August 28, 2012 (PLANSPONSOR (b)lines) – “I work for an ERISA 403(b) plan sponsor and due to extreme difficulties in obtaining the proper 404a-5 participant fee disclosure information from some of our plan vendors (we have several active vendors in our plan), I am concerned that we will not meet the upcoming August 30th deadline to distribute the proper fee disclosure to our participants. What should I do?”
Michael A. Webb, Vice President, Retirement Plan Services, Cammack LaRhette Consulting, answers:
The Experts sympathize with your situation, as it is often difficult to rely on third parties to provide you with timely and accurate fee information, especially if you are dealing with many such parties. Though the Department of Labor has made it clear that there will be no further delays in the deadline, they appear to have provided just a little bit of “wiggle room” in the form of Q&A 37 of the recently released Field Assistance Bulletin (FAB) 2012-02R (see “DOL Issues Clarification to Participant Fee Disclosure Guidance”)
The Q&A states that, for purposes of enforcement of the deadline for the initial participant disclosure, they will consider whether the plan sponsor has acted in good faith to satisfy the disclosure requirements. Thus, the Experts would suggest that you obtain as much of the required disclosure information from as many vendors as possible prior to the deadline, and then work with benefits counsel well versed in such matters to determine if the resultant disclosure would be considered sufficient as having acted in good faith, even though certain vendor information might be missing from the final document. Note that the application of this good faith standard applies only to the INITIAL disclosure; the DOL fully expects all subsequent disclosures to be 100% compliant with all guidance, with no exceptions.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.