DoL: All Fees and Commissions Must Be Disclosed to Plan Administrator

>Insurers and others that provide benefits covered by the Employee Retirement Income Security Act (ERISA) now have a legal duty to report all fees and commissions paid to brokers, agents and other people to the plan administrator so that the Form 5500 can be completed correctly. It is a criminal violation, according to the DoL opinion, to not report such fees.

>This includes all commissions and fees paid by an insurance company where the agent’s, broker’s or other person’s eligibility for the payment is based at least in part on the value of contracts, according to the opinion. This includes not only sales commissions, but also prizes, trips, gifts, club memberships, stock awards, and all other incentives. Even if fees and commissions are paid from a separate bonus fund, they must be reported, according to the DoL. Finder’s fees and other payments of the sort must also be included.

>Insurers must also provide plan administrators with a proportionate allocation of fees for each contract for which a Schedule A is required. As long as they are disclosed to the plan administrator, any reasonable method of allocating such fees and commissions is acceptable, according to the opinion.

>The opinion is available at http://www.dol.gov/ebsa/regs/aos/ao2005-02a.html .