Once Is Not Enough: Ongoing Fee Disclosure Obligations Under ERISA

Firms that manage ERISA plan assets are subject to the US Department of Labor regulations on fee disclosures. In addition to the initial fee disclosure, these regulations require disclosure of changes to fee information previously provided to plan fiduciaries. This client publication describes the requirements for reporting such changes to plan fiduciaries.

Firms that manage separate accounts or funds that hold assets of ERISA plan clients are subject to ongoing disclosure obligations to these clients under the fee disclosure regulations of the US Department of Labor (the “DOL”). It has been nearly a year since the DOL’s regulations on service provider fee disclosures first became effective. These regulations required asset managers and certain other service providers to ERISA plans to provide their plan clients with detailed disclosures related to the direct and indirect fees charged to the plans. The regulations resulted in a round of fee disclosures to existing plan clients last summer ahead of the July 1st effective date of the new regulations.

The DOL regulations also require asset managers to keep their fee disclosures current. New disclosure obligations are triggered when there are changes, whether or not material, to the information that managers previously provided to plan fiduciaries. Some of the changes to the fee disclosure may be covered in an amended investment management agreement, which, by definition, would have been given to the plan fiduciary as part of the amendment process. Alternatively, an emerging best practice appears to be a single disclosure document, similar to the template provided in the DOL regulations, capturing all changes to covered disclosure items since the last update. If you used that template for the July 2012 disclosure, it should be sufficient to amend that template, with the changes flagged.

Please see full memo below for more information.

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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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