DOL fines ING $5.3 million

EBSA is focused on the fiduciary duty of plans and many insurers are watching to see if EBSA allows definitive safe harbors for new annuity guarantee products–some plan sponsors reluctant  to offer guaranteed income products because of EBSA's strict interpretation of fiduciary. Insurers want to offer a wider array of new retirement solutions to 401(k)s.

According to the agreement:

• ILIAC must disclose its policy on how it corrects transaction processing errors to plan clients covered by ERISA. Its transaction policy must be presented to current and prospective ERISA plan clients in writing. Current plan clients have the opportunity to object to the policy within 30 days of receipt. Prospective plan clients will be informed of the policy by way of its incorporation in ILIAC's contracts and service agreements.
• The disclosure also will state that ILIAC will track the effect of the corrections for each affected plan on an annual basis and will make that information available to its ERISA plan clients.
• In addition, ILIAC will acknowledge in the disclosure that any gains it keeps as a result of the policy constitute additional compensation for the services the company provides and it will report such compensation in accordance with ERISA Section 408(b)(2).
• ILIAC has agreed to pay a $524,500 civil penalty.
• ILIAC will further adopt procedures for properly terminating abandoned plans through the Employee Benefits Security Administration's Abandoned Plan Program. If the company attempts to contact the sponsor of an abandoned plan, but is unsuccessful, ILIAC will then become that plan's qualified termination administrator. 

ILIAC issued a statement in which it said, that the settlement with the DOL "enhances our broader efforts to increase transparency in the industry and help our clients better understand how their plan services work."

"Under terms of the agreement, ING Life Insurance and Annuity Company will continue applying its policy – which was communicated to sponsors during the 408(b)(2) fee disclosures in July 2012 and again recently as part of a sponsor mailing," the ILIAC statement said.

The settlement was the result of an investigation conducted by EBSA's Boston Regional Office. It was reached with the assistance of the Labor Department's Regional Office of the Solicitor in Boston.

•  See also:

• Survey: Only one-third of Americans actively contributing to retirement plan
• Senators resolve to save retirement products from cliff
• Benefits group pans 401(k) loan disability mandate proposal