DOL Policy Allows Employers A Limited Opportunity To Re-Set Timing Of Annual Participant Fee Disclosures


The DOL’s new participant fee disclosures regulations took effect last year.  These rules require 401(k) and other participant-directed plans to provide participants with an annual disclosure of certain plan and fee information, including a comparison of plan investment alternatives.  Most plans provided the initial annual disclosure in July or August of 2012, and under the DOL regulations the deadline for each subsequent annual disclosure is the anniversary of the preceding notice.  For example, a plan that provided the initial disclosure to participants on August 2, 2012 had to provide this year’s disclosure no later than August 2, 2013.

Many in the 401(k) community have raised concerns about the timing requirements and have been asking the DOL to change the rules so that the participant fee disclosures can be coordinated with other plan notices or events.  In response, the DOL recently published a Field Assistance Bulletin that provides limited relief.  In essence, the DOL is allowing plans to postpone either this year’s or next year’s annual disclosure by up to six months, if the responsible plan fiduciary determines that doing so will benefit plan participants and beneficiaries.  If a plan fiduciary decides to re-set the notice cycle, the fiduciary should document the decision-making process, including the reasons why the re-set will benefit participants and beneficiaries.

This is a welcome change because it will allow plans to re-set the notice cycle to coincide with other plan events, such as annual open enrollment or the issuance of annual IRS safe harbor 401(k) notices.  However, this relief does not address a key problem – the requirement in the regulations that each year’s comparative chart be provided within 12 months of the immediately preceding one.  The DOL acknowledges that this is an issue, and it is considering whether to revise the regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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