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DOL to Confirm Deadlines for Retirement Plan Fee Disclosures
Transition period for initial 2012 quarterly report to participants would increase from 60 to 120 days

By Stephen Miller, CEBS  6/1/2011
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Updated 2/3/2012


DOL Extends Deadlines for Service Provider and
Participant-Level Fee Disclosures by 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."

As employers gear up to comply in 2012 with a set of new rules from the U.S. Department of Labor (DOL) on retirement plan fee disclosures, the department is moving to shed light on some of the remaining gray areas.

On June 1, 2011, the DOL's Employee Benefits Security Administration published in the Federal Register a proposal titled "Requirements for Fee Disclosure to Plan Fiduciaries and Participants—Applicability Dates." The proposed rule would confirm the effective dates for a previously issued DOL interim final rule regarding fee disclosures by retirement plan service providers to plan sponsors, and a final rule regarding fee disclosures to plan participants.

Disclosure by Service Providers to Plan Sponsors

The DOL published an interim final "section 408(b)(2)" rule on July 16, 2010, requiring retirement plan service providers to disclose comprehensive information about their fees and potential conflicts of interest to defined contribution plan sponsors/fiduciaries under the Employee Retirement Income Security Act (ERISA). Although the new requirements originally were scheduled to apply to plan contracts or arrangements for services in existence on or after July 16, 2011, the DOL announced its intention to extend the deadline to Jan. 1, 2012.

The new proposed rule, when finalized, would make the extension official. The DOL recognizes that because a final rule is not yet in place, service providers might need additional time for compliance.

Disclosures to Plan Participants

In addition, the DOL published a final participant-level rule on Oct. 20, 2010, requiring that employers disclose information about defined contribution plan and investment costs to workers who direct their investments. The final rule requires that fee disclosure reports to participants be made quarterly and conform to the DOL's model comparative charts. The rule applies for plan years beginning on or after Nov. 1, 2011, (i.e., Jan. 1, 2012, for calendar year plans), with a 60-day transition provision.

The DOL's new proposal would amend the regulation’s transitional period so that employers would have up to 120 days to furnish initial quarterly disclosure reports to workers. This amendment is intended to ensure that employers obtain the information they need from service providers in order to satisfy their disclosure obligations to their workers.

“We want employers and workers to benefit from the increased transparency provided by these rules as soon as possible,” said Phyllis C. Borzi, assistant labor secretary for employee benefits security, in a released statement. “But we also appreciate that service providers may need more time for compliance efforts, because they have not yet seen a final ERISA section 408(b)(2) regulation. This action will provide that plan fiduciaries have all required information from service providers before they must disclose information to their workers, ensuring that workers receive accurate information about their retirement plan and investment costs.” 

The comment period for the proposal ended on June 15, 2011.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Articles—SHRM:

DOL Extends Effective Date for Fee Disclosure Rule, SHRM Online Benefits Discipline, February 2011

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

Fee Disclosure Rule Puts Spotlight on Investment Committees, SHRM Online Benefits Discipline, December 2010

Final Rule on 401(k) Fee Disclosure to Participants Seen as 'Reasoned Approach, SHRM Online Benefits Discipline, October 2010

Related Resource—External:

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

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SHRM Online Benefits Discipline

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