Has Your Retirement Plan Been Restricted?

Given the increased congressional interest in 401(k) plan oversight, the U.S. Government Accountability Office (GAO), an agency of the Congress, is offering an opportunity to plan sponsors to provide input for a congressional study on Restrictions on Withdrawals from 401(k) Plans. To facilitate input, GAO asked PLANSPONSOR to help by reaching out to its membership and encouraging plan sponsors to participate in a short survey.

Unlike those covered by traditional pension plans, 401(k) plan participants are responsible for selecting from an array of investment options, such as various mutual funds, offered by the plan sponsor, and directing their investments. However, in recent months, some 401(k) participants purportedly were unable to transfer their money between investment options or were limited in withdrawing money from their account. According to reports, participant withdrawals are being restricted from certain funds because many investments were negatively affected in the market downturn and experienced cash flow or liquidity problems. As a 401(k) plan sponsor, you will have the opportunity to provide GAO with information about whether your plan participants were restricted from withdrawing from their plan accounts and whether any of the investment options offered in your plan restricted withdrawals. GAO is interested in finding out (1) the extent of the problem, (2) which types of investments are involved, and (3) what disclosures plan sponsors and participants received about the possibility of such withdrawal restrictions.

The results of this inquiry will be compiled and presented in summary form only. Our report will not identify individual respondents. Respondents' names will not be listed in any GAO report. Providing your name and contact information is optional. However, if you are interested in helping GAO further by discussing these issues in greater detail, or if you would like to answer these questions by telephone, you will be given the opportunity to provide your contact information, or you can contact the GAO staff working on this study, whose telephone numbers are listed below.

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Did any of your 401(k) plan’s participants have difficulty withdrawing/transferring their money from certain funds in the last three years?

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If participants were prevented from withdrawing/transferring their money from certain funds, what type(s) of fund(s) were they invested in?

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If participants were prevented from withdrawing/transferring their money from certain funds, about how many of your 401(k) plan participants were invested in these types of funds (if you don't remember, please indicate that - approximations are fine)?

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If participants were prevented from withdrawing/transferring their money from certain funds, about what percentage of those participants were unable to withdraw their money (if you don't remember, please indicate that - approximations are fine)?

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Does your 401(k) plan offer a fund that invests in real estate (but is not a REIT)?

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Does your 401(k) plan offer a stable value fund?

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If you do have either a real estate or stable value fund in your plan, have any of them provided you with disclosures about the potential for restrictions on fund withdrawals?

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What was the language, if any, used to disclose the restrictions on withdrawals from these funds?

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What kind of consideration, if any, did you give to these disclosures?

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If your plan - or any of the funds offered in your 401(k) plan - engage in securities lending, was the possibility of engaging in this practice disclosed to you by the plan administrator or by the funds offered in your plan?

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What, if any, was the language used to disclose that a fund may engage in securities lending? Did you inquire or was it disclosed to you by the plan administrator or the fund, whether or not the plan or the fund actually engaged in this practice?

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If you did receive disclosures that the 401(k) plan or a fund in your plan may engage in securities lending, did these disclosures make it clear that the plan or a fund engaging in this practice could encounter cash flow problems and could potentially restrict participant withdrawals in an economic downturn?

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If your plan’s investments experienced cash flow (liquidity) problems or your plan or plan’s investments engaged in securities lending that resulted in restrictions placed on participants’ withdrawals, would you be willing to talk to us further about the issue?

If so, please provide your contact name and phone number, and we will contact you.

Alternatively, if you would like to answer these questions by phone or talk about the issue of 401(k) withdrawal restrictions, feel free to call Monika Gomez, in Washington, D.C. at 202-512-9062 or Jessica Gray, in Seattle, WA at 206-287-4894. Thank you.

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