DC Plans Focused on Responding to Recent Regulatory Action

In response to increased Department of Labor and IRS audit and enforcement activities, nearly 60% of plan sponsors surveyed said they intend to take some kind of action in the next 12 months, including:

• l 65% plan to conduct an internal review of plan operations;
• l 27% intend to engage their vendor to review administration; and
• l 22% will conduct an independent operational compliance review.

Pending fee-disclosure rules will increase information available to participants regarding fees. In preparation, 60% of plan sponsors indicate they will take some kind of action, as follows (again, more than one response was permitted):

• l 53% will conduct an administrative fee benchmarking study;
• l 28% will reevaluate who (participant or employer) pays administrative fees; and
• l 21% will change from a nontransparent bundled pricing arrangement to a transparent, fixed administrative fee pricing arrangement.

Other findings include:

• l 77% of plan sponsors intend to maintain their current level of employer contributions, despite the negative impact the market downturn has had on participant accounts;
• l 45% of plan sponsors are considering adding some type of annuity option or minimum withdrawal benefit to their DC plan, reflecting a growing interest in helping participants manage the distribution phase of retirement; and
• l 25% of respondents intend to add investment advice in response to finalized Labor Department rules.