“The majority of the changes that were made were to facilitate administration,” Bradford P. Campbell of Schiff Hardin LLP, formerly assistant secretary of labor for Employee Benefits and head of the Employee Benefits Security Administration (ERISA), told PLANSPONSOR. “They are generally positive changes. I also think that the department was wise to propose in a separate rule the summary disclosure.”
Campbell added, “I think one area where the change is kind of interesting is the way they are asking plans to respond to failure to disclose. They are almost commanding it now.”
Roberta J. Ufford of the Groom Law Group said the final rule has not changed much from the interim rule, but a couple of clarifications the DoL made are very helpful. One of the biggest clarifications is the additional information requirement. This new requirement asks for a description of the arrangement between the payer and the covered service provider who is receiving the compensation.
“The DoL has indicated that providers who want to deliver information electronically—such as through a website—must give plan sponsors notice of where to find the information online, and make sure that it will be readily accessible,” Ufford said. “The DoL seems to be more liberal in terms of allowing providers to use electronic means to deliver information to plan sponsors than we had thought because the DoL does not seem to require that plan sponsors have agreed to receive information by an electronic delivery method such as posting to a website.”
Campbell said that plan sponsors need to understand that with the final rule now in place starting July 1, they will need to do things differently. Plan sponsors will need to use a checklist asking their service providers if they have provided them with everything they need to comply with 408(b)(2).
“They need to make sure it is complete, then they can get into their normal fiduciary process. They just need to add steps to safeguard themselves,” said Campbell. “I think plan sponsors generally know this, I’m not sure they fully understand there is a duty on the plan and service provider, and they need to have a solid process for dealing with those procedures.”
Ufford said, “Our impression is that most covered service providers have been looking at this rule for over a year. Plan sponsors on the other hand, they know it is coming, but I’m not sure they they have really begun to focus on implementing their own compliance guides and procedures.”
Plan sponsors need to view the disclosures, Ufford added. They should be looking and preparing the record that the disclosures were received and complete.
Campbell stated: “I’m glad to see this regulation concluded. I initially proposed this regulation back in 2007. I think in general, the regulation looks a lot like where we were at the end of the Bush Administration. I think most folks are comfortable with the actual content of these disclosures. I think it is a big achievement. I think the department did an overall good job.”
« DXP Enterprises to Pay $120K to Fired Employee