By Susan Kelly
The federal government is trying company executives' patience. Again.
This time, it's the Department of Labor, which has yet to issue final regulations on default investments for 401(k) plans. And, according to some experts, it's going to be a couple more months.
What could be worse for some employers, stable-value funds are not likely to be included as a qualified default option. A recent Watson Wyatt survey showed that 27% of defined contribution retirement plans used a stable-value fund as their default investment.
"My own gut tells me that DOL will not go for stable value as a default option," James M. Delaplane Jr., a partner at Washington law firm Davis and Harman, told attendees during a speech Feb. 12 at Pensions & Investments' Defined Contribution Conference in Palm Beach Gardens, Fla.
He also said it's likely to take the Labor Department until April to put out the final regulations, which will take effect 60 days after being issued.
While not confirming Mr. Delaplane's time frame, a Labor Department official acknowledged the final rule on qualified default investment alternatives wasn't published by the mid-February deadline.
"We are making significant progress on the final rule, and we are working hard to publish it as close to the statutory deadline as possible, consistent with the legal requirements of the regulatory process," Bradford Campbell, acting assistant secretary of labor, said in an e-mail.
The default option regulations stem from the Pension Protection Act of 2006 and its provisions encouraging automation of 401(k) plans.
The PPA offers safe harbor from discrimination testing for companies that automatically enroll employees in their 401(k) plan and meet certain other requirements, including the use of a qualified default option.