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DOL Extends Effective Date for Fee Disclosure Rule

By SHRM Online staff  2/11/2011

Updated 2/3/2012

DOL Extends Deadlines for Service Provider and Participant-Level Fee Disclosures by Additional 3 Months


The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) published its long-awaited final rule, "Reasonable Contract or Arrangement Under Section 408(b)(2) – Fee Disclosure," in the Federal Register on Feb, 3, 2012. The final rule requires retirement plan service providers to disclose to plan sponsors the administrative and investment costs associated with their plans. It extends the effective date to July 1, 2012, for new and existing contracts or arrangements between service providers and plans covered under the Employee Retirement Income Security Act (ERISA).


Another set of required fee disclosures, from plan sponsors to 401(k) plan participants (participant-level fee disclosures), is set to take effect 60 days after the service provider fee disclosure deadline. Due to the extension of the effective date of the final rule, plan administrators for calendar year plans now must make the initial annual disclosure of "plan-level" and "investment-level" information (including associated fees and expenses) to participants no later than Aug. 30, 2012, and the first quarterly statement (for fees incurred July through September) must be furnished no later than Nov. 14, 2012.


To learn more, see the SHRM Online article "DOL Final Rule Extends Deadlines for Service Provider and Participant-Level Fee Disclosures."

On Feb. 11, 2011, the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) announced that it intends to extend the applicability date to Jan. 1, 2012, for an interim final disclosure rule covering fee disclosures from retirement plan service providers to employers who are plan sponsors and fiduciaries—to be known as "408(b)2 disclosures."

The DOL published an interim final rule on July 16, 2010, requiring certain service providers to employee retirement plans to disclose information to assist plan sponsors in understanding the reasonableness of the fees being charged for plan services and assess potential conflicts of interest that might affect the quality of those services. The new requirements were scheduled to apply to plan contracts or arrangements for services in existence on or after July 16, 2011 (see the SHRM Online article "DOL Issues Interim Final Rule on Disclosing Retirement Plan Fees").

“The department intended to have final rules in place sufficiently in advance of the July 16 applicability date to avoid compliance problems for both plans and their service providers,” Phyllis C. Borzi, assistant secretary of EBSA, said in a statement. “Given the need to ensure a careful review of all the valuable input we received on the interim final rule, including suggestions for a summary document to further assist plan fiduciaries in their review of furnished information, we now believe plans and plan service providers would benefit from an extension of the rules applicability date."

Borzi added, "An extension of the applicability date to Jan, 1, 2012 will ensure that we have the time we need to get the final rule right and that plans and their service providers have the time they need to undertake orderly and efficient compliance efforts following publication of the final rule.”

Disclosure to Participants Not Altered

The announcement does not affect a related EBSA final rule that requires employers who sponsor 401(k)-type defined contribution plans to provide their plan participants with greater fee disclosure. For plan years beginning after Oct. 31, 2011 (in most cases this means Jan. 1, 2012), plan sponsors still must provide participants with quarterly reports detailing plan and investment fees and expenses (see the SHRM Online article "Final Rule on 401(k) Fee Disclosure to Participants Seen as 'Reasoned Approach'").

Related Article:

What 401(k) Plans Can No Longer Hide, SHRM Online Benefits Discipline, February 2011 

Related Resource—External:

New Participant Fee Disclosure Rules: What Plan Sponsors Need to Know, The Principal Financial Group, January 2011

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