This week I asked readers what they’d most like to put on the regulatory resolution screen for the next six months.
“Clarity in regulations, surely you jest :),” noted one respondent. Nonetheless, there were responses, but w hat was most striking to me in this week’s results – the diversity of responses. Having said that, the most common choice – cited by nearly 27% – was some final answers on the qualified default investment alternatives, or QDIA. As one reader noted, “I think the whole automatic enrollment area including the QDIA issue needs to be addressed first as employers have an immediate issue here since employers hire new individuals and hence have potential new participants every day.”
Roughly 20% cited participant statement disclosures (lots of questions here – one reader noted, “Particularly re-examining the 45 day requirement for providing participant statements. Administratively difficult in the Balance Forward world.” Another observed, “First, I need to know what the definition of “participant direction” is; does it mean a self-directed brokerage account or can it mean a choice between a fixed and an equity pooled account? If it means the latter, the statement that investing 20% or more in a single investment doesn’t make much sense.”
Resolution on cash balance plans – certainly for the ones already out there (one reader pleaded, “Cash Balance Plans – PLEASE!” ) was an issue for one-in-five, while nearly 10% cried out for clarity on 409A distribution rules (one reader noted, “Since, in our case, it has gone on the longest, caused the most headaches and gray(er) hair my first choice would be 409A distributions (ending, once and for all, further “transition” relief) and finally setting something in “stone” ). A like number were anxious about reasonable fees (one reader cautioned, “we need to know or else the courts will be defining this one.).
It was interesting that no one cited the new adviser fiduciary standards (although one might argue that most of the clarity missing here seems to revolve around how these new arrangements will impact revenue flows).
My “starter” list of candidates wasn’t intended to be all-inclusive – still just about 15% opted for an option not on that list (“other”). Topping that “other” list was 403(b) regulations (one reader noted, “It’s been over 40 years since we’ve had updated regulations.” ), but also on this list were 404c, setting a safe harbor for deposit timing standards, 416 regs, Social Security, the Alternative Minimum Tax – and “ALL of the above”.
Also in that “other” category – the following observation: “The regulators need to start requiring financial education at every level starting in elementary school. It’s seems everything is moving to disengage the participant from paying attention and being involved. That’s exactly the opposite of what should be going on. If we made individuals accountable, we wouldn’t even need QDIAs. It’s amazing what can happen when you can get people to pay attention to some information. Just look the impact nutrition labeling is having on transfats.”
But this week’s Editor’s Choice goes to the reader who noted, “It doesn’t really matter; resolving one creates another.”
Thanks to everyone who participated in our survey!