New ERISA Fiduciary Obligations Exist Regarding Recent Fee Disclosures

This year, the Department of Labor (DOL) imposed two new fee disclosure requirements on retirement plans subject to the Employee Retirement Income Security Act (ERISA). First, every “covered service provider” of an ERISA retirement plan had to provide the plan’s fiduciaries with a service and fee disclosure by July 1, 2012 (the “Service Provider Disclosures”). Second, qualified defined contribution retirement plans with participant-directed investments were required to disclose plan, investment, and fee information to participants by August 30, 2012 (the “Participant Disclosures”). While the initial disclosure requirements have passed, there are ongoing requirements for plan fiduciaries. With respect to Service Provider Disclosures, plan fiduciaries should: (1) prepare procedures for reviewing the sufficiency of such disclosures, (2) request any missing or inadequate information, (3) determine whether the fees are reasonable and prepare a schedule to evaluate service provider fees going forward, (4) report disclosure failures to the DOL, and (5) determine the reasonableness of the contract and terminate the contract if necessary. With respect to Participant Disclosures, plan fiduciaries should: (1) review their service provider’s commitment to providing Participant Disclosures, (2) prepare ongoing annual and quarterly disclosures, (3) review the disclosures for compliance purposes, and (4) develop a procedure for notifying participants of changes in the disclosures (typically changes due to a change in investments).