February 5, 2004

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: File No. S7-26-03 - Comment Letter on Proposed Rule: Disclosure Regarding Market Timing and Selected Disclosure of Portfolio Holdings

Pension Specialists, Inc. would like to offer our comments on the issue of short-term redemption fees being considered by the SEC. Pension Specialists, Inc. is a third party administrator and record keeper of retirement plans.

Our position is that short-term redemption fees would be misapplied to retirement plans.

First, although we agree that the use of short-term redemption fees is appropriate to protect the integrity and value of a mutual fund from individuals who actively trade long-term investment vehicles, the application of short-term redemption fees to retirement plans will not protect individual investors as is intended, but will increase expenses and reduce returns for retirement plan participants.

Second, the burden of applying short-term redemption fees will initially fall on many third party administrators and recordkeepers of retirement plans, and ultimately on the participants of the retirement plans.

The costs will be significant to the third party administrator, as a number of systems and procedures will need to be modified to comply with the short-term redemption fees. This includes changes to websites to identify the funds and applicable fees, modifications to voice response systems, development of new participant forms, and the procurement or development of new software and procedures for our recordkeeping systems. These costs will ultimately be passed on to the employers or participants in the plans.

Third, the short-term redemption fees will mostly be applied to small individual investors -- not the individuals who have created the need for the proposed rules.

Consider the following example:

We might have a retirement plan participant who has reevaluated his investment strategy at an annual investment meeting. The participant subsequently requests to transfer his money from one fund to another fund. This may be the first transfer the participant has requested in the past 12 months, however he has had two semi-monthly payroll deposits for $250 in the past 30 days.

As the recordkeeper for the plan, we estimate that the fee collection and payment to the mutual fund company will cost an additional $250 in hourly charges to the plan. The amount collected on this 2% redemption fee is $5, which, incidently, will also be less than the mutual fund company's cost to process the receipt of the $5.

Furthermore the redemption did not stop the participant from making the short-term trade and it is the trade itself that actually affects the performance of the mutual fund.

Unfortunately, due to the payroll driven purchases in retirement plans, this scenario does not apply to transfers alone. The collection of short-term redemption fees applies to almost every transaction within the retirement plan from retirement distributions, rollovers to IRA or other qualified plans, hardship distributions and loans. Clearly, these are not the investors who have engaged in short term trading of millions of dollars to the detriment of the mutual fund. These are investors with normal daily transactions that occur in retirement plans.

Ultimately, if retirement plans must impose short-term redemptions fees, common sense, at the very least, would dictate that a de minimus amount should be necessary before it is applied.

We are also concerned that restricting investment transfers to a specific number of transfers per year could violate the provisions 404(c) of the Internal Revenue Code, which reduces employer's liability on participant directed accounts.

Please remember, the average participant account balance in a retirement plan is less than $30,000. It is extremely rare to have a participant account with a million dollars in it. While we don't condone short term trading, the potential for abuse in retirement plans is negligible.

Congress has spent approximately 30 years trying to increase retirement benefit coverage of employees through retirement plans, starting with the passage of ERISA in 1974. , In requiring short-term redemption fees, the SEC and mutual fund companies will increase the costs of administering these retirement plans. The subsequent increase in costs to the employer will ultimately reduce the number of employees covered due to the discontinuance of some retirement plans. Remaining plan participants will have their retirement benefits reduced as these additional costs are passed on to the participants either as direct fees or through reduced employer contributions to the plans.

In conclusion, we do not agree that applying short term redemption fees to retirement plans will protect individual investors as is intended and we ask you to waive restrictions that would further erode our nation's investments for retirement