EBSA Releases Final Rule on Fee Disclosures, Deadline Now July 1
MANCHESTER, NH - Eldridge Investment Advisors alerts companies with employer-sponsored defined contribution retirement plans, including 401(k) and 403(b), of new deadlines associated with ERISA 408(b)(2).
The U.S. Department of Labor's Employee Benefits Security Administration issued on February 2, 2012, a final rule on fee disclosures under ERISA Section 408(b)(2), which provides employers sponsoring pension and 401(k) plans with information about the administrative and investment costs associated with providing such plans to their workers. The department also announced a 3-month extension of the compliance deadline for this rule — now July 1, 2012, for new and existing contracts or arrangements between ERISA-covered plans and service providers.
The rule requires service providers to furnish information that will enable pension plan fiduciaries to determine both the reasonableness of compensation paid to the service providers and any conflicts of interest that may impact service provider's performance under a service contract or arrangement. It requires disclosures of direct and indirect compensation certain service providers receive in connection with the services they provide. The rule applies to those service providers that expect to receive $1,000 or more in compensation and provide certain fiduciary or registered investment advisory services, make available plan investment options in connection with brokerage or record-keeping services or otherwise receive indirect compensation for providing certain services to a plan.
Eldridge Investment Advisors held an informational workshop in November 2011 featuring Mary Rosen, J.D., associate regional director of Employee Benefits Security Administration, on the topic of service provider fee disclosure and participant-level fee disclosure under ERISA 408(b)(2) regulations. Her presentation and a full audio recording of the workshop are available on the Eldridge website at: ERISA Fiduciary Responsibility.
The department also intends to publish a separate proposal that would require service providers, in addition to providing the required fee and investment expense information, to furnish a guide or similar tool to assist plan fiduciaries in identifying and locating the potentially complex information that must be disclosed and which may be located in multiple documents.
Service providers not in compliance as of July 1 will be in violation of ERISA's prohibited transaction rules and subject to penalties under the Internal Revenue Code.
A fact sheet on this regulation is available on EBSA's website here. Additional information about how the final rule differs from the previously published interim final rule can be seen here.
For more information, please contact Craig Garner at Eldridge Investment Advisors at 800-821-3812.
About Eldridge Investment Advisors
Eldridge Investment Advisors, Inc., located in Manchester, NH, is an independent investment advisory firm focused on retirement plan and investment consulting for individuals, families, corporations and trusts throughout New England and beyond. With the added capability to provide retirement plan administration through its affiliated company Stephen Eldridge & Company, Inc., the firm is especially well-suited to meet the needs of the principals and key executives of privately held businesses.
Securities offered through LPL Financial. Member FINRA/SIPC.