Fee Disclosure Deadlines Extended
In early February, the Department of Labor (DOL) released final 408(b)(2) regulations. The regulations extend the compliance deadline for service provider-to-employer fee disclosure, from April 1 to July 1, 2012.
At the same time, for calendar-year plans, the delivery date for employer-to-participant 404a-5 disclosure was extended to no later than Aug. 31, 2012, for the annual notice, and no later than Nov. 14, 2012, for the quarterly notices, which will appear in The Standard's third-quarter participant account statements.
Other Key Changes
Below you will find summaries of changes to the final 408(b)(2) regulations that are most relevant for advisors. For more details, refer to the DOL Fact Sheet which contains additional links.
- "Covered Plan" definition: The DOL clarified that the "covered plan" definition includes 403(b) plans except for annuity contracts and custodial accounts issued before Jan. 1, 2009, for which the employer's obligation to contribute has ceased.
- Indirect compensation information: The regulations provide an expansion of the information that must be provided to employers with regard to indirect compensation. In addition to the amount and payer of indirect compensation, such information must now include a description of the arrangement between the service provider and the payer to expose possible conflicts of interest.
- Annual disclosure regarding investment options: Information about investment option changes — expense ratios, sales loads, etc. — must now be provided at least annually, rather than within 60 days of the change. The change brings the plan sponsor disclosure regulation in line with those for participant disclosure.
- Agreement termination: A responsible plan fiduciary must now expeditiously terminate an agreement if the service provider fails to provide the required information within certain time frames.
How The Standard Can Help
You can use the resources below and other materials on www.standard.com to assist you in meeting the requirements:
- Refer to the Advisor Compliance At-A-Glance: Plan Sponsor Fee Disclosure flyer for an overview of requirements and deadlines.
- Refer to the Plan Sponsor Fee Disclosure brochure for specific information regarding the fees and services providers must disclose to plan administrators and other plan fiduciaries.
- Use the Sample Agreement (RIA and Non RIA) if you do not currently provide a written agreement that discloses your services and fees.
- Customize the Sample Agreement (RIA and Non RIA) to reflect your agreement with a client if you do not have an existing contract and need to provide a disclosure on or before July 1, 2012.
More Resources For Advisors
You will find more information and resources in the Winter 2012 issue of Mainspring Partner (now called Mainspring Edge). Please note that disclosure deadlines may have changed since the newsletter was issued. Refer to the "Using Fee Disclosure As A Prospecting Opportunity" article and the related sidebar, "Helping Clients Respond To Questions," as well as the section titled "What's New." You will also find current materials on www.standard.com.