Rep. Neal Reintroduces Fee Bill with a Number of Modifications

Rep. Richard Neal (D-MA), Chairman of the House Ways & Means Subcommittee on Select Revenue Measures, has reintroduced his Defined Contribution Plan Fee Transparency Act. The newest bill comes after Neal introduced the original bill (H.R. 3765) in the 110th Congress. Joining Rep. Neal as original cosponsors of the bill are Rep. Earl Pomeroy (D-ND), Joe Crowley (D-NY) and Allyson Schwartz (D-PA).

The latest Neal bill would apply to all tax-preferred, participant-directed defined contribution plans including 457 plans and non-ERISA 403(b) plans. It would take a more moderate approach to fee disclosure than a bill from Chairman George Miller (D-CA) (H.R. 1984). For example, the Neal bill does not mandate the inclusion of an index fund, would require somewhat less unbundling of service pricing by bundled service providers, and does not require monetization of participant investment expenses. It would also require less fee and account information be provided to participants.

Other changes to the Neal bill that narrow the differences between his bill and the Miller bill include requiring that participants receive quarterly account statements rather than annual statements. Other changes would require translation of plan investment expense ratios into generic illustrative dollar examples and permit reliance on third-party information by both plan administrators and service providers.

The U.S. Treasury Dept. would be required to develop safe harbor methods for bundled service providers. The Neal bill also includes a directive to Treasury to adopt a favorable “post and push” approach for electronic delivery of all retirement plan notices required under the Internal Revenue Code.

Next steps for the Neal bill are not yet clear as no mark-up of the legislation is currently scheduled in the Ways & Means Committee. It is likely that should fee legislation continue to move through the Education & Labor Committee, there will be Ways & Means Committee consideration of a fee disclosure bill. Presumably the Neal bill would be the leading candidate to be the Ways & Means product.