Now that the July 1, 2012 deadline has passed for ERISA “covered service providers” to inform “responsible plan fiduciaries” about the services performed for their retirement plans and the investment management, recordkeeping, and other fees charged to those plans, it is time for employers and other plan fiduciaries to take action.
First, plan fiduciaries must review the information provided by the covered service providers. If any information appears to be missing or is incomplete, a plan fiduciary must request the missing information from the covered service provider in writing. If the information is not provided within 90 days, the plan fiduciary will need to notify the Department of Labor. In addition, plan fiduciaries must analyze all of the information provided by plan service providers. If a fiduciary does not conclude that the service provider’s fees are reasonable for the services it performs, the fiduciary must take appropriate action, such as negotiating lower fees or finding a new service provider. This review and analysis process must be documented in order to demonstrate fulfillment of one’s fiduciary duties.
In addition, the plan administrators of individual account plans (usually, the employers sponsoring the plans) need to begin compiling the information that is required to be provided to participants by August 30, 2012. Some of this information will come directly from the disclosures provided by covered service providers. For example, with respect to designated investment alternatives, covered service providers are required to disclose the total annual operating expenses, calculated in accordance with the participant disclosure regulations. Plan administrators should keep in mind that, although the covered service providers are required to provide much of the information that is to be passed along to participants, the plan administrators have the ultimate responsibility to provide the required fee information to participants.
Plan administrators must take time to analyze the information that will be disseminated to participants. In addition, plan administrators should anticipate participant questions and be ready to respond on short notice once the disclosures are delivered.
Finally, plan administrators need to gear up to deliver the quarterly notices. The first quarterly notice is due by November 14, 2012.