In a recent PLANSPONSOR Plugged In Web cast, Lisa Alexander, Chief, Division of Coverage, Reporting & Disclosure in the Office of Regulations and Interpretations at the Employee Benefit Security Administration of the Department of Labor, said her office is working on a Q&A document to assist in implementing the regulations.
One point Alexander stressed now however, is that transition notices to employees on what investment will be a plan’s designated QDIA and on the intention to grandfather stable value funds that were previously default investments must be issued by November 24 in order to enjoy the protections provided by the regulation as of its effective date – December 24 (for more on those notices, see IRS to Publish Sample Notice for Auto Enrollment Arrangements ).
Alexander said the Q&A document will likely provide more guidance on what effect notice dates will have on the grandfather rule for stable value funds.
Attorney Fred Reish, partner at Reish, Luftman, Reicher, & Cohen, another Web cast panel member said, in addition to new questions prompted by the final regulations, he feels there are points in the regulations that are being overlooked.
Reish pointed out:
- Age is a factor in all three long-term QDIA choices.
- A fiduciary does not have to determine which QDIA is the most prudent choice. Reish said this is a “tremendous fiduciary relief.”
- The most likely fund choice for the 120-day capital preservation fund QDIA will be money market investments because stable value funds usually involve long-term contracts.
- Trustees included in the list of eligible QDIA investment mangers, do not include self-trusteed plans.
Reish also indicated there are plan sponsors now wondering if they can choose a QDIA based on the demographics of one group of employees (i.e. those over age 40) and a different QDIA based on another employee demographic (i.e. those under age 40). Alexander said such as choice is not prohibited by the regulation, but is also not required.
Alexander added that discussions and questions prompted by the final regulations may lead to the development of other investment vehicle types, and she said the Department of Labor is totally supportive of that.
align=”center”> A recording of the Plugged In webcast is available here
align=”center”> A copy of the slideshow presentation is available here