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DOL Extends Annual Participant-Level Fee Disclosures in Retirement Plans

In a significant new regulation, the DOL has provided relief for plan sponsors to provide required fee disclosures to participants in qualified retirement plans, including 401(k) and 403(b) programs.

The previous rule initially called for participant fee disclosures “at least once in any 12-month period,” and interpreted that to mean that those disclosures must be made within 365 days of the prior notice. After much employer input, DOL issued a non-enforcement policy that gave plan sponsors a one-time opportunity to re-set the date on which the annual disclosures were made by allowing up to 18 months between the first and second required disclosures. At that time, the DOL again asked for public comments, and they were inundated. First, employers complained that after the second disclosure, there would be “calendar creep” as each new annual disclosure would move up by one day each year (e.g. if the annual fee disclosure for 2014 was given on December 1st, the next disclosure would have to be delivered by no later than November 30th of the following year). Second, given the 60+ annual notices required by the IRS and DOL for a variety of health and welfare and retirement plans, plan sponsors wanted to coordinate all within one package, possibly at open enrollment time.

Responsive to these and other comments, the DOL has amended the participant-level fee disclosure regulations to define “annually” as “at least once in any 14 month period.”

The amendment offered in the new regulation takes effect June 17, 2015, but a second non-enforcement policy announced in the preamble to the new regulation provides that plan administrators may rely on the new rule immediately.

Bottom line: make sure you collect and deliver the required participant fee disclosures (and in particular be sure to include the required comparative charts used to disclose investment-related information) in a timely manner.

Posted on March 26, 2015 by Gary B. Kushner, SPHR, CBP, President and CEO

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