ERISA and I were both born in 1974, so we are becoming what many consider to be middle-aged this year by turning 40. I can honestly say that I had no idea what ERISA was for the first half of both of our lives, but in the last 20 years, it has been central to my focused work on the defined contribution space.
Ironically, section 401(k) of the tax code, which has driven the growth of the DC market today, wasn't even enacted into law until four years after ERISA came into being. Yet, I find that the law is – for the most part – very well suited to address what is now the predominant retirement vehicle for most private sector workers.
That being said, I find it interesting that many plan sponsors, as well as many providers, are daunted by ERISA, particularly as it applies to DC plans. The big scary "fiduciary" word haunts many, as they fear the consequences of not meeting the required standards. And inevitably this leads to plan sponsors feeling as though they can't implement solutions that they may believe would benefit participants because there may be risks attached. Examples include re-enrollment, active management, alternative investments, custom funds and guaranteed income.
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