As promised, on March 19, 2015, the U.S. Department of Labor (DOL) published guidance that would provide more flexibility in the timing of the annual plan and investment disclosures for participant-directed defined contribution plans, required since 2012. Under ERISA Reg. §2550.404a-5 as adopted, the requisite disclosures must be furnished to plan participants and beneficiaries on or before the first date they can direct investment of their plan accounts and “at least annually thereafter,” which DOL interpreted to mean no more than 365 days after the prior annual disclosure. This approach created a number of practical difficulties, and often had the effect of an ongoing “creeping” forward of the deadline for subsequent plan years. In response to concerns expressed by the regulated community, the DOL has proposed revising the timing rule to require the annual disclosure to be within 14 months of the prior annual disclosure, effectively providing a two-month grace period that is intended to permit a more consistent and regular schedule for the annual disclosure.

In a creative use of administrative procedures, DOL provided this guidance in three forms:

  • A temporary enforcement policy, to the extent that plan administrators determine that making use of the two-month grace period benefits participants and beneficiaries;
  • A “direct final rule,” which takes effect on June 17, 2015, unless DOL receives significant adverse comment during a 30-day comment period ending April 20, 2015, in which case the direct final rule will be withdrawn. The temporary enforcement policy was included with and will expire upon adoption of the direct final rule; and
  • proposed rule, which will become the vehicle for considering and resolving commentary if the direct final rule is withdrawn.

DOL requested comments on this solution, as well as whether a comparable refinement is appropriate for the timing of the quarterly disclosures under this regulation (which is not affected by this proposal).