Compliance September 11, 2007

DoL Puts Out Annuity Provider Selection Guidance

September 11, 2007 (PLANSPONSOR.com) - The U.S. Department of Labor (DoL) on Tuesday issued two rules under the Pension Protection Act (PPA) relating to annuity provider selection to provide plan distributions.
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A DoL news release said the agency had issued:

  • an interim final rule amending Interpretative Bulletin 95-1 to limit the bulletin’s application to the selection of annuity providers for distributions from defined benefit plans.
  • a proposed rule to provide guidance, in the form of a safe harbor, for annuity provider selection fiduciaries for benefit distributions from individual account plans, such as 401(k)s.

Under the proposed safe harbor, the DoL said fiduciaries must:

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  • conduct an objective, thorough and analytical search to identify and select providers.
  • consider the need to engage an expert to assist in its evaluation of providers.
  • appropriately conclude that the annuity provider would be financially able to make all future payments under the contract, and the cost of the contract is reasonable in relation to the benefits and services to be provided under the contract.

According to the DoL, the PPA required the agency to issue regulations clarifying that the selection of an annuity contract as an optional distribution from an individual account plan is not subject to the “safest available” standard under Interpretive Bulletin 95-1, but is subject to all otherwise applicable fiduciary standards.

The interim final and proposed rules are to be published in Wednesday’s edition of the Federal Register. Public comments should be submitted electronically to DoL’s Employee Benefits Security Administration at e-ORI@dol.gov or through the federal e-rulemaking portal at  www.regulations.gov .  

The full text of the new rules is  here .

Products September 10, 2007

Fidelity, Sungard Introduce New Trading and Custody Platform Services

September 10, 2007 (PLANSPONSOR.com) - Fidelity Investments and SunGard have announced the addition of new services to their integrated trading and custody platform for trust institutions and third party administrators (TPAs), including a directed trustee services program, a payment and reporting program for brokers who support retirement plans, and an online revenue management tool.
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The Directed Trustee Services program helps TPAs that custody assets with Fidelity to streamline management of qualified retirement plans by providing access to the professional trustee services offered by Fidelity Personal Trust Company, the announcement said. Through Directed Trustee Services, plan sponsors can access fiduciary services to help reduce risk, audit expenses, and administrative costs.

Paying Agent Services provide administrative support of contribution, distribution and loan processing, status reports on distributions, and IRS Form 1099-R tax reporting. Paying Agent Services can be bundled with Directed Trustee Services or are available on an unbundled basis, according to the announcement.

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The Fidelity Institutional Broker Network is a program for broker/dealers and their representatives who service retirement plans through a TPA relationship. For broker/dealer firms, the service can act as a compliance resource and also provides automated payments of asset-based fees to broker/dealers through the NSCC Commission Settlement Service. The service also provides reporting to fund companies of broker/dealer representative relationships to the retirement plans and a Web application designed exclusively for broker/dealers.

The online revenue management tool helps TPAs monitor commission payments from multiple fund companies across the multiple retirement plans they service. Data is refreshed daily and the system confirms payments by account, position, and payment instructions and supports information searches by a number of criteria, including plan name/account number, security, broker/dealer, and payment type.

Clients can print a consolidated report directly from the revenue management system or export the information to a spreadsheet.

The Fidelity/SunGard integrated trading and custody platform utilizes the capabilities of the SunGard Transaction Network (STN).

More information can be found at  www.sungard.com .

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