|
<nobr>Feb 2, 2007</nobr>
ERIC Files Comments on PPA Diversification Requirements
In written comments filed with Treasury and the IRS, ERIC encouraged officials to change proposed regulations implementing the Pension Protection Act’s (PPA) employer stock diversification requirements. ERIC’s comments focused on a provision that forbids a defined contribution plan from subjecting investments in the plan’s employer securities investment option to restrictions or conditions that the plan does not impose on other investment options.
The comments argue that the language and legislative history of the PPA make it clear that Congress did not intend that a defined contribution plan apply identical terms and conditions to all of the plan’s investment options. ERIC urged the IRS to correct the proposed regulations to allow plans to impose restrictions on employer stock investment options that are consistent with those applied to some other investments. For example, the comments cite the need for plans to include provisions designed to prevent participants from engaging in market timing and other short-term trading strategies. Furthermore, ERIC urged IRS to ensure that the regulations make clear that a plan does not violate the provision because restrictions on investments in employer securities are less stringent than the restrictions that apply to any other investments.
ERIC’s comments also urge the IRS to make changes to the proposed regulation to allow employers to restrict reinvestment in the plan’s employer securities investment option for a specified period. Currently, the regulations would allow a permanent ban on investments in an employer securities investment option, but not a temporary restriction. In addition, ERIC urged the IRS to make clear that a plan does not violate the restrictions or conditions provision because the administrative practices that apply to the employer securities investment option differ from those that apply to its other investment options.
Text Files:
ERIC's Comments
Back to Previous Page
|
