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IPA Letter Urges Critical Changes to Rules Governing Defined Contribution Plans’ Ability to Invest in Private Funds

The IPA today submitted a to the SEC recommending critical regulatory changes as part of the SEC’s requested public comment on ways to simplify, harmonize, and improve the exempt offering framework, and in particular to expand investment opportunities.

The SEC has been focused on ensuring that the limitations put in place to protect retail investors do not excessively limit their investment opportunities. By updating its rules for the retirement space, the SEC can give retail customers access to portfolio diversifying investments while still protecting them.

In our comment letter, the IPA encourages the SEC to harmonize its rules for defined benefit and defined contribution plans. At a minimum we urge the SEC to fix longstanding No Action letters by permitting investors to be considered “qualified” if they make an investment in any option offered inside their retirement plan. We believe that addressing these “look through” requirements will better allow private funds to accept defined contribution plan investments, and support the use of alternative products in 401(k) plans. We also believe the SEC should allow for relaxed liquidity requirements and more alternative usage by target date funds that have a long time horizon by addressing Rule 22e-4 that prohibits open-ended mutual funds from investing more than 15% of a fund’s total assets in illiquid investments.

The letter is the latest in the IPA’s ongoing efforts to provide greater access for Main Street American retirement savers to invest in alternative investment strategies through their employer-sponsored 401(k) or other retirement plans. The IPA continues to support the SEC and DOL following their joint efforts on a recent providing ERISA fiduciaries with a framework to evaluate private fund investment availability and alternative strategies for defined contribution plans.

We look forward to continuing our efforts with the SEC and DOL to advance this critical issue of allowing average retirement savers to access more options to diversify their investment strategies.

Please don’t hesitate to reach out to Tony or me if you have any questions.

Thank you,

Anya Coverman
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives