(b)lines Ask the Experts – Fee Disclosure Deadlines in 2013

January 29, 2013 (PLANSPONSOR (b)lines) – “I work for a 403(b) plan sponsor who is attempting to piece together a calendar of critical due dates for 2013.

“Our plan year is the calendar year, and I realize that the deadlines for the initial 408(b)(2) plan sponsor fee disclosure and 404(a)(5) participant fee disclosure were July 1st and August 30th, 2012, respectively. But I do not recall reading any guidance as to the deadlines for 2013? Can the Experts assist in this regard?” 

Michael A. Webb, Vice President, Retirement Plan Services, Cammack LaRhette Consulting, answers: 

You are quite correct; although much was written regarding the initial compliance deadlines for fee disclosures, much less has been written about the ongoing compliance deadlines, which vary from the initial deadlines.  

With regard to the 408(b)(2) service provider disclosures to the plan sponsor, if a service provider contract is extended or renewed during 2013, a new disclosure must be provided reasonably in advance of the date of extension or renewal. If contracts are NOT being extended or renewed in 2013, the deadlines for 2013 would be dependent on any changes in information with expect to the initial disclosures.  

If investment-related changes have been made since the July 1, 2012, initial disclosure, such changes must be disclosed to the plan sponsor by July 1, 2013, as there is a requirement to disclosure such information on an annual basis. If changes OTHER than investment changes have been made, such changes must be disclosed within 60 days of the change (except in extraordinary circumstances beyond the service provider’s control, in which case the change should be disclosed as soon as practicable).  

With respect to 404(a)(5) participant fee disclosures, there are separate deadlines for annual fee disclosures, fee disclosures that must be provided to new plan participants, and changes to fee disclosures. The annual fee disclosure must be provided every 12 months, so that disclosure would presumably be due by August 30, 2013, for plans who provided the initial disclosure on the August 30, 2012, deadline.  

For new plan participants, the most recent annual disclosure must be provided on or before the date that they can first direct plan investments (for many 403(b) plan that permits all employees to make elective deferrals as of date of hire, this material should be included in the new hire package). With regard to changes to the fee disclosures, such changes must be furnished to all plan participants at least 30 days, but not more than 90 days, in advance of the effective date of the change (again, there is an exception if there is an inability to provide such notice due to events beyond the control of the plan administrator, in which case notice of changes should be provided as soon as is reasonably practicable). Finally, plan sponsors should confirm with their vendors, if they have not done so already, that quarterly statements to participants are including a disclosure of the actual dollar amount of fees charged to each participant as required under 404(a)(5).  

The Experts thank you for this informative question that will no doubt fill a knowledge gap among many plan sponsors! 

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.