THE ICI has prepared this FAQ on the subject. FAQ 408(b)(2) allows some service providers to avoid amending previously provided 408(b)(2) notices and to give others additional time to personalize the content of these communications. Under the new fee disclosure rules, plan sponsors have increasingly focused on how registration fees will be allocated among participating populations. Beyond erisa`s general fiduciary requirements, there are limited legal guidelines that deal directly with the allocation of costs. This white paper discusses the fiduciary standards that apply to such allocation decisions. The U.S. Department of Labor`s Employee Benefits Security Administration has announced improved procedures for plan sponsors seeking fiduciary relief in the event of non-compliance with a service provider`s plan-level fee disclosure rule. Many believe that the 408(b)(2) and 404(a)(5) fee disclosure rules will be a panacea for eliminating hidden or hard-to-find 401k fees. However, if plan sponsors are not actively involved in the escrow process, there will be an unintended consequence that can be costly to many plan sponsors. Over the past four years, the DOL has published three sets of fee disclosure rules for pension service providers, all of which fall under Section 408(b)(2) of ERISA. Despite all the instructions from the DOL, there are a lot of questions and uncertainties.

This is an FAQ that helps service providers navigate the new world of fee disclosure. Checklist of Disclosure Requirements for Covered Service Providers ERISA §408(b)(2) Regulations. Major changes could occur in the way pension plans are managed after the Ministry of Labour announced the final version of its rules under section 408(b)(2) of ERISA, which requires broker-dealers to disclose their services and fees to individual plan sponsors. With the exception of contract amendments and investment information, the covered service provider is not required to provide additional information until the contract is extended or extended. This article explains when to make disclosures for changes. Certain types of service providers are referred to as “covered service providers” (CSPs) under Rule 408(b)(2), including: Amendments to ERISA Rules 408(b)(2) regarding the reporting and disclosure of remuneration of service providers have generated growing interest in the amount and relevance of compensation plans paid to service providers, including financial professionals. Get tips to show your customers the value of the important services you offer. You have received your 408(b)(2) disclosures from your covered service providers. Have you looked at them? Do you know what you`re watching? Do you know what to do next? This section discusses the plan sponsor`s liability for disclosing the covered service provider`s fees. On February 2, 2012, the Ministry of Labor (DoL) finalized the provisions of Article 408(b)(2) and Article 404(a)(5) of ERISA. The final arrangements are a relief for employers and plan providers who have been eagerly awaiting definitive clarification on the exact method and format to provide all the necessary information.

In addition to only delaying the implementation of the new reporting requirements, we now have a clear understanding of how the rules will work. This bulletin describes the steps that plan sponsors must take to review the disclosures they receive and how to proceed appropriately in cases where disclosures have not been provided. All affected service providers, including consultants, must provide a responsible plan trustee with a written description of their compensation received by July 1, 2012. This requirement is a nuisance to many who have fully disclosed their fees and services in the past, but for many others, 408(b)(2) is a nuclear bomb with potentially disastrous consequences. What do you mean? Consider the following three consultant scenarios. Section 408(b)(2) of the LIRIR is designed to provide a responsible plan trustee with sufficient information to determine whether fees are reasonable and whether conflicts are avoided. A practical approach to benchmarking fees in a manner equivalent to paragraph 408(b)(2) is described here. While paragraph 408(b)(2) applies to a significant portion of very frequent transactions and relationships, there are a number where the answer is not as clear.

And as with other matters of eccentric forbidden transactions, a careful examination of the individual facts will be crucial. While the fiduciary rule, which was issued on the 9th. June, did not contain any specific termination obligations (at least during the transitional period from June 9 to December 31, 2017, which could be extended1), existing Regulation 408(b)(2) – including the requirement to provide amendments within 60 days – is separate from all other requirements of the escrow rule or associated exceptions. As a result, some service providers were unsure whether they would have to provide a notice of change regarding their fiduciary status under the escrow rule and, if so, when such a notice of change would be required. Order 408(b)(2) on the Disclosure of LOOL Fees requires certain covered service providers to provide certain information to plan administrators so that they can comply with their disclosure requirements in the Member-Level Disclosure Order. This bulletin complements the Participant-Level Disclosure Policy by providing guidance on some of the most frequently asked questions about the Participant-Level Disclosure Policy and its implementation. (A) At the written request of the trustee of the plan concerned or the administrator of the plan concerned, the service provider shall provide all other information on the remuneration received under the contract or agreement that is necessary for the plan to comply with the reporting and disclosure requirements of Title I of the Act and Regulations. Forms and annexes issued as part of these forms.

(E) Disclosure of Investments – Fiduciary Services. In the case of a covered service provider as described in paragraph (c)(1)(iii)(A)(2) of this Division, the following additional information regarding any contract, product or investment entity that holds assets of the plan and in which the plan has a direct capital interest and for which fiduciary services are provided in accordance with the contract or agreement with the plan concerned; unless such information is disclosed to the responsible plan trustee by a covered service provider that provides record-keeping or brokerage services in accordance with paragraph (c)(1)(iii)(B) of this section – the disclosure of the 401k fee is a significant deficiency in one of the largest asset classes. Stable value, or guaranteed funds, typically make up 10-40% of the assets in most 401k plans and have different and complex structures that make it difficult to disclose fees. Billions of dollars in so-called spread-based fees will go undisclosed under the U.S. Department of Labor`s new fee disclosure rules. In general, a 408(b)(2) disclosure is a fee document associated with employer-sponsored pension plans. The term comes from a specific part of the Employee Retirement Income Security Act of 1974 (ERISA), which describes the rules for employer-sponsored defined benefit and defined benefit plans, such as a 401(k). Regulations made under paragraph 408(b)(2) require service providers to provide employers (and other trustees responsible for a pension plan) with all the information they need to do the following: No later than 1.

In July 2012, most plan trustees and service providers complied with the final 408(b)(2) fee disclosure rules by disclosing information about service provider compensation and potential conflicts of interest. For those who have not, the latest 408(b)(2) fee disclosure rules require responsible plan trustees to file a notice with the Ministry of Labour seeking relief from ERISA`s prohibited transaction provisions. On July 16, 2012, the DOL adopted a final rule explaining where and how to submit this notification. (v) the date of the initial disclosure obligations; Changes. The Ministry of Labour would like to request new contributions from industry and form focus groups on the effectiveness of disclosure requirements for pension service providers. The DOL states that further information gathering is needed to examine current practices and the implications of a final settlement. Much has been written in recent months about the new Regulation 408(b)(2), which will come into force on July 1. Much of this has happened from the perspective of plan providers, not plan sponsors.

Therefore, many sponsors run a real risk of a prohibited transaction by neglecting two simple but very critical points of this regulation. .