On July 30, 2012, the U.S. Department of Labor revised a Field Assistance Bulletin that it issued in May, 2012 on fee disclosures to retirement plan participants. The revision relates to any retirement plan that allows participants to invest their retirement savings through a brokerage account. The original requirements by the Department of Labor (described in my June, 2012 Client Update) came under heavy criticism for their impracticality and for the government’s issuing a position in a bulletin rather than through a rule-making process that would have given interested parties notice and an opportunity to comment.
If you are an employer, retirement plan trustee or plan administrator, you should have your retirement plans reviewed for compliance with these new rules, and in particular as to fees and related fiduciary issues, by the end of this month, as further described below.
The revised guideline reduces the burden on employers by no longer requiring them to monitor the investments that retirement plan participants make in brokerage accounts. The revised guideline also eliminates fee disclosure requirements relating to brokerage options. These revisions do not, however, change an employer’s general duties under ERISA to exercise prudence and loyalty to plan participants when establishing brokerage account options in a retirement plan. While plan fiduciaries do not have to provide fee information related to brokerage accounts, they must provide fee disclosures for mutual fund investment options.