Legal Alert: DOL Proposes 408(b)(2) Disclosure Guide

by Eversheds Sutherland (US) LLP

On March 12, 2014, the Department of Labor (DOL) published in the Federal Register a proposed amendment to its disclosure requirements for “covered service providers” to retirement plans under ERISA § 408(b)(2) that would require a separate “guide” if those disclosures are contained in multiple or lengthy documents. 

  • Effective July 1, 2012, those disclosures became necessary to qualify for the statutory exemption from the ERISA § 406(a) prohibition on services provided to a plan by a “party in interest,” including by an existing service provider.
  • At the time those requirements were finalized, DOL did not specify any particular form for these disclosures.
  • DOL did publish a “sample guide” that could be used on a voluntary basis, and reserved for a future rulemaking whether to mandate the use of a guide.
  • The proposed amendment would require such a guide in certain circumstances, effective 12 months after publication of a final rule. The proposal does not address whether the guide would be required for new arrangements only, or also for existing arrangements for which 408(b)(2) disclosures have already been provided.
  • The proposal would make no other change to the content, form, or delivery requirements for the disclosures themselves.  The preamble comments favorably on the electronic delivery of 408(b)(2) disclosures, e.g., on a readily accessible website for which responsible plan fiduciaries have clear notification about gaining access.

Under the proposal, a guide would be required if a covered service provider’s 408(b)(2) disclosures are contained either in more than one document or in a document in excess of a (to be determined) specified number of pages.

  • No guide would be required if the disclosures are contained in a “single, concise” document.  DOL sensibly recognized that, for the many 408(b)(2) disclosures that can be appropriately provided in a straightforward form, a guide would be a cost without a benefit.
  • DOL requested commentary on the page length criterion, including on page format and font size and other constraints to prevent manipulation of that criterion.
  • It is unclear what the single document or page criteria would mean for disclosures provided on separate or “running” web pages, for example.

The proposed guide would not be a summary of the disclosures.  Instead, it would be a roadmap to the location of all the required information in the disclosure documents, i.e., of:

  • The description of services provided;
  • The statement concerning services provided as an ERISA fiduciary or registered investment adviser;
  • The description of all direct compensation;
  • The description of all indirect compensation;
  • The description of any compensation paid among related parties;
  • The disclosure concerning compensation for any recordkeeping services provided; and
  • The disclosures about investment vehicles or options required of certain covered service providers.

For each of these disclosure elements, the guide would provide a document and page reference, or other “sufficiently specific locator” such as a section number or a hyperlink to each required element of the disclosure that would enable the responsible plan fiduciary to “quickly and easily” find the required disclosure. 

  • DOL referred to its previously published “sample guide” as illustrative of the approach it intends.
  • While the approach is conceptually simple, it is entirely predictable that there would be complexities in its execution.
  • Page references will not be technologically viable for a number of covered service providers, for example – a point about which DOL expressed skepticism in its regulatory impact analysis.
  • Also, the “quickly and easily” concept does not seem a reliable legal standard in a prohibited transaction exemption like the § 408(b)(2) regulations.
  • In addition, it is unclear what DOL intends for guides to disclosures that cover multiple separate services or products, such as those often provided by retirement platform providers or by broker-dealers.
  • It seems possible that the guide, if adopted, will cause some covered service providers to restructure their 408(b)(2) disclosures altogether.  If so, the deferral of the guide mandate will add to the cost of compliance with these new disclosure requirements.

Also, the guide would be furnished as a document separate from the disclosure materials, with the intent that it would be prominently identified to the responsible plan fiduciary reviewing the disclosures, and include contact information for a person or office available for questions about the location or substance of the disclosures.

  • It is unclear whether providing the guide on the cover of the disclosure materials would suffice, or what would constitute a separate document in an electronic delivery environment.
  • The contact information requirement apparently would be inapplicable to covered service providers not required to provide a guide (although many if not most 408(b)(2) disclosures already include that information).

Changes to the information provided in the guide would have to be furnished only annually.

  • In principle, this seems a more workable approach for both responsible plan fiduciaries and covered service providers than furnishing updated guides coincident with updates to the disclosures themselves, which (other than for certain investment information) are required within 60 days of a change.
  • If the guides for plans entering into new service arrangements are required to contain current information, however, then covered service providers would still need the capability to update the guide on a real-time basis, even if the changes need be communicated for existing arrangements only annually.

In its regulatory impact analysis, DOL estimated that there are approximately 12,000 covered service providers furnishing 408(b)(2) disclosures, and their additional cost to provide the guide would not exceed $22.2 million annually.

  • The estimate assumes that, for each unique service or product provided, it would take a covered service provider no more than four hours to identify the requisite disclosures, construct the guide and validate its accuracy.
  • The estimate appears not to take account of the cost, for example, of information technology infrastructure to support the guide or of guides that would have to be produced on a plan-specific basis.

DOL specifically requested commentary on numerous aspects of the proposal, signaling a possibility that any final rule could diverge materially from the proposal.  Comments are due June 10, 2014.  DOL also intends simultaneously to conduct focus groups among small plan sponsors to test the efficacy of current 408(b)(2) disclosures and of the proposed guide.  DOL expects to publish the results of its focus group testing after the close of the comment period, and may reopen the comment period in light of those results.

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.

© Eversheds Sutherland (US) LLP | Attorney Advertising

Written by:

Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.