New DOL Guidance Provides Relief, But Concerns Remain

July 31, 2012 ( - Plan fiduciaries will hopefully find relief in new guidance about participant fee disclosures for brokerage windows—but experts say concerns loom for brokerage window-only plans.

By Corie Russell | July 31, 2012
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The Department of Labor's (DOL’s) Employee Benefits Security Administration (EBSA) issued Field Assistance Bulletin (FAB) No. 2012-02R, which supersedes Field Assistance Bulletin No. 2012-02. On May 7, the DOL issued Field Assistance Bulletin No. 2012-02, which provides guidance to its field enforcement personnel in question-and-answer format on the obligations of plan administrators under a final regulation to improve transparency of fees and expenses to workers with 401(k)-type retirement plans (see “DOL Issues Additional Guidance for Participant Fee Disclosures”).

Some plan sponsors and service providers were concerned about question 30 regarding brokerage windows and other arrangements that enable plan participants and beneficiaries to select investments beyond those designated by the plan (see “DOL’s Answer in Fee Disclosure Guidance ‘Surprising’”).   

Jason Roberts, CEO of Pension Resource Institute and managing partner at Roberts Elliott, LLP, told PLANSPONSOR that some in the industry thought the DOL had essentially created a rule through Field Assistance Bulletin 2012-02. The revised FAB seems to provide some relief for plan fiduciaries concerned about the original guidance.    

“While the original FAB 2012-02 would essentially have created new law — imposing unreasonable requirements on employers that provide mutual fund windows and brokerage windows as investment options in their 401(k) plans — the revised FAB ... takes a much more practical approach,” said Lynn Dudley, American Benefits Council senior vice president of policy, in a statement.

American Benefits Council said the revised FAB eliminates several significant fiduciary requirements that were not provided under current law but had been included under question 30 of the FAB as originally drafted—including requirements that a plan must have “a manageable number of investment alternatives,” monitor for “significant investment through a brokerage window” and provide participant disclosures for any investment selected through a brokerage window by at least 1% of participants to qualify for the safe harbor test.