Virtual Conference Features Experts’ Insights on Hot Issues
ASPPA’s first-ever virtual conference on May 14 provided its 600+ attendees more than critical information on important issues — it also afforded them an ideal opportunity to gain the expert speakers’ insights on particular situations and matters.DOL Fiduciary Rule
It’s no surprise that the Department of Labor’s reproposed rule defining a fiduciary — which has been one of the hottest topics now for more than a month — was among the matters that evoked a question.
In this case, it was how the proposed regulation applies to TPAs. In the situation posed, a TPA that communicates with participants has a participant who talks to the TPA about a rollover. The TPA is not compensated for investment advice, but wonders if she is going to be deemed to be giving investment advice just because she spoke to a participant about a rollover.
The answers highlighted the fact that the DOL’s reproposal has not made all matters crystal clear. “The rule requires there to be compensation associated with the advice. But this is a gray area,” noted American Retirement Association CEO Brian Graff. “I would be concerned as a TPA — if part of my engagement agreement includes providing participants with education — to make sure that my employees don’t cross that line,” Graff continued. “If part of the engagement involves education, your employees are going to have to undergo a lot of education” to ensure that they don’t, he said. “You’re going to want to say in your engagement letter that you are not providing advice for compensation.”
Ilene Ferenczy, Managing Partner of Ferenczy Benefits Law Center LLP, stressed the importance of following the agreements TPAs enter into with clients before they begin providing services. “Under the old rule and under the new rule, whether one is a fiduciary is a functional analysis. You’re going to end up being a fiduciary if you go beyond what a service agreement says,” she said.Safe Harbor Contributions
Another question concerned the use of forfeitures to fund safe harbor contributions.
“This is one of my pet peeves with the IRS — that the IRS believes that you can’t use forfeitures to fund safe harbor contributions,” remarked ASPPA General Counsel Craig Hoffman. “The fact of the matter is that we feel very strongly about the statutory basis to allow the use forfeitures to fund safe harbor contributions.”
There may be some hope on the horizon, Hoffman indicated. “We have spoken to folks on Capitol Hill, and Senator Orrin Hatch, in his SAFE Act, has included a provision that would override that IRS position,” he said.
Hoffman also indicated that the IRS may be moving toward a new stance on this issue, saying, “The bottom line is, I think, that the IRS is in agreement with us, but they feel that they need to formally amend the 401(k) regulations in order to implement it. They think the wording in the regulations precludes them from allowing that.” He added a further observation: “The good news on the IRS priority guidance plan is a provision that does indicate they are writing some guidance on QNECs and QMACs.”
Recordings of the May 14 ASPPA Virtual Conference will be made available; ASPPA Net will provide announcements and information concerning their availability.Opinions expressed are those of the speakers, and do not represent the official views of ASPPA.