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Release Date: 03/01/2004
Release Number: 04-316-NAT
Contact Name: Gloria Della
Phone Number: 202.693.8664
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Washington, DC - The U.S. Department of Labor
announced a proposed rule that provides guidance on how employers and
financial institutions can implement the new requirement that retirement
plan distributions between $1,000 and $5,000 be automatically rolled over
into an individual retirement plan unless the worker directs otherwise. By
following the terms of the regulation, employers will meet their fiduciary
responsibility for choosing the IRA or annuity provider and investment of
the funds. |
“Preservation
of retirement savings when workers change jobs is key to ensuring
retirement security,” said Assistant Secretary of Labor Ann L. Combs of
the Employee Benefits Security Administration (EBSA). “The proposed rule
changes the landscape from one where workers cash out and spend small
distributions to one where savings accumulate over time and are available
when needed at retirement.” |
The
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
requires that certain distributions of retirement plan benefits of $1,000
to $5,000 be automatically rolled over into an individual retirement plan
when a separated worker fails to elect a distribution method. The proposed
regulation protects retirement plan fiduciaries from liability under the
Employee Retirement Income Security Act (ERISA) by providing a safe harbor
in connection with two aspects of the automatic rollover process – the
selection of an institution to provide the individual retirement plans and
the selection of investments for such plans. |
In
order to obtain relief under the safe harbor, plan fiduciaries must
satisfy certain conditions. Among others, these relate to the types of
institutions that are qualified to offer individual retirement plans, the
investment products in which funds can be invested, and the limitations on
the fees and expenses that may be assessed against the individual
retirement plan funds. |
The department also is proposing a class exemption. The
proposed exemption would enable certain plan sponsors to use their own
services and products in connection with rollovers from their own
retirement plan. |
The proposed regulation and class exemption are scheduled to
be published in the March 2, 2004 Federal Register. Comments should be
submitted by April 1, 2004 to the Office of Regulations and
Interpretations, Employee Benefits Security Administration, Room N-5669,
U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.
20210, Attn: Automatic Rollover Regulation. Electronic responses may be
addressed to e-ori@dol.gov and should be marked “Automatic Rollover
Regulation” on the subject line. Comments on the proposed exemption
should be addressed to the Office of Exemption Determinations in Room
N5649 at the address above or by Internet to moffitt.betty@dol.gov. |
U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7755. |
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