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
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.”