In recent years, the U.S. Department of Labor ("DOL") has undertaken significant initiatives to increase transparency and individual responsibility in managing retirement security, including helping plan fiduciaries and participants better understand fees and costs associated with retirement plans. To that end, the DOL issued final regulations on February 2, 2012, under Section 408(b)(2) of ERISA (the "Final 408(b)(2) Regulations"), which requires "covered service providers" to disclose to "responsible plan fiduciaries" (including employer plan sponsors and plan administrators) certain direct and indirect compensation that they receive in connection with the services that they provide to a plan.
The Final 408(b)(2) Regulations extend the due date for providing these disclosures to July 1, 2012. Once the plan fiduciaries receive the disclosures, they are required to assess the reasonableness of the compensation paid for necessary services and to identify potential conflicts of interest on a timely basis in order to avoid a "prohibited transaction" and resulting penalties.
The extension of the due date impacts the due date for participant-level disclosures that plan fiduciaries of individual account plans, such as 401(k) plans, are required to provide to participants under Section 404(a) of ERISA. The new due date is August 30, 2012, and the issuance date of the first quarterly participant statements is now November 14, 2012.
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