SPARK wants retirement plan funds to be able to charge up to 75 basis points, rather than only 25 BPS, under the new distribution Rule 12b-2 as long as the fund provides a breakdown between the sales and non-sales portions of the fee.
SPARK also wants administrators to have 30 months, instead of 18, after the effective date to comply or later, should it propose new rules on revenue sharing.
“As the SEC knows,” the SPARK letter says, “retirement plan intermediaries perform many of the necessary recordkeeping and ongoing administration services for fund shareholders.” The letter then goes on it itemize 16 functions that plan administrators perform, including maintaining shareholder identification and beneficiary designations, maintaining accurate sub-accounting records of the shares held by investors, trade settlement and clearing and transmitting proxy statements.
“The costs associated with maintaining the systems and staff required to provide the recordkeeping, administrative services and other services to comply with the SEC, Internal Revenue Service, Department of Labor and other rules that apply to retirement plan investments in mutual funds are substantial…often 50 basis points or more," SPARK says. "The SPARK Institute believes that the 25 basis point compensation limitation under 12b-2 will be disruptive to the entire retirement plan community, including plan sponsors, participants, mutual funds and retirement plan intermediaries.”
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