Simpson Thacher Co-Authors Comment Letter Supporting the DOL’s Proposed 401(k) Safe Harbor
Simpson Thacher, along with six other law firms, recently submitted a comment letter to the Department of Labor in connection with the proposed rule that provides a safe harbor for a fiduciary to establish it has satisfied its duty of prudence under the Employee Retirement Income Security Act of 1974, as amended, in connection with selecting designated investment alternatives for participant-directed individual account plans, such as 401(k) plans. The proposed safe harbor is in direct response to an Executive Order directing rulemaking designed to reduce frivolous litigation that impedes the inclusion of alternative investments in 401(k) plans. The comment letter strongly supports adoption of the proposed rule and suggests areas for clarification that would buttress the policy goal of facilitating democratized access to alternative investments for all American workers. The letter outlines areas for potential changes in the final version of the rule, including confirming the process for a plan fiduciary’s ongoing monitoring, establishing the appropriate diligence steps a fiduciary must take in evaluating a designated investment alternative under the safe harbor and offering an alternative approach to compliance with the “Liquidity” factor to account for structures not subject to the Investment Company Act of 1940, among other areas.
The Simpson Thacher attorneys who were responsible for contributing to the comment letter include Partners David Blass, Rajib Chanda and Erica Rozow and Associate Blake Delaplane. The other law firms that co-signed and contributed to the letter include Cleary Gottlieb Steen & Hamilton, Davis Polk & Wardwell, Debevoise & Plimpton, Kirkland & Ellis, Latham & Watkins and Ropes & Gray.
To read the full letter, please click here.