George L. Whitfield
On February 2, 2012, the U.S. Department of Labor (DOL) published final service provider disclosure regulations completing its three-part requirements for disclosure and transparency of fees and conflicts related to retirement plan administration and investments. In addition to earlier fee disclosure for large plans on Form 5500 Schedule C, the guidance consists of:
- Final service provider regulations that require fiduciaries of all qualified plans to obtain fee disclosure and conflict information from covered service providers. Without proper disclosure and analysis, the service provider contract is a prohibited transaction.
- Final participant disclosure regulations published October 20, 2010, that require a plan administrator to provide plan and investment-related information to participants and beneficiaries eligible to direct the investment of their accounts in defined contribution plans. Failure to provide this disclosure is a breach of fiduciary responsibility under ERISA.
The deadlines for these requirements are now July 1, 2012, for service provider disclosures and August 30, 2012, for most plans for participant disclosures. This is only a 90-day extension of the previous deadlines of April 1, 2012, and May 31, 2012.
The final service provider regulations contain substantive changes from the interim rules, including welcome coordination of investment-related disclosures with those required by the participant disclosure regulations.
We have prepared a detailed article about the final service provider regulations, coordination with the participant disclosure regulations and steps plan sponsors should be taking now to prepare for these new obligations. On February 23 we sent an E-Bulletin to our employee benefits e-mail list with a link to the detailed article from our Web site. If you do not receive our employee benefits E-Bulletins, the detailed article can also be accessed directly at www.wnj.com/publications. We urge you to review these resources.
The new deadline dates will not change. Disclosure deadlines loom for all plan sponsors. Responsible plan fiduciaries must take steps to prepare for the July 1 effective date. It is not necessary for existing service provider contracts to be amended by July 1, but many plan sponsors will want to add a provision committing the service provider to compliance with the disclosure requirements. Without the required disclosure, any existing contract will be a prohibited arrangement.
The members of the Warner Norcross Employee Benefits Practice Group are prepared to assist you with the steps necessary for timely compliance with both of these disclosure requirements. For assistance, please contact George L. Whitfield ((616)752.2102 or firstname.lastname@example.org) or any member of our Employee Benefits Practice Group.