The Department of Labor has issued proposed regulations which would require covered service providers (CSPs) subject to the fee disclosure rules to provide the responsible plan fiduciary (RPF) with a guide which would enable the RPF to locate specific information in potentially lengthy or multiple disclosure documents. This is consistent with comments the DOL made in 2012 when it issued the final 408(b)-2 regulations.
These rules are only proposed and they have no current effect. Moreover, the proposal suggests that the new requirements would not go into effect until 12 months after the DOL issues final regulations. Issuing final regulations may take some time. There is a 90-day comment period, but, in addition, the DOL will be conducting focus groups to determine how and to what extent plan fiduciaries are using the information from fee disclosures. The DOL says they may reopen comments on these proposed regulations after the focus groups are done and analyzed.
Under the regulations, a CSP must provide to the RPF a guide to the fee disclosure material. The guide must be a separate document from the initial disclosures. The guide must provide contact information and tell the RPF where to locate specific information included in the CSP’s initial disclosures:
· The services being provided
· The fiduciary/investment advisor status of the CSP
· The compensation (direct, indirect, related party, termination) of the CSP
· Recordkeeping expenses
In addition, certain look-through fiduciaries (such as investment managers of common collective trusts and pooled separate accounts) and platform record keepers) must provide investment-related information (i.e., information for the comparative chart). The guide must tell the RPF where to locate a description of shareholder fees and annual operating expenses. However, the guide need not point the RFP to other investment information the RFP must provide to participants (such as investment results or benchmarks).
The 2012 fee disclosure regulations apply to all covered service providers for all employer retirement plans subject to ERISA. However, the requirement to provide a guide to RFPs does not apply if the initial disclosures are contained in a single, concise document. What is concise (i.e., How many pages in the initial disclosures)? The DOL will determine the parameters in the final regulations.
Under the proposed regulation, the guide must specifically identify “the document and page or other sufficiently specific locator, such as a section, that enables the responsible plan fiduciary to quickly and easily find” the information. The DOL is requesting suggestions on what those identifiers might be, such as hyperlinks to specific areas in web pages where the RPF can locate the information.
When it issued the fee disclosure regulations in 2012, the DOL provided a sample guide. The preamble to the new proposed regulations suggests that that the 2012 sample still demonstrates what the DOL is looking for under the new rules.
If there are any changes to the guide, the CSP must update the guide annually. Platform recordkeepers and look-through fiduciaries must annually inform CSPs of changes in investment information. It would make sense to provide an updated guide at the same time such a CSP provides updated investment information.
We will discuss this issue in details in our upcoming Web seminar “Fee Disclosure Guide: What the New Roadmap Rules Mean for You” presented on Tuesday, April 8, at 12:00 p.m. ET, details and registration will be posted soon. We will also discuss this topic at our Southern Retirement Plan Conference and at our 401(k) Plan Workshop. More information here: www.relius.net/Events/events.aspx?Seminar
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New Southern Retirement Plan Conference – April 24-25, Atlanta, GA – Early fee ends 3/24
Pensions on Peachtree
Earn up to 15 hours of CE Credit including 2 ethics hours.
See more details and register online, here: www.relius.net/Events/seminardetail.aspx?CID=43.
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Upcoming Web Seminars – just posted!
Earned Income: Computing Compensation for the Self-employed, March 20, 2:00 pm ET
457(b) Plans for 401(k) Practitioners, March 27, 2:00 pm ET
Forfeiture Allocations & ERISA Recapture Accounts, April 3, 12:00 pm ET
New - Fee Disclosure Guide: What the New Roadmap Rules Mean for You, April 8, 12:00 pm ET. Registration opens soon.
Attribution: What You Don't Know Can Hurt You, April 10, 12:00 pm ET
Top Ten Corrections Not Addressed in EPCRS, April 16, 12:00 pm ET
Details and online registration: www.relius.net/Events/events.aspx?Web
Focused Web Seminar Series – 12 NEW topics – bundled pricing – begins March 24
Titles of the 12 new segments: Average Benefit Test; Nondiscrimination Testing With Related Employers; Benefits, Rights, and Features; Troubleshooting Cross-Tested Plans; Resolving Loan Errors Under EPCRS; RMDs: Calculating Lifetime and Death RMDs; Retirement Plans - Mergers and Acquisitions; The Ethics of Retirement Plan Practice; Roth Rollovers and Distributions; Prohibited Transactions; Compensation: Allocation vs. Testing; Automatic Enrollment and Escalation Provisions.
Registration is open. Bundled pricing – register for nine segments and get three segments free. Details and online registration: www.relius.net/Events/events.aspx?Web.
Recently Archived Web Seminars
401(k) Testing Techniques, January 2014
403(b) Plans: Understanding Universal Availability, January 2014
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