NDCC Speaks Out on Pending K Plan Legislation

February 8, 2002 (PLANSPONSOR.com) - In a position statement on the Enron case and the legislation being drafted in the wake of the company's bankruptcy, the National Defined Contribution Council said it opposes mandatory company stock caps and supports the Retirement Security Advice Act of 2001 (HR2269).

“Having appropriate investment advice available to employees, however, would be of limited value if there were unreasonable restrictions on the purchase or sale of company stock,” reads a statement by the provider organization.

“Employees should not be required to purchase company stock in their 401(k) with their payroll deferral contributions and plans should not impose unreasonable restrictions on the sale of company stock.  President Bush’s recommendation for a three-year vesting period may be a reasonable approach, but again, it may not be the best solution for all plans,” the statement reads.

Also, the NDCC warned against legislation that would discourage employers from offering retirement programs altogether, citing the possible administrative effects such legislation would have on sponsors.

Last, but not least, the organization defended blackouts saying that they are necessary to ensure a proper transition of records from one plan provider to the next. The NDCC agreed that reasonable notice of impending blackouts should be provided but stipulated that blackouts would become less of an issue in the future, as competition among providers will shrink the length blackouts dramatically.