DC industry experts are relieved by the Department of Labor's decision to change its guidance regarding self-directed brokerage accounts.
“We're pretty happy,” said Edward Ferrigno, vice president for Washington affairs at the Plan Sponsor Council of America. “We're pleased with the speed that the department acted.”
Robyn Credico, senior retirement consultant at Towers Watson, said: “It's good news for now. It takes the pressure off.”
The pressure was applied by a DOL guidance document issued May 7 covering fee-disclosure regulations. Industry members said one section would have required sponsors and providers to keep track of all investments within self-directed brokerage accounts, checking if any investments crossed certain thresholds based on participants' use.
If such a threshold were crossed, a specific brokerage account investment would be considered a designated investment alternative and thus subject to additional monitoring and fiduciary responsibility for sponsors, they said.
On Monday, the DOL issued revised guidance that removed the threshold formula.
The new guidance “is an extremely welcome development and seems to resolve the concerns that were raised,” Larry Goldbrum, general counsel of the SPARK Institute, wrote in an e-mail.
Lynda Abend, managing director of product development for New York Life Retirement Plan Services, said in an e-mail that “the guidance, as previously written, would have created a significant administrative burden. The revised guidance has mitigated our concerns,”
The DOL also left the door open for additional regulations covering brokerage accounts. “The department intends to engage in discussions with interested parties to help determine how best to assure compliance with these duties in a practical and cost effective manner, including, if appropriate, through amendments of relevant regulatory provisions,” the document said.
