(b)lines Ask the Experts – DOL’s New Fee Disclosure Proposal

March 25, 2014 (PLANSPONSOR (b)lines) – “Just heard the Department of Labor has updated its fee disclosure requirements. Is there any immediate action I need to take as a plan sponsor?”

Michael A. Webb, vice president, Retirement Practice, Cammack Retirement Group, answers: 

No, assuming that your service providers are currently following their requirements to provide certain fee and potential conflict of interest information under the current 408(b)(2) regulations. The Department’s Employee Benefits Security Administration (EBSA) is proposing an amendment to that regulation that would provide greater standardization of the disclosure requirement to plan sponsors in the form of a guide to assist plan fiduciaries in reviewing the disclosures required under 408(b)(2) (see “DOL Proposes Service Provider Fee Guides”). The guide would be required only if the disclosure itself is provided in multiple and/or lengthy documents. The proposed amendment also includes a new annual timing requirement for changes to both the guide and the underlying disclosures (previously, changes were required to be disclosed when made).

Since these are proposed amendments, they are not effective as yet. In fact the comment period regarding such regulations does not close until June 10. Furthermore, it is important to understand that nothing in this proposal directly affects the plan sponsor fee disclosure requirement to participants, which is covered under a separate regulation (404(a)(5)).

Though there is no immediate action required, plan sponsors may wish to take this opportunity to review the existing 408(b)(2) disclosure requirements of their service providers to confirm that such providers are in compliance with the existing regulations, keeping in mind that, at present, the disclosures are required to be updated every time there is a change to the provisions, as opposed to annually.

Thank you for your question!


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.
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