labor lawAdivision of labor law center

Employers have been invited to comment on new regulations regarding 401k and other retirement savings plans.

 

The US Department of Labor recently announced stricter rules for employers to follow in informing workers of options. These regulations are proposed at this point, however, they will become final beginning January 1, 2009. The proposed regulations were published in the Federal Register on July 23, 2008.

 

Employers can comment on the new regulations by mailing them to the US Department of Labor, Employee Benefits Security Administration, Room N-5655, 200 Constitution Avenue NW, Washington D.C. 20210, Attention: Participant Fee Disclosure Project.

 

Employer comments can also be emailed to  e-ORI@dol.gov or at www.regulations.gov.

 

The new regulations concern reporting of fees, expenses and investment options for 401k and other savings-based retirement plans. More than 65 million employees are currently covered under such plans – and all of their employers would be affected.

 

The regulations would require that employers furnish investment-related information in a comparative chart or similar format. The US Department of Labor will provide a model chart for complying with this requirement. In addition, plan administrators would be required to disclose basic information about the plan and investment options on a regular basis, repeatedly throughout the year. This information would include the procedure for changing investments, data on investment returns and fees, among others.

 

“Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of ‘legalese,’ about the investment options available under their plans, and that they would benefit greatly from having that information in a comparative format,” said US Secretary of Labor Elaine L. Chao. “One of the department’s top priorities is improved disclosure to workers that will give them the information they need to make informed investment decisions.”

 

In addition, the department is proposing conforming changes to its regulation under section 404(c) of the Employee Retirement Income Security Act.

“We want to help workers make the most of their 401(k)-type plans by ensuring that they are provided the information they need to make wise investment decisions,” said Bradford P. Campbell, assistant secretary for the Labor Department’s Employee Benefits Security Administration.

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1. Posted by: Kate

   Are there regulations concerning investment choices for 401ks? Specifically, if a 401k has no “cash” choice– either a money market or US Treasury Money Market or Ultra_SHort US Treasury money Market Fund choice, is it a violation of any kind?

2. Posted by: Madison

   Hi Kate! That’s really a timely question, considering the state of the stock market today. Unfortunately, no, there are no federal regulations that require an employer to offer a range of investment options, including bonds and cash, in the 401k. Until very recently, in fact, the majority of 401ks have offered a choice between mutual funds, mutual funds and mutual funds.

   In a few tragic cases, employers have offered few options except the company’s own stock for employee 401ks. (Enron is a very sad example.) Given the current financial situation, you will probably see employers offering more options, or employees reducing their contributions to 401ks in the short term. Thanks for an excellent question, and for reading the blogs!~ Madison

3. Posted by: GLORIA ROPERO

   Hi, I am no longer employed by a small doctor’s office. I am on SSI disability. My former employer will not release my 401K funds to me so I can roll it over into a CD and use some for accumulated expenses. I am 62 years old. Do I have the right to keep asking for my 401K money as they keep telling me it is frozen and I cannot have it as it will cut back on them making money without my share of it. Please responsd. I am desperate. Gloria

4. Posted by: Amelia

   Hi Gloria! Send your employer a certified letter (return receipt required) that states, due to financial hardship, you have to cash in your 401K. Keep a copy of the letter. Send it to the plan administrator, listed on your 401K statement. If money has been deducted from your paychecks to fund the 401k, that is your money and you are entitled to it. If you do not receive a check within 2 weeks, contact the ERISA. at http://www.dol.gov/ebsa/compliance_assistance.html This is the federal agency that enforces the law regarding 401ks. Unfortunately, sometimes employers steal money from an employee 401k, or misuse it. We hope that is not what has happened here, but the reluctance to pay your portion suggests that it might. For a more complete discussion, post a question on our sister site at http://www.laborlawtalk.com. HTH, and thanks for reading the blogs!~ Amelia

   PS. Please don’t type your posts all in capitals. It’s considered rude, like shouting, and we just have to retype them for you.