The Worker Investment and Retirement Education Act (S. 2190) incorporates several of the provisions from other bills already introduced. For example, it incorporates the language of the Bingaman-Collins investment advice bill (S. 1677), which would offer a safe harbor liability for plan sponsors that offer qualified, independent investment advice
The bill would require 30 calendar days notice before any blackout period of three or more business days, but it would also require that workers be informed of the expected length of the blackout.
Worried about bad ‘hand-offs?’ For blackouts that are due to a change in plan administrators, the transferor must turn over the data within 30 calendar days – if the plan has more than 20% of its total assets in company stock. However, the Secretary of Labor may modify or waive these requirements for small businesses, unforeseen circumstances, or companies involved in mergers or acquisitions.
And for publicly-traded companies, no insider trades would be allowed during any suspension of the ability of plan participants or beneficiaries to sell employer stock. Finally, the bill would create an Office of Pension Participant Advocacy, directed by a Pension Participant Advocate, at the Department of the Treasury.
However, the bill also calls for:
- an annual document offering basic guidelines for retirement investing to be developed each year by the Secretary of the Treasury, in consultation with the Secretary of Labor, and given to each participant in a defined contribution plan
- companies with 100 or more workers to provide a personalized benefit statement to every covered worker, describing a worker’s total accrued and vested benefits, the distribution of their retirement assets among different investments, and other personalized information to help workers know if they are adequately preparing for their retirement
- participants in plans other than Employee Stock Ownership Plans (ESOPs) to no longer be required to buy company stock with their own contributions, and where employees choose to invest their contributions in company stock, they would be able to transfer those balances at the same time they are allowed to change other allocations
The bill would also introduce a series of diversification requirements designed to allow participants to transfer funds from company stock investments at a pace faster than currently provided, even for ESOPS. Furthermore, participants would be allowed to diversify all stock at age 55, regardless of tenure.
Once the worker reaches age 55, the employer would be required to provide an annual, written notice of the right to diversify to each worker. For all plans except ESOPs, participants with more than 20% of their retirement plan assets invested in company stock would be required to be given a notice recommending that the worker seek professional investment advice.
The bill would allow employers to continue to deduct dividends paid on stock in an ESOP or KSOP (matching or otherwise) in accounts that workers under age 55 are allowed to diversify each year, for the remainder of that year, and the following two years.
The provisions in this bill shall become effective for plan years beginning on or after January 1, 2003.