Service Providers to ERISA Plans: DOL’s New Disclosure Regulations Are Imminent—Are You Ready?

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According to Department of Labor (DOL) officials, the agency will soon publish a “final” final regulation on required disclosures by plan service providers under the statutory prohibited transaction exemption provided by Section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA). This makes it a good time for plan service providers (such as investment advisers, broker-dealers, banks, insurance companies, and recordkeepers) and plan fiduciaries to assess where they are in their efforts to comply with the new disclosure rules. The new rules are currently scheduled to become effective on April 1, 2012.

These new rules have been added as a condition to an exemption from the ERISA prohibited transaction rules that, absent other exemptive relief, is necessary for firms to provide such basic services as recordkeeping and investment management to ERISA plan clients. By their terms, the rules apply to ERISA-covered retirement plans, mainly corporate tax-qualified plans such as defined benefit and defined contribution retirement plans (including 401(k) plans), but not to welfare plans such as health plans and life insurance plans (although DOL is considering extending the rules to such plans) or individual retirement accounts (IRAs) (including IRAs that are part of “Simple” or “SEP” arrangements).

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