Legal Alert: Final Section 408(b)(2) Disclosures Regulation Published; Disclosure Deadline Extended


The Department of Labor (DOL) has issued a final regulation establishing specific disclosure obligations for covered service providers (CSPs) regarding service details and fee information that must be provided to responsible plan fiduciaries as required by ERISA Section 408(b)(2). These disclosure requirements are established as part of a statutory exemption from ERISA's prohibited transaction provisions. The final regulation also extends the deadline for the disclosures from April 1, 2012 to July 1, 2012. The new effective date for CSPs also impacts when plan fiduciaries must make participant-level disclosures. For calendar year plans, the initial annual disclosure of plan-level and investment-level information must be furnished no later than August 30, 2012. The first quarterly statement must be furnished no later than November 14, 2012.

The final regulation imposes specific disclosure obligations on CSPs to ensure plan fiduciaries have the information they need to: assess the reasonableness of compensation received by the CSP; identify any potential conflicts of interest; and satisfy the reporting and disclosure requirement imposed by Title I of ERISA. The disclosures must be made in writing to a responsible plan fiduciary of a covered plan and must describe the services to be provided and all direct and indirect compensation to be received by a CSP, its affiliates, or subcontractors.

The final regulation applies to ERISA-covered defined benefit and defined contribution pension plans. It does not apply to simplified employee pension plans (SEPs), SIMPLE retirement accounts, IRAs, and certain annuity contracts and custodial accounts described in Internal Revenue Code section 403(b). Additionally, the final regulation does not apply to employee welfare benefit plans. The DOL has indicated that it will separately publish proposed disclosure requirements for welfare benefit plans in the future.

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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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