The previously issued DOL regulations regarding fee disclosure will become effective soon. The disclosure rules affect plans on two fronts: (1) required covered service provider disclosures and (2) required disclosures to plan participants. Service provider disclosures must be provided to plan fiduciaries by July 1, 2012. If a fiduciary does not receive the disclosures, it is required to notify the DOL. The fiduciary will be deemed to have engaged in a "prohibited transaction" subject to excise taxes if the required actions are not taken. Initial annual participant disclosures must be provided by August 30, 2012 and the first quarterly disclosure of actual expenses charged to each participant will be due by November 14, 2012. The disclosures must be provided to all eligible employees (regardless of actual participation). For more details regarding required service provider and participant disclosures, click here.
Practice Tip: Plan sponsors will want to:
- Identify affected plans and covered service providers.
- Notify covered service providers whose fees are being reimbursed from the plan.
- Contact providers and request the initial disclosure materials (even if only in draft).
- Certain participant disclosures will require information from plan providers. Plan sponsors should obtain that information sooner rather than later in order to meet the August 30 deadline.
- Plan sponsors intending to deliver participant disclosures electronically should confirm that such delivery will meet ERISA's electronic delivery requirements.
- If the plan will be signing new provider agreements, they should contain requirements for providers to comply with the disclosure rules and provide necessary participant disclosure information.