On April 25, 2007, the Department of Labor (DOL) published in the Federal Register a request for information (RFI) regarding fee and expense disclosures to participants and beneficiaries in participant-directed plans. The RFI is another step in the DOL’s current review under ERISA of the adequacy of regulatory and disclosure requirements for plan- and investment-related fees and expenses, including but not limited to indirect compensation received by plan service providers.

  • In July 2006, DOL proposed revisions to the annual Form 5500 report, including expanded reporting on Schedule C of indirect compensation received by plan service providers. The DOL currently expects to publish a final Schedule C in the second quarter of 2007, effective for the 2008 plan year (i.e., to be filed at the earliest in 2009).
  • In this most recent development, the RFI solicits commentary from plan participants, sponsors, service providers, financial intermediaries, and the general public to assist DOL in determining whether rules under ERISA should be adopted or modified to ensure that participants directing the investment of their plan accounts have the information needed to make informed decisions. In general, the RFI requests information on (i) what administrative and investment-related fee information participants should consider in directing their plan accounts, (ii) in what manner should that information be provided or made available to participants, and (iii) who should be responsible for providing that information, all taking into account that participants regularly may bear the expense of that disclosure. Responses are due on or before July 24, 2007.
  • The DOL continues to consider proposing an amendment to its regulation under the ERISA service provider exemption (section 408(b)(2)) requiring more comprehensive fee disclosure, including of indirect compensation, at the time a plan enters into or renews a service agreement with a provider that is a party-in-interest to the plan. Such an amendment apparently would not be limited to participant-directed plans, but would apply in all instances where section 408(b)(2) relief is required. The most recent informal indications from DOL suggest this amendment (which has been under consideration for some time) may be proposed as early as summer 2007.