Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
June 10, 1996 01:00 AM

BOXER'S 401(K) BILL TO AFFECT FEW PLANS

Vineeta Anand
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    WASHINGTON - Only 1% of corporate defined contribution plans would be affected by a bill that would limit investment in employer-related assets.

    The bill, the 401(k) Pension Protection Act, was introduced last week by Sen. Barbara Boxer, D-Calif. It applies only to employer-directed plans funded with employees' pre-tax contributions.

    The 401(k) and profit-sharing plans for virtually all large corporations are employee-directed and wouldn't be covered by the bill.

    "It's a very small number of the market. Our data indicate that you are looking at maybe 1% of plans," or about 2,000 plans, said David Wray, president of the Chicago-based Profit-Sharing/401(k) Council of America.

    Under Ms. Boxer's bill, the employer-directed plans would be prohibited from investing more than 10% of assets in company securities or company-owned real estate. The bill wouldn't affect company stock options in employee-directed plans.

    If a plan is not an employee stock ownership plan and the company directs the investment of employee contributions, investment restrictions would apply. If a company gives employees a number of investment options but only matches the employee contributions in company stock, restrictions probably would not apply.

    Plans that combine a 401(k) plan with an ESOP probably would not be covered if employees don't have to invest in company stock. Such arrangements, known as KSOPs, are offered by only 2% of the 1,050 large companies surveyed last year by Hewitt Associates, Lincolnshire, Ill.

    Even defined contribution plans that meet the criteria for inclusion under Ms. Boxer's bill could be exempted. The exemption would apply if the supplemental plan assets were less than 10% of all pension assets maintained by the employer.

    The bill also would grandfather existing profit-sharing and 401(k) plans. However, the plans would not be able to make further investments in company stock nor reinvest dividends to buy more shares, according to Ms. Boxer's staffers.

    Ms. Boxer's legislation has very little chance of becoming law this year. She does not sit on the Senate Labor and Human Resources Committee, which has jurisdiction over the issue, and the Republican-controlled Congress is not likely to yield control over the agenda to Democrats in an election year. And because the bill has no tax implications, it cannot be rolled into the pension package being considered by the Senate Finance Committee.

    Also, employers - big and small - will almost certainly lobby hard to prevent the bill from getting further attention.

    "It amends ERISA, which always makes employers nervous," said Will Sollee Jr., attorney at Kirkpatrick & Cody and former Democratic counsel to the Senate Finance Committee. The Employee Retirement Income Security Act prevents traditional corporate defined benefit plans from investing more than 10% of their money in employer-related securities or real estate, but the law does not extend the same coverage to 401(k) and profit-sharing plans.

    Said Randolf H. Hardock, partner at Davis & Harman and a former benefits tax counsel at the Treasury Department: "My main concern here is it's a slippery slope. Once they start telling you what you can and can't do, it's social investing. There is a difference between investing in yourself and coins or derivatives."

    Ms. Boxer's legislation was prompted by her alarm over the number of Americans who have lost their nest eggs because their employers used retirement plans as company piggy banks.

    Ms. Boxer specifically referred to Color Tile Inc., Fort Worth, Texas, which shut down its stores and sought bankruptcy protection from creditors in January. Almost 85% of the company's only retirement plan - a 401(k) plan - was invested in company stores.

    "The employees are facing not only the loss of their jobs but their pension savings," Ms. Boxer said when she introduced her legislation last week. "If my bill had been law, Color Tile's pension plan would not be in jeopardy."

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    A Good Time for Trend Following
    Sponsored Content: A Good Time for Trend Following

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit