On July 16, 2012, the U.S. Department of Labor (DOL) published a final rule amendment to improve procedures for plan sponsors seeking fiduciary relief for a service provider’s failure to comply with the DOL's plan-level fee disclosure rule.
The new Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure/Web Page includes a provision to protect plan sponsors or other responsible plan fiduciaries from liability for a breach of their fiduciary duties under the Employee Retirement Income Security Act (ERISA) when a service provider failed to comply with the regulation’s comprehensive disclosure requirements.
By July 1, 2012, plan sponsors should have received fee disclosure data from their plan service providers under the DOL's final rule Reasonable Contract or Arrangement Under Section 408(b)(2) – Fee Disclosure. By Aug. 30, 2012, plan sponsors must disclose plan facts and investment fees to participants, including a summary of the administrative and individual expenses charged against participant accounts, under the DOL's final rule Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans. By Nov. 14, 2012, plan sponsors must issue the first of required quarterly statements of fees deducted from individual accounts, initially reflecting fees deducted during the third quarter.
Under the section 408(b)(2) disclosure final rule, if a plan sponsor discovers that required information has not been furnished by a plan service provider and efforts to obtain the undisclosed information from the service provider were not successful, the plan sponsor must notify the DOL by regular mail or electronically. The new amendment continues to permit paper or electronic submissions, but enhances the existing procedures by providing a dedicated P.O. box address (U.S. Department of Labor, Employee Benefits Security Administration (EBSA), Office of Enforcement, P.O. Box 75296, Washington, DC 20013) and a web-based tool that will assist plan sponsors in ensuring that all required information is submitted and providing immediate confirmation that notices have been received by the department.
"These revised submission procedures will help plan sponsors who, through no fault of their own, do not receive the disclosures promised to them by the 408(b)(2) regulation," commented Assistant Secretary of Labor for EBSA Phyllis C. Borz in a released statement. "When efforts to resolve the disclosure failure with their service provider are ineffective, plan sponsors will be able to take advantage of an easy-to-use, online tool that will guide them through the information that must be submitted to the department and provide immediate confirmation that their notice has been received."
Comments on the amendment to the 408(b)(2) regulation are being accepted through Aug. 15, 2012. Unless significant adverse comment is received, these revised procedures will be effective on Sept. 14, 2012, the DOL stated.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles:
401(k) Fee Disclosures: A Top 10 List of Issues, SHRM Online Benefits Discipline, July 2012
Tips on Communicating 401(k) Fees, SHRM Online Benefits Discipline, April 2012
A Checklist for Participant Fee Disclosures, SHRM Online Benefits Discipline, March 2012
Related External Article:
Armed with Fee Info, Plan Sponsors Bailing on Service Providers, InvestmentNews.com, July 2012
SHRM Online Benefits DisciplineSHRM Online Retirement Plans Resource Page