The Department of Labor has published a direct final rule that provides plan administrators with a two-month grace period for delivering required annual participant – level fee and investment disclosures. This modification will alleviate concerns regarding “creeping deadlines” in which plan administrators who furnished the required disclosures any time prior to the expiration of the 12-month deadline would accelerate the deadline for subsequent plan years.
The current fee disclosure regulations require that participants and beneficiaries in participant‐directed individual account plans disclose specific information regarding fees and investments to participants on or before the date on which the participant can first direct his or her investments and “at least annually thereafter.” The DOL has previously interpreted the phrase “at least annually thereafter” to require disclosures to be made no more than 365 days after the prior annual disclosures.
Example 1: Old Rules. ABC established and is the plan administrator of the ABC 401(k) plan. The plan is participant‐directed and subject to the fee disclosure regulations. ABC provided the annual fee disclosures December 8, 2013. That means the deadline to provide disclosures was December 8, 2014. ABC’s TPA sends ABC the 2014 disclosures November 16, 2014. The TPA was uncertain of the date ABC delivered the disclosures, and chose to send them early to avoid the deadline. ABC promptly sent out the disclosures November 20, 2014. Under the old rules, the deadline to send the 2015 disclosures would be November 20, 2015. The deadline would creep earlier and earlier each year.
As a result of comments the DOL received about the burdens associated with complying with the regulations, the agency decided to amend the regulation. Accordingly, the definition of “at least annually thereafter” is being amended to mean “at least once in any 14‐month period, without regard to whether the plan operates on a calendar year or fiscal year basis.” By replacing “12‐month period” with “14‐month period” plan administrators will gain a two--‐month grace period and flexibility regarding the delivery of the annual participant disclosures.
Example 2: New rules. Continuing Example 1, under the new rules the deadline to provide the next disclosures is January 20, 2016, 14 months after delivery of the 2014 notice. The TPA can send the notices to ABC early in November each year, confident that any date for distribution in November or December will be acceptable.
As a direct final rule, the amendment will be effective June 17, 2015 (90 days following publication in the Federal Register). For notices otherwise due prior to June 17, the DOL has adopted, effective immediately, a temporary enforcement policy that will treat a plan administrator as satisfying the regulation if the plan complies with the new 14‐month deadline. A condition of this enforcement policy is that the plan administrator reasonably determine that using the extended deadline will benefit participants and beneficiaries.
Pensions on Peachtree – April 16-17, Atlanta, GA – Register by March 23 and save $100
15 hours of continuing education credits, including 2 ethics credit hours.
Event presented in partner with the Ferenczy Benefits Law Center, LLP
Speakers – Alison Cohen, Gina Farmer, Ilene Ferenczy, Robert Richter, David Schultz, and Derrin Watson. View the detailed program Agenda and register online, here: http://www.relius.net/Events/seminardetail.aspx?CID=26696
2015 Live Classroom Seminars
PPA Pre-approved Plan Workshop (Corbel or PPD) – a 2-day program, 5 locations only, register now
401(k) Plan and Form 5500 Workshop – Registration is open! Back-to-back scheduling in 14 cities, April-June
For more information about these events: www.relius.net/events/events.aspx?Seminar
Upcoming Live Webcasts
Fundamental Series 05: Elective Deferrals, March 23, 12:00 pm ET
Fundamental Series 06: ADP/ACP Testing, March 30, 12:00 pm ET
Beyond Fee Disclosures, April 2, 12:00 p.m. ET
Fundamental Series 07: Safe Harbor 401(k) Plans, April 6, 12:00 pm ET
Service Agreements, April 10, 12:00 p.m. ET
Fundamental Series 08: Nondiscrimination Testing, April 13, 12:00 pm ET
Fundamental Series 09: 415 and Deduction Limits, April 20, 12:00 pm ET
Fundamental Series 10: Top-heavy, April 27, 12:00 pm ET
For more details about these programs, and to register online: www.relius.net/events/events.aspx?Web
Chicago Advanced Pension Conference – September 2-4 – Save the date
Online registration will open in June, here: http://www.relius.net/Events/seminardetail.aspx?CID=26684