House Passes Fee Disclosure and Pension Funding Relief Bill

May 28, 2010 (PLANSPONSOR.com) - The U.S. House of Representatives passed a bill Friday that provides for defined contribution plan fee disclosure and temporarily eases pension funding requirements.

The American Jobs and Closing Tax Loopholes Act (H.R. 4213) was considered by the House this week, after passing the Senate (see "Fee Disclosure Rides Along with Pension Relief").

Fee Disclosure

The bill passed by the House amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA) to increase the disclosures provided to administrators and participants of defined contribution plans, incorporating provisions that are based on the 401(k) Fair Disclosure and Pension Security Act.

Plan Administrator Disclosures

Service providers must provide a written statement to the plan administrator describing the services to be provided and the total annual revenue to be collected by the service provider in connection with the plan (disclosed in dollar amounts or as a formula) before entering into a contract with a plan administrator (and additionally for each year subsequent to the initial contract year). (Service providers with contracts less than $5,000 in the aggregate are exempt from these disclosure provisions.)

The revenue must be allocated among three categories:

• administration and recordkeeping services,
• investment management, and
• other services.

The bill directs the Secretary of Labor to develop safe harbors and other guidance on the allocation of revenue among the categories.