IRA Rollover Services and Responsibility of Plan Sponsors
The Government Accountability Office (GAO) has issued a report that raises serious issues about how participant rollovers are being handled. The report also suggests that plan sponsors and committees, in their roles as ERISA fiduciaries, may have duties regarding rollovers they have never considered. The report, issued in early April, entitled "401(k) PLANS: Labor and IRS Could Improve the Rollover Process for Participants," points out the lack of quality information and possible mis-information being given to participants by some providers. (As discussed later, this shouldn’t be taken as a condemnation of all, or even most, providers.)
This bulletin summarizes parts of the GAO Report and discusses whether plan sponsors and committees may be obligated to monitor the IRA rollover services offered by their providers. The answer is that the law is not clear, and the cautious approach would be to proactively monitor the services.
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