Nonprofit Retirement Plan Fee Disclosure – Action Needed


Nonprofit organizations that sponsor retirement plans such as 401(k) and 403(b) plans are subject to two separate, but related, newly finalized U.S. Department of Labor regulations regarding disclosure of retirement plan fees that will become effective soon: (1) vendor-to-plan disclosure, and (2) plan-to-participant disclosure. Compliance with the vendor-to-plan regulation is required no later than July 1, 2012, and the plan-to-participant disclosure generally is required by August 30, 2012. In this alert, we provide an overview of these regulations and provide action items for the immediate attention of nonprofits that sponsor retirement plans.

The regulations apply to retirement plans of nonprofit entities governed by ERISA; most nonprofit retirement plans are subject to ERISA.

Vendor-to-Plan Disclosure

The regulations are another step in the expansion of reporting on administrative fees and mutual fund expenses that began with the changes to IRS Form 5500 a few years ago. Vendors that serve as plan fiduciaries, registered investment advisors, recordkeepers, or brokers, or that provide certain professional services for “indirect compensation,” are required to provide detailed fee-related disclosures to the plan fiduciaries responsible for selecting and monitoring them. Here is what to expect from the vendors...

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