If President Obama wins a second term, Department of Labor officials will
address their concerns about brokerage windows, at least with respect to Section
401(k) plans that offer a brokerage window and no other selected investments, a
benefits attorney told BNA Aug. 20.
“They appear to be questioning whether it is a violation of fiduciary duty to
offer a brokerage window-only plan,” said Bradford P. Campbell, counsel at
Drinker Biddle & Reath in Washington. Campbell was DOL assistant secretary
at the Employee Benefits Security Administration under President George W.
Campbell said he is unaware of problems created by brokerage-window-only
plans that would justify DOL's interest. “Brokerage-window-only plans are a
perfectly appropriate plan design,” he said.
Until three months ago, when the department issued Field Assistance Bulletin
2012-02 (95 PBD, 5/17/12; 39 BPR 969, 5/22/12), DOL itself had not raised
concerns about brokerage windows during several years of notice-and-comment
rulemaking, Campbell said. DOL mentioned those concerns again in a revised FAB
2012-02R (146 PBD, 7/31/12; 39 BPR 1473, 8/7/12).
“If [presumptive Republican presidential nominee Mitt] Romney wins, I think
this issue goes away unless there is evidence of an actual problem in need of a
solution,” Campbell said. “So far, DOL has not made its case,” he said.
Brokerage windows are features in less than about one out of 10 Section
401(k) plans, according to a quick analysis of filings in DOL's Form 5500 series
database, an employee of the financial information company BrightScope told BNA
Slightly less than 8 percent of 401(k) plans offer brokerage windows, said
Brooks Herman, the head of research at BrightScope. Nearly 8 percent, or 50,350
Form 5500 series plan filings for 2010, display a 2R code, Herman said. The 2R
code on a filing indicates that the plan has a brokerage window.
DOL's Form 5500 series database contains 643,747 401(k) plan filings for
2010, Herman said. The plans with the largest amount of net assets “have a
slightly higher occurrence of a brokerage window” than do smaller plans, he
By Florence Olsen