PLANSPONSOR - February/March 2018 - 19

with the plans are helping to usher in
use of multiple fund families, notes a
1996 PLANSPONSOR article. " Clearly,
you can't expect the larger plans to put
all their funds with one organization, "
says Robert Reynolds, then president
of Fidelity Institutional Retirement
Services, in the story. The writer speculates
that Fidelity may have been " pushed
in this direction " by its mega-plan client
Ford Motor Co.
By the end of the 1990s, more of
the focus on recordkeeping technology
has shifted to online participant education
and communications. Providers have
embraced " boning up on their Netiquette, "
according to a story on the 1999 Defined
Contribution Services Survey. " Our
participants can do almost anything they
want over the Internet, " says one sponsor
source. His plan's participants can enroll
in the plan, make portfolio changes and
access loans via a leading-edge package of
online services, he says.
As recordkeepers rapidly enhance
their platforms, the competition for plan
clients leads to a decline in fees. Fiftynine
percent of respondents to the 1997
Defined Contribution Services Survey say,
over the past two years they have seen a
rise in services their vendors provide, but
only 27% have seen an increase in fees.
Sponsor fee consciousness does not
appear to drive that dynamic much. In
reality, " many defined contribution plan
administrators are more concerned about
service provisions than cost, " an article on
the 1997 survey says. " In fact, only 52%
said fees were crucial considerations when
selecting a new, or different, provider. "
2001
Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA)
ONE of the first regulatory initiatives
of the 2000s, the Economic Growth
and Tax Relief Reconciliation Act of
2001 (EGTRRA) effects some significant
changes. It increases contribution,
compensation and deferral limits
for both DC and DB plans; allows for
catch-up contributions for those ages
50 and older and for Roth deferrals,
both, helping workers save more effectively;
and permits cashing out of 401(k)
accounts with balances of $5,000 or
less into a default individual retirement
account (IRA).
Moreover, EGTRRA manages to level
the playing field for corporate, 403(b) and
457 plans, and it lays the groundwork for
a rational means of raising contribution
limits, which effectively had not been
increased in nearly 20 years.
Representatives Ben Cardin, D-Maryland,
and Rob Portman, R-Ohio-later to
become senators-are much to thank.
Their willingness to learn about the
issues, then craft practical solutions, their
leadership and commitment to setting
party differences aside not only provide
an extraordinary example of how government
can work, but make an inestimable
contribution to the retirement security of
the nation.
In 2006, Nevin Adams, the former
editor-in-chief of PLANSPONSOR
will say, " In a single stroke, it boosted
stifling contribution limits for defined
contribution programs, lifted arcane
limits on compensation and benefits,
provided economic incentives for lowerincome
workers to participate in these
programs, and gave older workers a
chance to " catch up " on missed opportunities
to save for retirement. "
EGTRRA redresses the balance
among programs for private, public
and not-for-profit employers in terms of
deferral limits and provides savings portability
for workers who move among those
fields in the course of their working lives.
The act also makes regulatory simplifications,
such as the repeal of the multipleuse
test and modification of the top-heavy
rules and, further, provides the genesis
for the new Roth 401(k).
When Congress enacts EGTRRA,
and also JGTRRA-the Jobs and Growth
Tax Relief Reconciliation Act-it includes
sunset provisions, under which most of
the changes in the acts will expire after
2010. That year, when the Republicans
gain the majority in the House, EGTRRA
will be extended for two years, except for
tax breaks to those earning $200,000
($250,000 for families) or more, by
request of the Democrats. Also in 2010,
President Barack Obama will extend
most of the George W. Bush tax cuts, as
well as extend unemployment benefits
and cut payroll taxes. In 2012, the cuts
will be made permanent as part of the
deal to avoid the fiscal cliff.
PLANSPONSOR.com February-March 2018 19
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