Last week I received copies of the first new fiduciary fee disclosures required by final Department of Labor Regulations under ERISA Section 408(b) (2). Fee disclosures were received from Fidelity Investments and Prudential Financial, providers to two client retirement plans. The details of the required disclosures are described in my earlier July 26, 2011 and February 9, 2012 Compensation Benefits Alerts.
To my surprise, there were no surprises. In both instances the fees as broken out in full detail, aggregated to the fees quoted in the respective fee agreements with the two providers. These new disclosures will allow boards of directors and plan fiduciary committees to look at all the fees (investment management and record keeping, etc.) and determine on an “apples to apples” basis whether they are a reasonable use of the plan’s assets.
Future requests for proposals will likely follow the format of these fee disclosure tables. If you are an in-house fiduciary you should be receiving the required disclosure statements on or before the regulatory deadline of July 1, 2012. If your service providers have not mentioned anything about the statement, a gentle reminder or confirmation that they will be meeting the deadline may be in order. Plan sponsors are required to issue the first participant fee disclosures 60 days after the fiduciary disclosure deadline – August 31, 2012. Failure to receive the fiduciary disclosure statement triggers an obligation by the plan fiduciary to notify the Department of Labor and ultimately to terminate the provider relationship in order to avoid prohibited transaction penalties.