July 30, 2012
For additional information:
Jason Hammersla
202-422-4652 (cell)

Revised FAB 2012-02 alleviates most plan sponsor concerns

Elimination of new brokerage, mutual fund window requirements will ease 401(k) plan administration

WASHINGTON, DC — “We commend the U.S. Department of Labor (DOL) for its swift response to the serious concerns of the defined contribution plan community,” said Lynn Dudley, American Benefits Council senior vice president, policy, upon the release of Field Assistance Bulletin 2012-02R (a revision of the original FAB issued May 7).

“While the original FAB 2012-02 would essentially have created new law — imposing unreasonable requirements on employers that provide mutual fund windows and brokerage windows as investment options in their 401(k) plans — the revised FAB issued today takes a much more practical approach,” Dudley said.

The revised FAB effectively eliminates several significant fiduciary requirements that were not provided under current law but had been included under Question-and-Answer No. 30 of the FAB as originally drafted, including requirements that a plan must have “a manageable number of investment alternatives,” monitor for “significant investment through a brokerage window” and provide participant disclosures for any investment selected through a brokerage window by at least one percent of participants to qualify for the safe harbor test.

“Employer retirement plan sponsors take their fiduciary duty very seriously and objected strongly to the issuance of new fiduciary obligations without the opportunity for comment and dialogue,” Dudley said. “Now that this issue has been resolved, employers can now focus on compliance with the newly-effective fiduciary-level fee disclosure requirements and the participant-level fee disclosure requirements that become effective next month. We appreciate the good faith compliance standard provided by DOL under FAB 2012-02 with respect to these disclosures. ”

The Council is particularly grateful to the members of Congress and the executive branch who communicated their concerns to DOL on the behalf of plan sponsors.

“The employer-sponsored retirement plan system relies on proper communication between the regulators and the regulated. New requirements should never be imposed without opportunity for comment and discussion,” Dudley said. “We thank the DOL for re-thinking their original approach in this case.”

For more information, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director, communications, at 202-289-6700.


July 14, 2012 — Council Letter to Assistant DOL Secretary for EBSA Phyllis Borzi Regarding FAB 2012-02 Q&A No. 30

July 12, 2012 — Issue Summary: Brokerage Window Rule Issued by DOL Immediately and Effectively Establishes New Law in Violation of Legally Required Notice & Comment Rules: Withdrawal of the Rule Needed As Soon As Possible

June 25, 2012— Group Letter to Assistant Labor Secretary for EBSA Phyllis Borzi Regarding FAB 2012-02 Q&A No. 30

June 15, 2012 — Council letter to DOL on Q&A 30 of Field Assistance Bulletin 2012-02

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.