Self Directed Brokerage Accounts Self Directed Brokerage Accounts were very popular during the bull market of the 1990’s, but today only about one in five employers offer them. As a result, you don’t find them being investment company directed brokerage arrangements much in the press or in retirement industry publications. This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know. To subscribe to our free weekly newsletter, enter your email address below then click the “Join” button. NOTE: WE DO NOT SELL YOUR DATA OR EMAIL ADDRESS TO ANY ORGANIZATION. Abstract: More 401k and 403b plan sponsors are offering an investment option called a brokerage window. However, more choice isn’t always better when it comes to the investment menu.

And some sponsors have the misconception that offering a brokerage window relieves some of their fiduciary responsibilities. That is not the case, while the Department of Labor does not prohibit the use of brokerage windows in retirement plans, it has shown increased interest in them in recent years. Abstract: A recent article published by the Wall Street Journal suggests more plan sponsors are adding self-directed brokerage accounts to their corporate retirement plans. But what exactly is a self-directed brokerage account, and is adding one to your plan a good idea? Abstract: 403b plans, with their wide variety of investments which are subject only to the control of the participants, are essentially structured in the same manner as SBDAs in 401k plans. Should the plaintiffs succeed in their calms that it was imprudent to permit employees the ability to invest in a wide range of securities without fiduciary oversight, it may well be the death knell of SBDAs. Abstract: The SEC recently published a new interpretation discussing the requirements for registering an offering of employer stock on a Form S-8.

33 discusses whether an employer must file a Form S-8 registration statement for employer stock if the stock may be purchased by 401k plan participants through a brokerage account window. Abstract: Companies that allow employees to purchase employer stock through their 401k plans are already well aware of the securities law requirements and restrictions related to that plan feature. However, what if a plan with no employer stock investment alternative is modified to include a brokerage window that does not prohibit employee contributions from being invested in employer stock? Could this constitute an offer of employer stock requiring Securities Act registration? Does Brokerage Window Require Company Stock Offering Registration? Abstract: The SEC recently weighed in on whether offering a brokerage window in a 401k through which investments in employer securities can be made involves an offer of employer securities requiring Securities Act registration.

Abstract: A recently filed lawsuit rekindled some old concerns about self-directed brokerage accounts. The lawsuit in question is Fleming v Fidelity Management Trust Company which was filed by a group of participants in the Delta Airlines retirement plan against Fidelity alleging breach of fiduciary responsibility for excessive fees charged to their brokerage accounts. Abstract: Some retirement plans are utilizing Self-Directed Brokerage Accounts as the primary investment vehicle for plan participants, but using this element instead of a recordkeeping platform is potentially formulating undesired results. There are numerous fiduciary and participant related considerations that typically outweigh the investment flexibility benefit that SDBAs offer. Abstract: A proposed class action accuses Fidelity Management Trust Co. ERISA fiduciary duties for allegedly receiving unreasonable compensation through its brokerage window feature and a kickback scheme with an investment advice company. Abstract: Plan committees need to ask questions, and get answers, before offering a brokerage window.