Benefits and executive compensation partner Joshua Waldbeser and counsel Joan Neri discuss prohibited conflicts of interest under the Employee Retirement Income Security Act and the Internal Revenue Code in an article published in the Journal of Pension Benefits, according to an Apr. 14 statement.
The topic is important as it addresses how service providers who already serve as fiduciaries to private sector retirement plans may face prohibited transactions if they recommend their own managed account services to plan participants.
Waldbeser and Neri focus on the risks that arise when these fiduciary service providers promote additional services, potentially leading to conflicts that are not allowed by law. They say this situation can create legal challenges for both the providers and plan sponsors.
The authors advise caution for those overseeing retirement plans. “Plan sponsors who are considering offering a managed account solution also should be aware of these [prohibited transaction] issues and related considerations in evaluating the fiduciary advisor’s services and fees,” Waldbeser and Neri write.
As regulations continue to evolve, understanding these potential pitfalls remains essential for those involved with private sector retirement plans.
