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August 8, 2011

Service Provider and Participant Fee Disclosure Final Regulation Issued

The DOL’s Employee Benefit Security Administration (EBSA) has issued a final rule that provides for an extension of the applicability dates relating to service provider fee disclosure to plan sponsors, and the participant level fee disclosure rules.  According to the final rule:

  • The service provider fee disclosure to plan sponsor rules were to take effect for relationships in existence on July 16, 2011 (see background Benefit Beat article, Retirement Plan Fee Disclosure Continuum).  The final rule extends the applicability date from July 16, 2011 to April 1, 2012.
  • The participant level fee disclosure rules were to take effect for plan years beginning on or after November 1, 2011 (see Benefit Beat article, Participant Level Fee Disclosure Regulations Finalized).  EBSA now provides for a transitional rule as to the effective date of these rules, as follows: 
    • Initial disclosures must be furnished no later than:
      • 60 days following the first day of the first plan year beginning on or after November 1, 2011; or
      • 60 days following the effective date of the service provider fee disclosure to plan sponsor rule.

What this means is that, for plan years beginning between November 1, 2011 and April 1, 2012, the first disclosure will be required by May 31, 2012.  For plan years beginning after April 1, 2012, the first disclosure will be required to be made within 60 days following the beginning of the plan year.

  • Quarterly statements of actual charges or deductions from a participant’s account(s) must be provided, and include both general administrative expenses, as well as individual expenses assessed against the participant’s account.  Quarterly disclosures must be furnished no later than 45 days following the end of the quarter in which the initial disclosures are required to be furnished to participants and beneficiaries. 

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

 

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