For example, a
brokerage window may subject participants to additional costs;
brokerage windows can be challenging for participants to use; the investments in the
brokerage window generally do not have the same oversight by the plan sponsor as the investments in the 'core' fund lineup; and few people ever actually use a
brokerage window," she says.
Summary paragraph: How to help limit the potential risks of
brokerage windowsThe report suggests that other flexibility-inducing options designed to prevent leakage, such as allowing
brokerage windows or "sidecar IRAs" inside a DC plan, could undermine adoption of qualified default investment alternatives.
Under the DB-ization model, employers may find it appropriate to place limits on
brokerage windows to protect employees' account balances.
Employee Benefits Security Administration (EBSA) backed off in late July on its controversial fiduciary requirements involving
brokerage windows under its fee-disclosure rule 408(b)(2) that had the retirement planning community up in arms.
That's whether a broker-dealer would be able to properly identify the payer of indirect compensation in connection with
brokerage windows.
Members of the AICPA's DOL Liaison Task Force will continue to work with the DOL as it conducts a review of this alternative reporting method for plans with
brokerage windows in an effort to determine whether and under what circumstances such method of reporting may need to be modified to ensure adequate information is provided to plan sponsors, participants and beneficiaries, and the DOL, PBGC and IRS in the future.
How do you know if
brokerage windows are a good choice for you?
Summary paragraph:
Brokerage windows in 401(k) plans
The Department of Labor's Employee Benefits Security Administration (EBSA) backed off on its controversial fiduciary requirements involving
brokerage windows under its fee-disclosure rule 408(b)(2) that had the retirement planning community up in arms.
Plan sponsors must provide each participant or beneficiary with the following general plan information: The procedures for participants and beneficiaries to give investment instructions; any limitations on investment instructions, including restrictions on transfers to or from a designated investment alternative (DIA); a description of every DIA offered under the plan; a description of any plan provisions that relate to the exercise of voting, tender, and similar rights accompanying investment in a DIA; the plan's designated investment managers (if any); a description of any
brokerage windows, self-directed brokerage accounts, or similar arrangements that allow participants to select investments beyond plan-designated investments.
