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Conn. Bill Would Require 403(b) Service Providers to Describe Services, Disclose Compensation

By Ray Harmon • March 03, 2017 • 0 Comments
On Feb. 23, Connecticut House Bill 7161 was introduced. Entitled “An Act Requiring Service Providers Under Certain Retirement Plans to Disclose Conflicts of Interest,” the bill requires all service providers to 403(b) plans in Connecticut to describe their services and disclose all the direct and indirect compensation received for the services. The bill appears to be consistent with NTSA efforts to enhance disclosures.

To implement and administer such a disclosure requirement, the bill tasks the Connecticut Department of Treasury with adopting regulations regarding those disclosures with only one instruction: that such regulations be “guided by” the U.S. Department of Labor’s 408(b)(2) regulation from 2012.

As we have seen elsewhere time and again, broad grants of authority to regulators can have a way of producing unintended consequences, so that is something we will monitor closely. However, on its face, HB 7161 seems to be in line with NTSA’s own disclosure initiatives. We worked for several years with the Securities and Exchange Commission (SEC) and FINRA—which approved the Model Disclosure Form NTSA prepared — to obtain no-action letters from them in order to allow 403(b) providers to disclose to participants in a meaningful, apples-to-apples way the same kind of information required by the DOL for 401(k) plan disclosures. This bill appears to seek the same result.

HB 7161’s sponsor is the Joint Committee on Banking itself, which gives it a pretty good shot at passage. A public hearing was held on the bill on March 2.

NTSA will keep you posted on the status of the legislation. Let us know if you have any questions or concerns.

Ray Harmon, Esq. is the Government Affairs Counsel for the American Retirement Association.

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