Congress may consider fees, advice issues in retirement accounts

What’s up with retirement plans in Congress?

Several bills are pending in Congress regarding retirement plans. Business consultant Towers Perrin looked at some of them recently. Here’s a brief summary:

FEE DISCLOSURE

TITLE: 401(k) Fair Disclosure and Pension Security Act of 2009

NUMBER: H.R. 2989

DESCRIPTION: Includes professional investment advice and fee disclosure issues, but combines them in one bill with pension funding relief.

STATUS: On June 24, the House Education and Labor Committee approved by a vote of 29 to 17. On Oct. 1 the House Ways and Means Committee held a hearing.

____

TITLE: Defined Contribution Plan Fee Transparency Act of 2009

NUMBER: H.R. 2779

DESCRIPTION: Requires sponsors of 401(k) plans to provide employees — at enrollment time and quarterly with detailed information regarding plan investments and fees. Tax penalties would be imposed for failure to comply.

STATUS: Introduced on June 9 and referred to the House Ways and Means Committee.

____

TITLE: Defined Contribution Fee Disclosure Act of 2009

NUMBER: S. 401

DESCRIPTION: Requires service providers to disclose to plan administrators the services to be provided, the entities that will be performing such services, the expected total annual charges, relationships between parties with financial interests in the plan, and certain other information.

STATUS: Introduced on Feb. 9 and referred to the Senate Health, Education, Labor and Pension Committee.

INVESTMENT ADVICE

TITLE: Conflicted Investment Advice Prohibition Act of 2009

NUMBER: H.R. 1988

DESCRIPTION: Would preclude 401(k) providers from arranging investment advice unless the adviser uses a computer model certified as unbiased. Advisers may participate if they do not provide or manage any plan investments and do not receive fees from anyone marketing, selling, managing or providing plan investments unless the fees are the same regardless of advice.

STATUS: Introduced on April 21 and referred to the House Education and Labor Committee. On June 17, the Health, Employment, Labor and Pensions Subcommittee of the House Education and Labor Committee approved it by a 13-8 vote.

REQUIRED ACCOUNT DISTRIBUTIONS

TITLE: Untitled

NUMBER: H.R. 882

DESCRIPTION: Increases the age at which required minimum distributions must be taken from retirement plans to 75 from 70½.

STATUS: Was introduced on Feb. 4 and referred to the House Ways and Means Committee.

____

TITLE: Retirement Security Needs Lifetime Pay Act of 2009

NUMBER: H.R. 2748

DESCRIPTION: Provides certain tax benefits for annuities when used as part of an IRA or other qualified retirement plan. The bill also exempts annuities held in such plans from the rule that requires retirees to withdraw money from an account at age 70½.

STATUS: Introduced on June 8 and referred to the House Ways and Means Committee.