The Department of Labor's extended deadlines for compliance with the new fee disclosure rules are fast approaching.
As discussed in our prior Employee Benefit Alerts (Fee and Investment Disclosure in Participant-Directed Plans: Final Rule, dated October 22, 2010, and Plan Fee Disclosures: DOL Issues Interim Final Rule, dated July 20, 2010), these fee disclosure rules apply generally to retirement plans governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Under the new final rule announced by the Department of Labor on February 2, 2012, the deadline for compliance with the rules requiring service providers to disclose fee information to plan fiduciaries is July 1, 2012; and the deadline for plan administrators to furnish certain detailed fee disclosures to participants in participant-directed 401(k) and other retirement plans is effectively August 30, 2012 or, if later, 60 days after the first day of the first plan year that begins on or after November 1, 2011. Quarterly disclosures required under the new rules will need to be furnished to participants and beneficiaries no later than 45 days after the end of the quarter in which the initial fee disclosures are furnished.
Plan sponsors and administrators should take steps now to prepare for the implementation of the new requirements.
With respect to the new rules regarding service provider fee disclosures, plan sponsors and administrators should identify covered service providers and coordinate with those service providers, as necessary, to ascertain the status of the required fee disclosure. In order to avoid potential fiduciary liability exposure under ERISA, plan sponsors and administrators need to ensure that the service providers furnish the required fee disclosure by the July 1, 2012 deadline. In addition, plan sponsors and administrators should be reviewing the fee disclosures in order to evaluate the reasonableness of the fees being charged, in accordance with their ERISA fiduciary responsibility.
With respect to the new rules regarding participant fee disclosures, plan sponsors and administrators should communicate with service providers to determine which parties will be responsible for preparing and distributing the required fee disclosure communications, to establish methods to be used for distributing such materials to plan participants, and plan for the communications to be prepared for review well in advance of the August 30 deadline.
