The Department of Labor has released 408(b)(2) regulations which will impose new fee disclosure requirement for service providers effective July 16, 2011. The regulations were published on an interim basis and the DoL has provided a 45 day comment period before the regulation becomes final.
“We are very pleased the Department of Labor has issued regulations addressing the disclosure and transparency of fees,” stated Chris Thixton, Director of Vendor Services. “The industry lacks any sense of standardization related to disclosing information on plan fees,” Thixton added. “Clear and meaningful information will help plan fiduciaries when evaluating different service providers and identifying conflicts of interest.”
The final regulation differs from the initial proposed regulation in a number of significant respects.
- It does not require a formal written contract or arrangement delineating the disclosure obligations; however, disclosures must be made in writing.
- It treats pension plans separately from welfare plans
- It modifies the categories of service providers that must comply
- It relies on full compensation disclosure by service providers to help address conflicts of interest
- It includes a new provision requiring certain providers to disclose separately the cost of recordkeeping services
- It addresses the requirements of section 4975 of the Internal Revenue Code
- The exemptive relief for plan sponsors and fiduciaries is now incorporated into the final rule
The entire rule is available at: http://www.dol.gov/federalregister/PdfDisplay.aspx?DocId=24028
