Compliance September 1, 2023

Republican Leaders Discourage 3(21) Fiduciary Rule Amendment

Updating the fiduciary rule remains a key area of focus for the Department of Labor, despite missing a published August timeline.

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Representative Virginia Foxx, R-Virginia, and Senator Bill Cassidy, R-Louisiana, published on Thursday a public letter to Julie Su, the acting director of the Department of Labor, discouraging the department from proposing a revised 3(21) fiduciary rule.

Foxx serves as the chair of the House Committee on Education and the Workforce, and Cassidy as the ranking member for the Senate Committee on Health, Education, Labor and Pensions.

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The letter criticized the DOL for creating confusion and excessive compliance costs by revisiting 3(21) fiduciary standards too frequently: “Over the last two years, the Department has espoused at least three separate positions on what it means to be an investment advice fiduciary. By failing to articulate itself consistently, the Department has created unnecessary instability for retirement plans, retirees, and savers.”

The legislators also referenced the 2016 fiduciary rule vacated by a decision from the 5th U.S. Circuit Court of Appeals in 2018. The 2016 rule would have defined advisers who recommend a plan for an individual retirement account rollover as ERISA fiduciaries. The rule was voided by the 5th Circuit on the grounds that rollovers are not normally part of an ongoing or continuing advisory relationship. The advice is typically given only once and not on a “regular basis.”

In the letter, the policymakers recommend that the DOL focus its resources instead on implementing the regulatory agenda proscribed in the SECURE 2.0 Act of 2022. Updating the fiduciary rule again would only create unnecessary uncertainty for fiduciary advisers and damage Americans’ retirement savings, Foxx and Cassidy argued.

The DOL has not given any sign that it will halt in amending the 3(21) rule. It previously wrote that a proposed amendment with “additional protections” would “deliver substantial gains for retirement investors and economic benefits that more than justify the costs” of the regulation.

The department published its Spring Regulatory Agenda in June and set August as a self-imposed deadline for proposing a new rule. That deadline has come and gone, but regulatory agendas often hold more aspirational or check-the-box value than serving as an actual timetable.

 

Client Service September 1, 2023

Transamerica Renews Small Business Retirement Plan Campaign

Starting September 1, the provider will launch a campaign called 401(k)ares that will include an incentive to transfer from a SIMPLE IRA plan to a Transamerica option.

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Transamerica Corp. announced that, as of September 1, it will be making a renewed push to earn small business retirement plan clients with an advertising campaign called 401(k)ares that includes incentives to leave government-provided Savings Incentive Match Plans for Employees, or SIMPLE IRAs.

Cedar Rapids, Iowa-based Transamerica announced that the campaign will include a $250 credit for third-party administrator partners that transition an employer’s SIMPLE retirement plan to a Transamerica retirement plan. To be eligible for the credit, the SIMPLE plan must terminate in 2023 and transition to the Transamerica plan in 2024. Businesses selecting Transamerica as their retirement plan provider in the final months of the year will also have some health and flexible spending account administration and participant fees waived for two quarters.

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In addition, during the retirement plan’s conversion period, Transamerica will extend its plan administration support communication services for free, in collaboration with third-party administrator partners. The partners will receive additional credits for transferring existing retirement plans as part of this campaign.

Transamerica makes the push as state mandates and incentives from the SECURE 2.0 Act of 2022 are intended to push more small businesses to offer workplace retirement plans.

“Transamerica is committed to helping everyone secure a financially stable future, and our special offering for small businesses reflects that pledge,” Phil Eckman, president of workplace solutions at Transamerica, said in a statement. “We believe all American workers need access to tax-deferred workplace savings programs, and this opportunity helps both employers and employees build a more secure future.”

The renewed push adds to a January 2022 announcement Transamerica made regarding the availability of a packaged solution created for small companies seeking to start a new workplace retirement plan for their employees. Named the Transamerica Advantage Solution, the program was described by the firm as “a configurable retirement plan solution that combines all the technical expertise and participant services designed to operate a workplace retirement savings program efficiently.”

In April, Transamerica began providing recordkeeping and 3(16) plan administration services to a new pooled employer 401(k) retirement plan solution from Smart Retirement Solutions Inc., called “Choice PEP.” 

Transamerica is not alone in its push to serve small companies. On August 29, retirement technology provider Smart USA widened its fiduciary services division to offer pooled employer plans and single employer plan solutions.

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