Contributed by Rebecca Dobbs
Almost two years ago, the Department of Labor (DOL) published an interim final rule outlining requirements for various types of service providers to disclose fees to plan sponsors/employers. The DOL also announced additional regulations requiring employers to, in turn, notify plan participants of various fees and expenses being charged to the plan. Due to a lack of clarity and confusion on the two sets of new disclosures, the DOL extended the implementation deadline pending publication of a final regulation. This final regulation was recently published on February 3, 2012.
The new deadline for the disclosures required by 401(k) service providers to plan sponsors/employers is now July 1, 2012. From there, employers will have 60-days (or until August 30, 2012) to comply with the disclosures they must, in turn, provide to employees. A fact sheet on this final regulation can be found on the DOL’s web site at: http://www.dol.gov/ebsa/newsroom/fs408b2finalreg.html.
It remains to be seen whether the additional disclosures will increase 401(k) litigation or make it easier for participants to bring such litigation. In theory, additional disclosures are generally a good thing in that they will assist participants in making educated investment choices and assist employers with monitoring plan fees and expenses. However, a plan sponsor/employer must always be conscious of potential challenges to expenses and fees charged to a plan and prepare, for example, to be able to demonstrate a reason why it may have chosen a higher cost fund over a lower cost fund as an investment option in the plan.