An important legislative update for those in the retirement services business. Keep your eyes peeled for fee disclosure updates. – Eric
As we told you back in June, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) announced its intent to grant an extension to the applicability date of the Fee Disclosure Rules under ERISA Section 408(b)(2). See Beacon Alert: “DOL Tries To Make It Official.” This week EBSA formally extended the applicability date for required disclosures under Section 408(b)(2) effective July 15, 2011.
What the Fee Disclosure Rules require:
Plan Sponsor Rule: Issued in July 2010, it requires “covered service providers” of ERISA pension plans to disclose specific information relative to that service providers’: services, fiduciary status, and fees, in order to assist the plan fiduciary in determining the reasonableness of the arrangement with that service provider. See Beacon Alert: “Fee Disclosure Regulation Shines Through.”
Plan Participant Rule: Issued in October 2010, it requires notifying plan participants of fees, expenses and investments relative to their individual account, as well as the plan as a whole. See Beacon Alert: “Participant Disclosures – Fees, Expenses, Investments and More.”
What the old timeframe was:
Plan Sponsor Rule: All Plan Sponsor Disclosure requirements were effective January 1, 2012.
Plan Participant Rule: All Plan Participant Disclosure requirements fell under a 60-day transition rule that permitted initial compliance no later than 60 days after the beginning of the first plan year on or after November 1.
What you should know about this week’s announcement:
Plan Sponsor Rule: All Plan Sponsor Disclosure requirements are now effective April 1, 2012.
Plan Participant Rule: Initial disclosures to participants (both existing and newly eligible) must be furnished no later than either 60 days after the plan’s applicability date or 60 days after the effective date of the 408(b)(2) regulation (April 1, 2012). The rule is applicable for plan years beginning on or after November 1, 2011. In other words, if you have a calendar year plan, the initial disclosures will be required no later than May 31, 2012.
Why the change?
EBSA’s intent is that the 408(b)(2) regulation becomes effective first and that plans would be able to take advantage of the transition period following the effective date of the 408(b)(2) regulation.