Not a Member? Get access to HR news and resources that you can trust.
The raw emotions of a polarized electorate are taking a toll on employee relations. How can HR promote peace?
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Get the HR education you need without travel expenses or time out of the office.
Elevate Your Talent Strategy. Join us in Chicago, IL – April 24-26, 2017.
Sponsors of 401(k) and other defined contribution retirement plans that offer non-mutual fund investment options face potential disclosure problems related to new requirements to inform plan participants about investment fees, according to an alert from The SPARK Institute, an industry group representing providers of retirement plan services.
Under the Department of Labor’s (DOL) disclosure regulations:
• By July 1, 2012, plan sponsors receive 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 disclose plan facts and investment fees to participants under the DOL's final rule Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans.• By Nov. 14, 2012,plan sponsors issue the first of required quarterly statements of fees deducted from individual accounts (initially reflecting fees deducted during the third quarter).
• By July 1, 2012, plan sponsors receive 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 disclose plan facts and investment fees to participants under the DOL's final rule Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans.
• By Nov. 14, 2012,plan sponsors issue the first of required quarterly statements of fees deducted from individual accounts (initially reflecting fees deducted during the third quarter).
However, “many investment managers and providers of non-registered investments, such as bank collective funds, separately managed accounts and annuities may be surprised that they will have to make significant new information available in order for plan sponsors to comply with the new regulations,” said Larry Goldbrum, The SPARK Institute's general counsel. “Some non-registered investment providers may not have the information readily available, and developing the information and cost-effective methods for providing it to plan sponsors and plan record keepers could be complex and time consuming.” Goldbrum added.
Plan sponsors face potentially significant fiduciary issues if an investment provider is unable or unwilling to provide the information that the plan needs in order to comply with the rule, Goldbrum noted. "Plan sponsors should act now to ensure that their non-registered investment providers are preparing the information needed,” he advised.
“Although the regulation states that plan sponsors can rely on the information provided to them by a third party, one has to question the prudence and soundness of a decision to continue offering a fund that is unwilling or unable to provide information that the DOL has stated should be provided to participants,” Goldbrum said. As a result, he warned that plan sponsors may be put in the position of having to drop an investment option if the investment provider cannot supply the information that is required.
Information Sharing Initiative Announced
To address these concerns, Goldbrum said that The SPARK Institute had begun a new initiative to develop data standards for retirement plan recordkeepers and providers of non-registered investment fund providers to enable them to electronically share information with each other and with existing investment information aggregators. “We are leveraging the experience and expertise we have from developing information sharing standards for 403(b) plans and lifetime income solutions to identify that data that should be shared and establish the formats and protocol for sharing it,” he said.
Stephen Miller is an online editor/manager for SHRM.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 3,200 companies