The Department of Labor published Wednesday a request for information on the use of brokerage windows, self-directed brokerage accounts and similar features in 401(k)-type plans.
Some 401(k)-type plans offer participants access to brokerage windows in addition to, or in place of, specific investment options chosen by the employer or another plan fiduciary, DOL explains. These “window” arrangements can enable or require individual participants to choose for themselves from a broad range of investments.
The RFI, which appears in the Aug. 20 edition of the Federal Register, includes the following questions: the scope of investment options typically available through a window; demographic and other information about participants who commonly use brokerage windows; the process of selecting a brokerage window and provider for a plan; the costs of brokerage windows; and what kind of information about brokerage windows and underlying investment options typically is available and disclosed to participants.
Comments are due Nov. 19.
The request comes after the DOL received questions about brokerage windows after publishing its 2012 regulation on participant-level fee disclosure, Field Assistance Bulletin 2012-02.
Phyllis Borzi, assistant secretary of Labor for the Employee Benefits Security Administration, said in a statement that DOL had “promised employers and other plan sponsors and fiduciaries that we would look into the use of brokerage window features,” adding that the RFI’s goal is to “determine whether, and to what extent, regulatory standards or other guidance concerning the use of brokerage windows may be necessary to adequately protect participants’ retirement savings.”
Fred Reish, partner and chairman of the financial services ERISA team at Drinker Biddle & Reath, told ThinkAdvisor that because of the “uproar” created by a question and answer about participant disclosures in the 2012 bulletin, “the guidance was reissued as 2012-02R and the controversial answer was dropped.”