Department of Labor issues final fee disclosure regulations extends effective date

On February 3, 2012, the Department of Labor (DOL) released the long awaited final plan sponsor fee disclosure regulation that will provide plan sponsors with information about the administrative and investment costs associated with providing employer-sponsored pension and 401(k) plans to their employees.  This regulation will also assist plan fiduciaries and plan sponsors in fulfilling their duties under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA).

The effective date of the regulation has been extended from its previous effective date of April 1, 2012 to July 1, 2012.

As a result, the date for the plan sponsors to provide the initial notice to their plan participants under the DOL’s 404(a)(5) participant disclosure regulation has also been delayed.  Initial disclosure for participants must be furnished no later than the latter of: 60 days after the plan’s anniversary dates that occurs on or after November 1, 2011 or 60 days after the effective date of the plan sponsor-level fee disclosure rule.

The earliest plan sponsors would need to comply with the initial participant disclosure rules is August 30, 2012, and that date could be later depending on the plan anniversary date.

Within this final regulation the DOL clarified that covered service providers may provide the required disclosures to responsible plan fiduciaries electronically. The use of the service provider’s website or other electronic medium must be readily accessible to the responsible plan fiduciary, and the fiduciary has clear notification on how to access the information. This does not apply to 404(a)(5) participant disclosures.  The final regulation does not require a summary or guide of the required disclosure information; however, the DOL intends to publish a proposed regulation later this year which may require a guide or similar tool. The DOL did publish a sample guide that service providers could choose to use in conjunction with final regulation on a voluntary basis.

The DOL published a fact sheet a summary of the changes to the interim final rules published last year. Additional information on the final 408(b)(2) rule is available at the DOL’s EBSA home page.

If you have questions, please contact Terri McNaughton, Employee Benefit Plan Practice Chair, at tmcnaughton@elliottdavis.com or 864.552.4740.