New ERISA Fee Disclosure Deadline is Looming

Rachel Smith, CPA

Do you know those packages that you get from your company's retirement plan service provider?  The ones that are sitting unopened in a pile on your desk or on the floor?   Well, you will want to open those soon since they likely contain information that you as your company's plan sponsor will need to pass on to your employees as soon as possible.  The DOL finally issued the final regulations relating to ERISA fee disclosure requirements earlier  this year.  Many people have been uncertain what these new rules mean, but not taking the time to figure it out could disqualify your company's retirement plan.  The DOL now considers it part of the Plan Sponsors job to not only pass the fee information on, but also to evaluate the quality of the services that the plan participants are receiving for the price that they pay.  A summary of the due dates and requirements are below.

Effective July 1, 2012 – Service Providers must provide fee disclosures to the Plan Sponsors.

Effective August 30, 2012 – Plan Sponsors must provide fee disclosures to Plan Participants.  An example of the fee disclosure form may be found at http://www.dol.gov/ebsa/pdf/401kfefm.pdf

November 14, 2012, quarterly expense statements are required to be provided to Plan Participants starting with the quarter ending September 30, 2012.  Going forward, participants must receive the expense statement within 45 days of the end of the quarter.

If your service provider failed to provide the information by July 1, it is the plan fiduciary's responsibility to request it and pass the information on to the participants by the end of August.  If you have made reasonable attempts to obtain this information and the service provider still refuses, you can report them to the DOL by filing a notice online at www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html.

What can you do to prepare?

1.       Determine who is your company's responsible plan fiduciary.

2.       Determine which of your covered service providers are included in the regulations.

3.       Contact those covered service providers and ask when they will provide the required disclosure, if they haven't already.

4.       Determine if the disclosure provided complies with the new regulations.

5.       Document your review of fee reasonableness and retain all documentation.  Reasonableness may be determined by comparing the fees paid by your plan to other plans by requesting bids from other service providers.

6.       Pass the information on to your plan participants.

Sounds easy, right?  For more information regarding the DOL regulations go to http://www.dol.gov/ebsa/newsroom/fs408b2finalreg.html.

Good luck!