The U.S. Department of Labor's Employee Benefits Security Administration announced February 11th that it is delaying the effective date of the service provider fee disclosure rules under ERISA section 408(b)(2). Service providers subject to these rules now have until January 1, 2012 to bring all new and existing retirement plan service contracts or arrangements into compliance with these final regulations.
On July 16, 2010, the Department of Labor published interim final regulations requiring certain retirement plan service providers to disclose fee-related information to a plan's fiduciaries. These new disclosures are intended to assist retirement plan fiduciaries in determining the “reasonableness” of the fees charged by the service provider as well as assessing any potential conflicts that may affect the quality of those services. For further details about the disclosures required under these regulations, please see our previous client alert summarizing the ERISA section 408(b)(2) final regulations.
The regulations were originally scheduled to be effective for all new and existing service provider arrangements on July 16, 2011. With this recent announcement, covered service providers now have until January 1, 2012 to establish processes to ensure that existing and future service contracts and arrangements are compliant with the ERISA section 408(b)(2) regulations.
This extension of the compliance deadline will also give the Department of Labor an opportunity to fully assess the comments it received in response to its request for comments at the time it published the interim final regulations. To this end, service providers and plan fiduciaries will need to continue monitoring these regulations for any additional amendments issued by the Department of Labor before year end.