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Rules and Income and Cyber, Oh My!

Like a plucky girl from Kansas, retirement plan professionals must face challenges of varying severity on the yellow brick road to retirement security. An expert panel at a May 1 session of the Plan Sponsor Council of America (PSCA) Annual Conference in Scottsdale, AZ discussed ways retirement plans and those who serve them can throw a bucket of water on those issues to make them melt away.

The panel was moderated by Tom Clark, Of Counsel at The Wagner Law Group. Other panelists included:

  • Krista D’Aloia, Vice President and Associate General Counsel, Fidelity Investments;

  • Marjorie Mann, Senior Attorney, NextEra Energy, Inc.; and

  • Nancy Gerrie, Co-Chair, Employee Benefits and Executive Compensation Practice, Winston & Strawn, LLP.

Gerrie also conveyed insights from former Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) Phyllis Borzi, who had been scheduled to be a part of the panel but was unable to do so.


Litigation can have a significant effect on plans and their administration — just ask the Department of Labor and a number of universities. But its effect, or course, is not limited to the macro — it can have a profound effect on an individual plan as well. D’Aloia noted that litigation has forced plan sponsors to make decisions in such a way as to reduce the risk that they will face litigation. Gerrie shed some light on why: It exacts heavy costs, not just financial, but also in terms of human resources and employee morale.

The panel offered some ideas on how better to nip the possibility of litigation in the bud. Mann said it is a must to have a schedule of meetings and reviews that are done systematically and thoroughly and are documented. “Be careful with language,” D’Aloia suggested; an illustration, she said, is the difference between telling participants that something will increase balances and tell them that something may increase balances.


The trend of plans removing retirement income options from plans has reversed, D’Aloia said. In fact, it’s reversed to such an extent, she said, that there’s growth not only in types of funds and accounts, but also in ways participants can be engaged in managing their money and preparing for their retirement. Those include:

  • a greater number of options by which participants can take control of their money and take distributions;

  • allowing participants to say what sources of income will be in which account;

  • target date funds (TDFs); and

  • managed accounts.

Gerrie shared that Borzi had hoped to issue guidance on lifetime income options during her tenure at the EBSA; however, this proved not to be possible. One impediment was that the federal Office of Management and Budget (OMB) wanted evidence that such guidance would induce participants to save more — but there wasn’t a lot of it. And the DOL also faced a lack of interest from plan sponsors in such guidance.

Mann offered some insight into that, remarking that the PSCA has heard from plan sponsors that they don’t want mandates. In addition, she said, some plan sponsors are sensitive about what type of education they are to provide, and oppose a one-size-fits-all approach.

The DOL’s approach, Gerrie reported, was to step back and take small steps, such as requiring that statements be given to participants to show what their lifetime income will be.

Plan sponsors are more interested in financial wellness, Mann said. Financial counseling, she said, can help participants develop good financial instincts and better equip them to determine the best way to take distributions. Employers, she added, and do not want to take undue responsibility for making choices for employees.


Cybersecurity, said D’Aloia, is a shared responsibility. All parties “need to understand that it is necessary to be careful about how much information to provide, and when, and to whom,” she said. But she also noted that employees sometimes object to procedures that increase security, according to some of the plan sponsors with which she works.

Clark posed questions that a plan administrator can consider in this regard:

  • Have you taken the time to educate yourself in this area?

  • Is personally identifiable information residing in a publicly available file or database?

  • Have you asked vendors what their policies and procedures are regarding security?

What’s very important to employers with which she has worked, Mann said, “is that service providers have robust systems.”