Employee Benefit Plan Sponsors: Are You Ready For The New Fee Disclosure Regulations?
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has issued final regulations under ERISA Section 408(b)(2) which require covered service providers of retirement plans to disclose certain detailed information about fees and potential conflicts of interest. The disclosures are required for all ERISA covered plans. These new rules are effective for all arrangements between covered plans and covered service providers as of July 1, 2012. Click here to view the final 408(b)(2) rules on EBSA’s website.
What do employee benefit plan sponsors need to do?
Plan sponsors must obtain the required fee disclosure information from all covered service providers and review, analyze, and assess the reasonableness of the fees for the particular service. Any service providers who are not in compliance with the new regulations will be in violation of ERISA’s prohibited transaction rules and could be subject to penalties.
What else is required?
The effective date of July 1, 2012 triggers (with a 60 day delay) the compliance date of the participant-level disclosure regulation at 29 CFR § 2550.404a-5. The participant-level disclosure rules require plan sponsors to provide participants in participant-directed plans information about plan and investment costs. Plan sponsors, no later than August 30, 2012, will be required to provide an annual disclosure of plan-level and investment-level information including related fees and expenses. Click here for more detail from EBSA’s website.
If you would like to discuss this matter further, please contact Drew Cheney.
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