DOL: Fiduciary duty will not be waived for Section 401(k) Annuities

The fiduciary responsibility of a defined contribution plan sponsor will not be suspended to ease the way toward offering an annuity for the plan, Assistant Secretary of Labor Phyllis C. Borzi said.

“The basic fiduciary duty, to prudently select and monitor, is not going to be waived,” Borzi said. “Not during my watch, not during Secretary [Hilda L.] Solis's watch,” she said.

However, Borzi said, there may be things the government can do for plan sponsors to make it easier for them to offer annuities.

Borzi, who heads the department's Employee Benefits Security Administration, noted that a request for information on “Lifetime Income Options for Participants and Beneficiaries in Retirement Plans” by the Labor and Treasury departments was published in the Feb. 2 Federal Register.

The departments are examining the Employee Retirement Income Security Act and the tax code to determine how they can facilitate the offering of annuities for defined contribution retirement plans, such as tax code Section 401(k) plans, and individual retirement accounts.

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