SURVEY SAYS: Will the ICI Proposals Make a Difference?

November 6, 2003 (PLANSPONSOR.com) - Last week, the Investment Company Institute (a mutual fund industry trade group) came out with three proposals to help restore confidence to the industry.

One was for mutual fund companies to tighten their internal ethics codes on any personal trading by mutual fund employees.   But the other two have implications for retirement plans, retirement plan providers, and retirement plan participants (see  Mutual Fund Proposal No “Treat” for Retirement Plans  ).   This week, we asked readers their opinions of the proposals.

With seven possible responses, the answers were, as expected, rather diverse.   The most popular response, given by 36%, was that the proposals, if enacted, seemed likely to make a bad situation worse.   Simplistically, one of the two proposals would require that mutual fund trades be delivered to the mutual fund complex by 4 p.m. ET(most daily valuation programs in place now take participant instructions up till that time, but forward the totals on to the mutual fund company after that time).   That proposal has drawn most of the attention from the provider community to date.   However, the other, which might actually be more visible to participants, calls for a 2% redemption fee on ALL mutual fund sales of units bought within the prior 5 days.

Shift Shrift

Regarding the4 p.m. ETshift, one reader (obviously familiar with the process) noted, Recordkeepers already have strict controls on cutting off all trade origination before4PM. Most recordkeeping systems need the end of day NAV before they can complete the posting process which then creates the actual trade records. The recordkeepers would have to shut down all systems for accepting trades (IVR, call centers, etc.) by 11AM ET or 8AM PT in order to process the transactions, create the trade file, and submit to the NSCC in order to make the NSCC’s cycle #18 by 2:30PM ET, which is the last cycle to get to the funds by 4PM. In addition, if a participant wanted to sell shares and reinvest in another fund, in today’s world, that transaction can be done same day, with a zero net settlement. With the proposed change to a4PMcutoff, the participant will be out of the market for an entire day in order to process this transaction.”

More than one in five ( 21% ) of this week’s respondents thought that the proposals would have multiple impacts, while roughly 8% said that the proposals made things easier for the mutual fund companies – and harder for everyone else.   One noted, “Most of them do not carefully consider the millions of dollars that would be spent in the recordkeeping and trading industry to comply with new trading arrangements.   Those costs will lead to higher overhead and be passed along to plan sponsors and participants, further discouraging plan sponsorship.   At least one insider said to me that he did not care what the cost would be — public confidence was the critical objective.”   

No Big Deal

On the other hand, nearly 13% said it wouldn’t be a big deal since, as one reader said, “most participants don’t trade very often anyway” – and more than 10% said that they would have no impact (that could be good and/or bad, I suppose).   About 8% said that the proposal would never be enacted, while 5% found our six possible responses inadequate to the task, instead opting for “other/none of the above,” frequently, it seems, because they were supportive of one or the other proposal, but not both, including the reader who said, “…I definitely don’t like the second proposal.   I wouldn’t have a problem with moving slightly away from daily transactions.” 

One reader who thought the 4 p.m. change would be a good thing said, “I think the MOST important reform is a firm4 PMEastern Time cutoff for ALL purchases and sales.   Retirement plans which aggregate purchases and submit them later than4 PMwould just have to do it earlier in the day. If some orders are done the next day, big deal; it’s supposed to be a LONG TERM retirement plan, folks!”

“Split” Decisions

What was most interesting to me was that while providers (at least those I could identify as providers) were almost uniformly opposed to the proposals (particularly the 4 p.m. delivery), plan sponsors seemed to be relatively ambivalent about the impact of the changes – mostly because they said participants didn’t trade frequently.   A frequent criticism of the 4 p.m. delivery was the lack of evidence that these programs are violating the late-trading rules (and recordkeepers have controls in place to prevent that).   A larger concern – that imposing it would undermine the competitiveness of unbundled offerings – was expressed by several, including this reader: “The4 pmproposal for trades will provide a distinct advantage to recordkeepers with a large stable of proprietary funds, and disadvantage those sponsors, participants, and recordkeepers who offer an open architecture. Since most recordkeepers don’t begin their nightly processing until after prices are received, and no mutual funds provide prices before4pm, it will be virtually impossible for participants to get a same-day price for the transactions they request today, no matter what time that transaction is requested.   We might as well go back to monthly valuation….”

One reader observed, ” All of your survey questions had a negative bent toward the ICI action.  

Why?”   Well, I suppose (in retrospect) that I should have added a choice that said the proposals would fix the current problems…except I don’t think even the ICI sees them as a perfect solution, just the best means currently at hand, according to their assessment.   Anyway, I apologize for not providing an “it will make things better” option.  

However, this week’s Editor’s Choice goes to the reader who opined, ” …the actual problems seem to be occurring within the fund companies, so I don’t see that this proposal addresses the real problem area. Someone needs to keep an eye open for foxes in the chicken coop.”

As to how the proposals would affect the participants in our Company sponsored 401(k) plan, I would have to say (e) not a big deal since most participants don't trade very often anyway.   Our plan only offers a trading window on one day a week.   But, what troubles me most is our consistent effort to legislate morality.   No matter how many rules and regulations we implement (and I don't mean to imply that they're not necessary), we'll still have those who will find opportunities to bend or outright break the rules.   It's a matter of the heart, really.   You're Wednesday Wisdom was very apropos - "Money dishonestly acquired is never worth its cost, while a good conscience never costs as much as it is worth."

Thanks for the great job you do!


(f) More than one above.

I definitely don't like the second proposal.   I wouldn't have a problem with moving slightly away from daily transactions.   I am hoping that all this attention will force mutual fund companies to review and tighten up their operating structure, procedures, standards and policies. Unfortunately, I don't have a lot of faith in the government to come up with a balanced solution rather than a reactive, over kill, solution.


F as b will cause d


WHY DO YOU ASK THESE HARD QUESTIONS SO EARLY IN THE MORNING? PROBABLY (E)


The ICI recommendations will make a bad situation worse. The main one I have an issue with is the one requiring all mutual fund trades to be placed at the mutual fund by 4PM. This would be disastrous to the recordkeeping industry and ultimately harmful for millions of participants.

Recordkeepers already have strict controls on cutting off all trade origination before 4PM. Most recordkeeping systems need the end of day NAV before they can complete the posting process which then creates the actual trade records. The recordkeepers would have to shut down all systems for accepting trades (IVR, call centers, etc.) by 11AM ET or 8AM PT in order to process the transactions, create the trade file and submit to the NSCC in order to make the NSCC's cycle #18 by 2:30PM ET, which is the last cycle to get to the funds by 4PM. In addition, if a participant wanted to sell shares and reinvest in another fund, in today's world, that transaction can be done same day, with a zero net settlement. With the proposed change to a 4PM cutoff, the participant will be out of the market for an entire day in order to process this transaction. There are many other ramifications to this proposed change, these are just a few worth mentioning.



(b) Making a bad situation worse.

The Mutual fund companies have a responsibility to self monitor.   They should not penalize the fund holder again with the redemption fees.  


'E'

We have about $40 mil in our plan and there is probably less than 100,000 traded in any one month (maybe even over 6 months)


"Alleged" reform proposals will make a bad situation worse!


It all sounds confusing to me.   I would say it would make a bad situation worse (B) and possibly (D), not likely to be enacted.


I'm confused about how the redemption fee would work for 401k plans. Ordinarily, I personally make trades for asset allocation reasons, so it would not be too difficult to wait 5 days after a purchase to make a sale. But don't 401k plans pass through an aggregate net buy or sell daily?   I don't see how that could be made to work equitably.   Or am I missing something?


(g) none of the above/other   To enact this legislation would be like taking an home Early Pregnancy Test an hour after having sex and expecting the test to be effective and the results, accurate.   It's too early to tell what else will be revealed that could impact the mutual fund industry.


I think it will be a combination of (c) not likely to have much impact and (e) not a big deal since most participants don't trade very often anyway.


F - in particular, B, C and D.

The proposal to cut off trading at 4 PM I believe has some merit in this electronic age when participant transactions could be cut off just a few minutes prior to 4 PM to allow transmissions to investment companies to be completed prior to 4 PM. This restriction would tend to limit the opportunity for improper after-hours trades. However, the actual problems seem to be occurring within the fund companies, so I don't see that this proposal addresses the real problem area. Someone needs to keep an eye open for foxes in the chicken coop.

As for the 2% redemption charge, this solves nothing, causes major headaches for everyone and unnecessarily imposes a costly monitoring burden on recordkeepers. This proposal has no "redeeming" value.

The obvious alternative is consistently applied after-hours share value adjustments, as are already successfully utilized by many companies.


Having managed a large recordkeeping transfers for Chase Manhattan, I have always provided management consulting advice that reflects the significant fiduciary risk with "bundled" recordkeeping and investment practices.

How does a fiduciary prudently accept the risk of a Putnam type situation that once it occurs is difficult to solve because of:

  • a) Low recordkeeping fees; and
  • b) The difficulty of recordkeeping transfers

(b) Making a bad situation worse

I have never been a proponent of Mutual Funds - call it woman's intuition- but I saw something like this coming years ago. Equities are the way to go. Since that's not reality in a retirement plan, the Mutual Fund houses to have their carpets rolled back and vacuumed underneath. Once again, the little people (as Leona Helmsley likes to call us) have to pay the price for the abuse of the wealthy. The mutual fund companies need to have strict audit controls in place to avoid market timing. They should be the ones to build reports that tag individual abusers and report and fine accordingly. The rest of the participants should not have to bear


Seems to me that mutual fund managers and related fund "insiders" should have reporting requirements similar to those imposed on corporate executive officers, such as the SEC's Section 16 requirements.   That would mean blackout periods, reporting requirements, time limits, and all related difficulties imposed on these folks.  


I'm going to go with (c) for both halves of the question.   I really don't see much of an impact form either.  

Both seem to sort of evade an underlying issue of participant education.   It looks like the industry is trying to protect the participants from themselves or others using the brilliant strategy of selling when the market takes a big upswing and buying it back as soon as all the intuitional investors take their short term profits.   I believe most "investors" who try to market time figure out in very short order they miss as many as they hit.   It will be interesting to see what unintended consequences fall out from the proposed regulations like the one suggested in your question.   I believe any regulations the industry sets up should be mandated by necessity to properly manage and run the fund investments.   Anytime you try to regulate behavior for some perceived greater good the chances of hurting the ones trying to make a legitimate transaction from personal need is too great.   It should be okay for investors to do stupid things, that's the only way some will ever learn.    


Don't know about a) thru e), but it does seem that the same scenario repeats itself over and over again.   The unscrupulous continually find ways to beat the "system", whether that be savings and loan debacles, accounting and financial reporting misdeeds, mutual fund trading rules, etc., etc., etc.   They eventually get caught (usually after making a fortune), and the part of the population who attempts to live morally, endures the suffering of cleaning up the mess and having to live with less freedom than before.   Nothing will change unless we start to truly value honesty, integrity, patience, respect for others, and self-discipline over greed, envy, selfishness and egotism.   IMHO...it won't happen in this world.


I liken the ICI proposals to squashing a flea with a sledgehammer. The proposal as it stands creates numerous problems:

1)       The redemption fees could be imposed on a participant attempting to take a hardship withdrawal, distribution or a loan.   Does this make sense?

2)       And by the way, who is the beneficiary of the redemption fee - the Fund, or the Fund Company????

3)       The 4pm proposal for trades will provide a distinct advantage to record keepers with a large stable of proprietary funds, and disadvantage those sponsors, participants and record keepers who offer an open architecture. Since most record keepers don't begin their nightly processing until after prices are received, and no mutual funds provide prices before 4pm, it will be virtually impossible for participants to get a same-day price for the transactions they request today, no matter what time that transaction is requested.   We might as well go back to monthly valuation.....


(b)    Making a bad situation worse.   Possibly (d) if the legislature eventually understands how 401(k)'s operate and small mutual fund investors start complaining.

Nevin, I will confess, I do not understand why something it is legal to do even if unethical is producing civil and possibly criminal charges.


I am opposed to the approaches that I have seen to solve the problem that are causing the mutual fund scandals.   Most of them do not carefully consider the millions of dollars that would be spent in the recordkeeping and trading industry to comply with new trading arrangements.   Those costs will lead to higher overhead and be passed along to plan sponsors and participants, further discouraging plan sponsorship.   At least one insider said to me that he did not care what the cost would be -- public confidence was the critical objective.   My response is that these changes will not substantially affect public confidence.   Where there is money, there will be crooks.   I don't believe that some of the regulatory agencies are concerned with catching crooks and prosecuting them for such white collar crimes, based upon track records.   They will not supervise themselves.   Like the CEO of Strong, they drop one job and go to another without really paying for their crimes.

If there were serious and substantive penalties -- lifetime bans from the industry, jail time, more fines and audits by the regulatory agencies, or close down their companies for really egregious violations -- those types of things would make more of an impact than eliminating late trading for retirement plans...   Another alternative -- give Elliott Spitzer more staff and authority to go after the fund companies and insurance companies, and force them to clean up their acts.


I would say b) making a bad situation worse.   This would be severe overreaction to a problem that needs to have a well thought-out, feasible, workable (emphasis on workable) solution.   It needs to start with the fund companies monitoring (and punishing) their own employees.


My response would be (A) - this will have a major impact on the recordkeeping systems and trading platforms that have been developed over the last 5 years.   Very bad news for us in the business!


My vote is "d" -- hopefully these won't be enacted as proposed.   Our lobbying groups are trying to provide input that will temper the harshness of these suggestions.

Let's deal with the issues separately.   Making recordkeepers shut off their systems earlier in the day so that they can balance and reconcile will create a disadvantage for the participants.   It's like throwing out the baby with the bathwater.   If audits are necessary to police the policies of the recordkeepers, then arrange for these to happen.   Don't punish millions of hard working individuals who invest in retirement plans for the greed of a few firms who took advantage of a privilege.

If market timers are hurting the masses, then rather than a redemption fee, how about a proposal which limits round trips.   If you transfer in -- no transfer out for xx days (where xx is 5 or 8 or 10).   Recordkeepers can generally identify a deposit from a transfer.   Recordkeepers can generally monitor competing fund rules.   This proposal would extend some of the existing functionality for a different use and would eliminate the need for the redemption fees.   It would seem the easiest to manage.   Too bad they aren't considering it.


I think the answer is (f): more than one.

I don't expect the ICI proposals to be enacted, I also don't think they would have much impact, and they wouldn't matter because most participants don't trade much anyway.

In my personal opinion (not my company's, as I don't know their position on this), I think the MOST important reform is a firm 4 PM Eastern Time cutoff for ALL purchases and sales.   Retirement plans which aggregate purchases and submit them later than 4 PM would just have to do it earlier in the day. If some orders are done the next day, big deal; it's supposed to be a LONG TERM retirement plan, folks!

And thanks for these surveys! I really enjoy them!


I believe the 4:00 deadline for trades to reach the fund company is a great idea.   It may mean that for certain plans participants will have to get their elections in earlier in the day to be effective at the closing price that day.   So be it.   This is not at all inconsistent with the long-term approach that 401(k) plan participants should be taking in any case.

The redemption fee issue is difficult.   As you point out, it is unreasonable to charge the participant a redemption fee simply because some very recently purchased shares, the last of shares purchased with regular periodic contributions, for example, might have to be liquidated for a loan or a distribution.   Theoretically, you could make expectations in these sorts of cases, but as a practical matter I don't believe the industry could pull that off.

At least these issues being put out for discussion.   There was a flurry of interest in changing the law relating to employer stock issues immediately following Enron, etc., which, at least from a legislative standpoint, has died down if not out.   Let's hope the interest in changes doesn't die out as well.   Ultimately, though, it's up to the consumer.   As long as we continue to send business to mutual fund companies that don't clean themselves up, we have only ourselves to blame.


It would be most beneficial for the service providers in the 401(k) industry if someone can make an effective presentation to the SEC about these new proposed rules.   The abuses in the mutual fund industry have not come from participants in the 401(k) plans and to penalize them would be inappropriate.   The impact on plans and plan participants if the earlier cutoff times are enforced would be significantly negative, particularly if redemption fees would be imposed.


Comments on the mutual fund proposals:

Let's hope that the early redemption part is never enacted.   Daily valuation record keeping systems would have to be completely revamped in order to deal with this potential nightmare.   The costs would be passed on as higher fees to participants and would vastly outweigh any possible benefit.


I'll go with (f) ... for both (a) and (b).

On mutual fund late trading issue:

As custodian for mid-sized 401(k) plans, we deal with many different plan sponsors and recordkeepers.   In order to manually process trades directly to the fund company by the 4:00 pm ET cutoff, we required net trade information (buys and sales of dollars and units) by noon each business day.   From my limited knowledge, it seems that most recordkeepers have a 9:00 am ET cutoff to be able to do the processing of the VRU and Internet participant requests to get us that net figure.

On an automated process where trades go directly through various data transmissions from the recordkeeper to the fund company, there is still a delay of 6+ hours.   For most providers and recordkeepers, requiring an earlier cutoff would essentially give the fund companies an advantage in offering a bundled 401(k) product.   Since feeds could be set up directly between affiliates - so a parent company having a trust charter,   daily recordkeeping system,   and proprietary funds could essentially process participants' requests virtually up to market close.

On mutual fund redemption fee:

   Many custodians trade with fund companies using an omnibus account that nets the trades of many trust clients.   The fund company would not know whether a redemption put through on Friday for Company A or Participant Smith was part of a purchase done on Monday.   Plus take this scenario: Company B buys $6,000 on Tuesday; then on Wednesday Company C buys $50,000 and Company B sells the $6,000 they bought on the previous day - the custodian would call in a net trade of $44,000: Company B is not charged a redemption fee as the fund company is trading at the custodian level.   For those plans that trade directly with the fund company - rather than face paying a redemption fee, they may seek to go more for individually managed accounts either on a plan or a participant level, thus trading stocks and fixed income issues with broker or through trust custodian where transaction costs may be lower than the fees charged within the mutual fund.   As ERISA fiduciary, companies need to look at costs charged to the plan and determine what is best for the participants.

I believe regulations based on these proposals would be of detriment to the 99.99% of fund clients and will not prevent circumvention of rules.   When a law has been broken (as in case of late trading), there should be consequences.   When a fund company does not follow their own published guidelines (allowing multiple and short term trading) there are civil remedies (class action suits) as well as reputational risk (as Putnam is feeling with loss of revenue by clients pulling funds out).   Many of these funds have lost the TRUST of their current and future customers ... and TRUST is hard to earn back.


The proposals will make life a living hell for 401(k) plan administrators even more so than it is now.    What's wrong with enforcing the existing rules (as Mr. Spitzer has been doing) instead of creating arcane new ones?

While redemption fees sound like they will help in reducing the rapid fire trading problems, they will be more trouble than they are worth.   Like the people who seek to avoid taxes on gains in taxable accounts, such fees will affect participant decision making, and lead to further participant inertia with respect to asset allocation. Most participants fail to do periodic account rebalancing as it is, and this may exacerbate this problem.   Although the redemption fees will be credited to the fund to offset the trading expenses, participants will see it as service charge and this will lead to an increase in "service" complaints, disputes and the like. This will also impose a complicated system on plan recordkeepers who will have to track each share purchase by participant - not a pleasant thought.   

Requiring participant trades to be received by the fund company (instead of by the broker dealer) by 4 p.m. to receive that day's NAV will also be despised by participants.   Participants will also hate the earlier trading close times and disparate standards for trading that will apply to their accounts by different vendors that will result. This will no doubt lead to more "service" disputes with participants who thought their trades would be processed at that day's close of business, and could lead to plans favoring funds within the fund family of their 401k administrator - not exactly a boon to participant fund choice, or funds that aren't mutual funds at all (such as common collective trusts and insurance co. separate accounts). I'm afraid the operational simplicity of moving to T+1 settlement for all funds in the plan will soon go out the window, and back offices will have to account for the disparities in the timing of trade settlement for "alliance/supermarket funds" vs. the funds managed in-house.

All in all, the proposals will result in more hassles for administrators already overburdened by regulations with little benefit to the fund shareholder.  

These proposals though well intentioned are like killing a fly with an elephant gun.   

Thanks for all the timely info on your site.

Regarding the ICI proposals, I think it's a classic case of damage control, in this case by the fund industry, to implement some quick remedies to give the appearance that they are trying to clean up the trading abuses. In other words the fund companies are scrambling to clean up themselves before somebody does it for them.

And as is typical in these situations, they really are putting the burden on the retirement plan clients. Just what I need for my business! Yes I think these proposals are poorly thought out, hastily drafted and will create a monumental amount of headaches for those of us who do business in the 401k market, from the TPA, Recordkeeper, Financial Advisor, and Plan Sponsor right down to the plan participant.

Considering that 401k participation overall is still down, these proposals may create more reluctance on participants to either increase what they are contributing now to their own 401k plans or decline to participate altogether because of these so called "redemption" fees that fund companies may start imposing. Don't the fund firms realize that this is where the only growth is now in their business, the retirement market? Apparently not. How many firms are calling on me just to get one or two of their funds onto my client's 401k menu? So what do these proposals do? Put the onus on plan participants and make it more difficult for them to build wealth! Thanks ICI. A not too thrilled Financial Consultant


1) Tighter internal ethics codes on any personal trading by mutual fund employees.

Yes...almost a no-brainer.   Short-swing trading their own funds should be flat-out prohibited...potential abuse of insider information, self-dealing by imposing costs on longer-term fund-holders (their clients), lack of alignment with their clients' interests.   If investment professionals want to make short-swing trades, they should use ETFs.

2) Requirement that mutual fund trades be delivered to the mutual fund complex by 4 pm.

This one has generated a lot of opposition, but the opposition is dead wrong.   It's the one proposal of the three which should ABSOLUTELY be implemented.   If I enter a trade which I know will be executed tomorrow (not today), that's not a bid deal UNLESS I'm investing with a very short investment horizon (e.g. trading mentality).   There will be some need for participant re-education ("trades will be executed tomorrow")...but that's the way it should have been all along.   The "arms race" among recordkeepers has led them to develop and offer features which aren't of real value to savers/investors.   The "same day execution" was an unnecessary feature with huge hidden costs.

3) A 2% redemption fee on mutual fund units bought within the prior 5 days. This has some appeal, but it will be expensive to implement and is, I think, using a sledgehammer as a flyswatter.   Nevertheless, I'm supportive.   While I understand that there may be legitimate hardship withdrawals, and while I understand that some people may give in to high pressure sales pitches and change their minds after sleeping on the decision, I think the fee, properly disclosed, won't impose meaningful hardship (except on investors too unsophisticated to make appropriate buying decisions even in the face of properly disclosed costs...and the fee would highlight the suitability issue for potential investors).   The fee would unambiguously make trading/timing less attractive...so it's very effective.   So my primary concern is a cost/benefit

One: how expensive will recoding the recordkeeping systems be?   If proposal #2 is accepted, is #3 still cost-justified?

a final ps: fair-value pricing is probably not a bad solution for global portfolios and portfolios of illiquid securities, but true forward pricing of European equity and Asian equity portfolios (e.g. strike the NAV and post shareholder buys and sells as of the close of the local market rather than at 4pm EST) is better than fair value pricing...simpler, far less opportunity for arbitrage or error, etc.            

I think a combination of b and f.

It is true that most participants do not trade at all (although if you count contributions and loans then the number is greater than zero.) I think the best thing is for ALL mutual fund companies to define and count trades separately from contributions, loans and loan-payoff's. I support some limit on the number of trades a participant can engage in over a period of time. I would count a trade on a per day basis NOT on a per fund basis. In that way someone rebalancing his/her portfolio of for example six funds would not be charged with six trades if he/she rebalanced their portfolio back to a target allocation. If all of these trades were done on one day I would recommend that this constitute one "trade".

I do NOT disapprove of late trades from plan administrators who are willing to certify that the trades that they are passing along to one or more mutual funds were entered into by the beneficial owner BEFORE 4:00 PM. In this way for example Fidelity could notify Vanguard that plan sponsor X wish to have a net inflow or outflow from a fund. This flow would be the aggregate of all of the plan sponsors participant directions received BEFORE the 4:00 PM cut-off. I think any new rules must recognize that it takes time for all of these trade directions to be processed and aggregated.


The bad boys are being dropped left and right and they deserve it!!

We just had one participant request that we switch our 401(k) to non-mutual fund investments.    Not sure what they would be other than a Self directed brokerage window.

As to 4pm.    I think the community could live with earlier cut offs.    We have a 1pm cutoff for transactions in our NQ plan.    Remember how plan transfers used to require length blackouts, well now this is being done over a weekend thank to S-OX.     It they had to live with a 1pm or 2 pm cutoff, amazing they'll find a way to make this all work.

People are out there saying this cut participation - I don't believe it.    People will adjust and live with it.    Life goes on.


Worse than the issues in your commentary is that most 401(k) trades at mutual funds are aggregate trades - net total buys and sells of all participants on any given day.   Unless you now setup brokerage accounts for every participant how do you comply with the proposed 2% rule?   Also, the cost of administering and offering a 401(k) plan will be a multiple of what it is today.   Surely there will be an exemption for retirement plans?


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