When I first started as an ERISA attorney in 1998, I was told that all retirement plans had to be restated by December 31, 1999. The Internal Revenue Service then kept on delaying the restatement process until 2003, almost 4 years later. When it comes to the retirement plan business, change takes time because the rules are set by the Federal Government who is not in the efficient or for profit lines of business.
Section 408(b)(2) regulations are supposed to go into effect on April 1, 2011, after a year and change of Department of Labor (DOL) delays. Right before New Years, the American Society of Pension Professionals and Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR) asked the DOL to push back the effective date for the new regulations. Both groups claim they are for fee disclosure. I hope it’s not the John Kerry, for fee disclosure before they were against it, but I certainly give them the benefit of the doubt because fighting fee disclosure is like fighting sunrise, they are both inevitable.
The push by these groups to extend the deadline makes sense on their end. Both groups are doing what any good trade group or unions do, representing the needs for their members. Truth be told, I was thrown off of the ASPPA LinkedIn group a few months back because there was a controversy that ASPPA was supporting multiple 403(b) vendors for the Los Angeles school district. There was much outrage, but my comments were that ASPPA does not represent the needs of teachers who should have lower cost 403(b) plans (which I believe you have when you only have 1 vendor) and their efforts (like their nice conferences) are probably financially supported by these multiple 403(b) vendors. I guess my dose of reality was a bit too much for the organizers of that group. Oh well.
That being said, I have never been a big fan of these trade groups as I am not a member of any bar association because as Captain Kirk said in the underrated Star Trek III: “the needs of the one outweigh the needs of the many.” I believe the needs of the plan sponsors and participants outweigh the needs of the TPAs who have to comply with these regulations because over the last year or so, they should have been preparing for fee disclosure since its implementation was inevitable. There are quite a few TPAs that have prepared for fee disclosure and have been ready for it for some time.
Delaying the fee disclosure regulations won’t serve anyone’s purpose. Plan sponsors and participants won’t have the information to determine whether fees are reasonable, it punishes those providers who have already complied, and it only further pushes the inevitable to those that haven’t. Fee disclosure will serve as a survival of the fittest for those that have embraced fee disclosure and those who haven’t. Further delay won’t help anyone. Let the games begin.