OUR THOUGHTS ON:

Fee Disclosure Regulations - UPDATE

Wealth Management

By Scott Rain

The Department of Labor (“DOL”) has recently released the final amendments to the service provider fee disclosure regulations under ERISA §408(b)(2) and participant fee disclosure regulations under ERISA §404(a)(2). As a result, the applicability dates of both regulations and their requirements have been extended.

Service Provider Fee Disclosure Regulations

Under the interim final 408(b)(2) rules, all covered service providers must disclose information regarding their compensation in order to assist plan fiduciaries in understanding and evaluating the service provider’s contract with the plan and the potential for conflicts of interest.

The newly amended rule postpones the initial effective date from July 16, 2011 to April 1, 2012. The DOL feels this should give service providers and fiduciaries the additional time necessary to adjust to any changes in the final regulations, which the DOL intends to publish before the end of 2011.

Participant Fee Disclosure Regulations 
In general, the participant disclosure regulations require administrators to disclose to plan participants, who have the right to direct the investment of assets held in their accounts, fee and expense information that may be charged against their accounts.

The 404(a)(2) final rules are applicable for plan years beginning after October 31, 2011. However, the amended rule delays the deadline for plans to provide the initial annual and quarterly disclosures under those rules.

Specifically, the deadline for the plan administrator of a covered plan to provide the annual expense and investment disclosures to participants is now 60 days after the later of:

  • The effective date of the 408(b)(2) regulations (i.e., April 1, 2012), or
  • The applicability date of the regulations.

This deadline applies to all participants and beneficiaries, whether they were eligible to direct investments on the applicability date or became eligible at some time prior to the initial annual disclosure.

The amended rule also clarifies the deadline to provide the first quarterly expense disclosure under the new rules. That deadline is the 45th day following the last day of the quarter in which the plan must provide the initial disclosures.

If you have any questions concerning the changes to the deadlines or the requirements under the fee disclosure regulations, please do not hesitate to contact Scott R. Rain.

© 2011 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person any tax-related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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