Gearing up for the April 1, 2012 fee disclosure deadline? Well, yesterday the Department of Labor released final regulations under Section 408(b)(2) of ERISA, requiring retirement plan service providers to disclose information about their services and fees to plan sponsors. They then delayed the application of the rules until July 1, 2012 to give plan sponsors more time to comply.
Some changes were made to the interim rule with the release of this new final rule:
- There is an increase in the information that must be disclosed relating to any indirect compensation received by a covered service provider to include a description of the arrangement made between the payer of the indirect compensation and the service provider.
- They revised the investment-related information that must be disclosed by providers of fiduciary services to an investment contract, product or entity that holds plan assets and in which the plan has a direct equity investment to provide consistency for parties that are also required to comply with the DOL's participant-level disclosure regulation under ERISA Section 404(a).
- Providers of record-keeping or brokerage services required to provide investment-related information are now permitted to comply with the regulations by providing information from the investment issuer's current disclosure materials, provided the issuer is one of the regulated entities described in the regulations.
- Adding an optional "summary guide" to assist fiduciaries with their review of required disclosures.
- Changing the deadline for disclosures of changes to investment-related information so that providers may disclose all such changes on an annual basis instead of being required to separately disclose each change within 60 days of the date the provider knows of the change.
- Revising the deadline for providing related reporting and disclosure information to responsible plan fiduciaries to coordinate with the date the plan intends to comply with ERISA's general reporting and disclosure requirements, rather than the prior requirement to provide this information upon request.
- Clarifying that any errors or omissions made by the covered service provider in disclosures of changes to previously disclosed information can be corrected within 30 days of the date the provider knows of the errors or omissions.
- Requiring any covered service provider that provides record-keeping services to include a detailed explanation of the record-keeping services provided to the plan and the cost of those services.
From a plan sponsor's perspective, these changes should not have a significant impact on the information that is disclosed to participants. However, it may change how information is reported to the plan by service providers. Because these changes are relatively fresh, we should see some further explanation to sponsors about what they are required to communicate and we will continue to pass that information along.