An Open Letter to Business Owners

Congratulations on offering a retirement plan to your employees. 
Just when you think you have a handle on your plan ... the rules are changing.

What do you know about the Department of Labor (DOL) major disclosure regulation change? 
More importantly, what does the rule change mean to your employees and how does it impact you?

The current effective date for these regulations is July 1, 2012 (assuming no further changes by the DOL). 
This effective date has been extended from April 1, 2012 to allow more time for compliance. 

In summary the key changes are as follows:

• Retirement plan service providers must fully describe their services and disclose their compensation to you the plan sponsor.  More ...

• Disclose to participants the plan-level fees they pay.  More ...

Are you prepared or will you be surprised by the fee disclosures?

Either way, are you prepared to answer questions from your employees?

We are here for you.  Click HERE to contact us.

[Additional Information] 

Are You Ready for the New Fiduciary Requirements?   [Top]

The Department of Labor is updating the rules (See TCRS 2011-02).  In summary, two of the major changes that retirement plan fiduciaries and administrators should be aware of are as follows:

Covered Service Providers (CSPs) must fully describe their services and fees.

This rule was to take effect in January'2012; however, the date was extended to April 1, 2012 and then again extended to July 1, 2012.  Covered Service Providers (CSPs) meaning, financial advisors, financial consultants, or third-party administrators who expect to receive $1,000 or more in direct or indirect compensation for their services, must detail their compensation and/or fee structure to fiduciaries.  CSPs include financial advisors or Third-Party Administrators (TPAs) who act as fiduciaries or Registered Investment Advisors for plan sponsors.  If applicable, the CSPs must disclose fees charged for recordkeeping along with recordkeeping methods.

Fiduciaries must detail fees to plan participants. 

If participant-level fee disclosures are not provided to plan participants by the applicable date, then a plan participant or beneficiary may claim a violation of fiduciary duty on the part of the plan sponsor.  The new regulations require fiduciaries to disclose and keep current the following items:

• Plan investment instructions, features, and options,
• Plan fees and expenses paid from participant accounts (detailed fees identification),
• Any other specific fees or charges that are drawn from a plan participant’s account.

Plan Sponsor (Employer) Impact   [Top]

The sponsor must review all vendor compensation to determine that the fees are reasonable.

For participant disclosures, sponsors will need to rely on disclosures by vendors to figure out for what contracts they will need to report fees to participants, even old contracts and even former participants.  Sponsors must disclose to participants plan-related information and investment-related information such as circumstances under which elections can be made, limitations on transfers (exchanges), voting rights, and investment alternatives under the plan.  

Sponsors must work with vendors to make sure administrative expenses are disclosed. 

Additional / Supporting Information: 

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