There’s a bill currently in Congress that would essentially remove fiduciary responsibility for small plan sponsors – and perhaps the need for retirement plan advisors.
The bill – H.R. 4523 – also known as the Automatic Retirement Plan Act of 2017 – was introduced by Rep. Richie Neal (D-MA) last December.
Among other elements (including requiring all employers above a certain size to offer a retirement plan with specific conditions), employers with fewer than 100 employees who participate in a new type of multiple employer plan (MEP) would basically be absolved of all fiduciary responsibility – including no responsibility for the selection and monitoring of the Pooled Plan Provider (PEP).
Under the requirements currently outlined in the legislation, employers would only be responsible for:
- meeting enrollment requirements (the legislation imposes a mandate on offering plans that meet certain standards, including automatic enrollment);
- transmitting contributions; and
- providing information to the PEP so that the plan can be administered.
What conditions are imposed fall largely on the PPP. Specifically, the PPP can receive no more than reasonable compensation (whatever that means), agrees to comply with the requirements applicable to a PPP under the legislation, agrees to take on the fiduciary liability with respect to the plan, and notifies the employer of the PPP’s obligations under the Pooled Employer Plan (PEP).
The Impact
Aside from the exposure of the plan assets and participants to the actions of potentially unvetted and unmonitored pooled providers, small employers who currently offer a stand-alone plan might well see this as a prime opportunity to move their plan to a PEP arrangement and thus eliminate their current fiduciary exposure – and perhaps the need for a retirement plan advisor.
The sponsor of the bill – Rep. Richie Neal (D-MA) – is a featured speaker at the upcoming NAPA DC Fly-In Forum (July 24-25). You’ll want to come hear what he’s thinking – and perhaps tell him what’s on your mind.
A limited number of delegates will be accepted. Submit your delegate application at napadcflyin.org.
The NAPA D.C. Fly-In Forum
July 24–25, 2018
PLEASE NOTE: Delegates to the Forum must:
- be a NAPA member;
- be responsible for $100M+ in plan assets, 10+ plans and 2,000+ participants; and
- have 5+ years of experience servicing retirement plans.
