An industry-friendly 401(k) fee bill could be drafted soon in the House Ways and Means Committee to avoid some of the more-onerous provisions of an earlier bill.
Lobbyists for employers allege that the first bill, introduced July 26 by Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, requires too much fee disclosure. In addition, Mr. Miller’s bill for the first time would require all 401(k) plans to include an
index fund in their investment mix, which some fear would set a dangerous precedent for lawmakers to dictate what kinds of investment options must be provided.
The congressional tax-writing and labor committees share jurisdiction over private retirement plans.
“Since this is the big retirement issue of the year, [Ways and Means Committee members] want to be sure they play a role,” said James Delaplane Jr., a partner at the Washington law firm Davis & Harman LLP.
According to lobbyists, preliminary signals suggest the Ways and Means Committee legislation might give plan sponsors greater discretion over fee disclosure requirements than would Mr. Miller’s bill.
Pension industry lobbyists said that Rep. Richard Neal, D-Mass., chairman of the Ways and Means subcommittee on select revenue measures, has been sounding out pension industry trade association representatives about possible legislation.
But his legislative ideas still are in their formative stages, they said.
“To the extent [Mr. Neal] is looking at it from another angle, we’re very interested to see what that final product will look like,” said Alane Dent, vice president, federal relations at the American Council of Life Insurers in Washington.
“He definitely was looking at providing plan sponsors and plan service providers flexibility … to make [the disclosure] meaningful to participants,” she added.
Mr. Neal wasn’t available for comment.
But a House Ways and Means Committee spokesman confirmed that he has been “shopping some things around.” Also, Ways and Means Chairman Charles Rangel,
D-N.Y., has announced plans to hold hearings on 401(k) fee disclosure requirements this fall.
“It’s safe to say we anticipate there being legislation,” the committee spokesman said.
Introduction of an alternative bill can serve an affected industry’s interests by setting the groundwork for a possible legislative compromise.
But at the same time, a competing bill can breathe new life into legislation that might otherwise die because it is perceived as overly onerous.
Some lobbyists are concerned that Mr. Miller — who is close to House Speaker Nancy Pelosi, D-Calif. — is likely to come out ahead in any legislative compromise. Their preference would be to discourage any kind of disclosure legislation.
“I don’t see the Miller bill being scaled back to something we could support,” said Ed Ferrigno, vice president of Washington affairs for the Chicago-based Profit Sharing/401(k) Council of America.
Some lobbyists, including Mr. Ferrigno, would prefer that Congress defer to the Department of Labor, which is reviewing a series of initiatives to enhance 401(k) fee disclosure requirements.
“It only makes sense to give the Labor Department time to complete their process,” said Jan Jacobson, retirement policy legal counsel for the American Benefits Council, a Washington-based group that represents plan sponsors and service providers.
“We understand the concerns, but we should let the regulatory process play out before acting on any new legislation,” added Ted Godbout, a spokesman for the Washington-based ERISA Industry Committee, which represents employers.
