critics of the current definition say it is so narrow that it excludes many wrongdoers who have clearly swindled plans or plan participants by acting in what appeared to be a fiduciary role.
Some believe, incorrectly, that the Labor Department’s proposed update of the definition would affect only retirement plan service providers, or that concerns about the definition would primarily involve individual retirement accounts (IRAs).
“That is not the case,” Klein said, according to a written version of his remarks provided by the committee. “The proposed regulations raise very serious issues for plan sponsors.”
Members of Congress should help employers tell the Labor Department about “the dangers inherent in an