Rules/Regs | Published in July 2012

Be Prepared

The 408(b)(2) deadline has come and gone, but 404(a)(5) is right behind it

By PLANSPONSOR staff | July 2012
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Illustration by JooHee Yoon

With all the attention surrounding the 408(b)(2) regulation, some industry experts think preparation for 404(a)(5) is falling by the wayside. Under Department of Labor (DOL) regulation 408(b)(2), covered service providers had until July 1 to be in compliance and disclose information about fees and services to plan sponsors of Employee Retirement Income Security Act (ERISA) plans. Under 404(a)(5), plan sponsors have 60 days from the effective date of the 408(b)(2) provider disclosure rules to supply fee information to participants.

Fred Reish, chairman of the financial services ERISA team at Drinker Biddle & Reath LLP, says he is concerned about plan sponsors’ lack of urgency in preparing for 404(a)(5). He thinks they believe the burden of participant disclosure falls on the recordkeeper, while, in reality, the recordkeeper is simply a service provider operating under a contract—not one ­acting as the fiduciary.

“It’s still the plan sponsor’s responsibility,” he says. “What [plan sponsors] haven’t really looked at is that the legal burden is on the ERISA plan administrator.”