Effective date extended for fee disclosure requirements


On February 2, 2012, the U.S. Department of Labor (DOL) announced a three-month extension to the effective date of the new fee disclosure regulations related to ERISA-covered retirement plans. Prior to this extension, service providers were required to comply with the new disclosure requirements as of April 1, 2012, and plans were required to comply with new participant disclosure requirements by May 31, 2012. Under the extension, service providers now have until July 1, 2012, to be in compliance, and plans will have until August 30, 2012, to make the required disclosures to participants.

The new regulations require service providers to provide specific information to retirement plans to enable plan fiduciaries to determine the reasonableness of compensation paid to the service providers. Related regulations require plans which permit participants to their direct investments to provide specific information to those participants.

Additional change may exclude certain 403(b) plans for disclosure requirements

In addition to announcing the extension of the effective date described above, the DOL has modified the regulations to exclude certain 403(b) plans from the new disclosure requirements. Specifically, 403(b) annuity contracts and accounts are not subject to the new disclosure requirements if (i) they were issued to employees before January 1, 2009, (ii) the employer ceased making contributions, (iii) rights of individual owners of the contracts or accounts are enforceable against the insurer or custodian with employer involvement and (iv) such individual owners are fully vested.

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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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