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05-23-2012 Department of Labor Issues Guidance to Clarify Retirement Plan Fee Disclosures

On May 7, 2012, the Department of Labor's Employee Benefits Security Administration (EBSA) published new guidance to assist plan administrators and service providers in implementing new regulations intended to improve the transparency of fees and investment expenses in employee's retirement accounts. The guidance seeks to clarify final regulations issued in October 2010 under Section 404(a) of the Employee Retirement Income Security Act of 19754, as amended (ERISA). In general, Section 404(a) requires the disclosure of information regarding the fees and expenses associated with employees' 401(k) plans or other participant-directed individual account plans. The new guidance also addresses related regulations issued in February 2012 under ERISA Sec. 408(b)(2) that require service providers to disclose to employers sponsoring these plans the administrative and investment costs associated with providing such plans to their employees. Together, the 404(a) and 408(b)(2) regulations seek to ensure that employees receive core investment information in a format that enables them to meaningfully compare their plan's investment options.

The new guidance from the EBSA consists of 38 frequently asked questions and answers addressing such topics as the format of the disclosures, brokerage windows disclosures, designated investment alternatives, revenue sharing disclosures, transition rules, and effective dates of the 404(a) and 408(b)(2) regulations. The complete EBSA guidance can be found here.

Plan administrators should review the new guidance in order to comply with their obligations under the new fee-transparency regulations. For most plans, the initial disclosures must be furnished to participants and beneficiaries no later than August 30, 2012.

Fraser Stryker is a leader in employee benefits law. Attorneys in the Firm's Employee Benefits & ERISA Practice Group advise individuals, business entities, governments, and nonprofit/tax-exempt organizations on a wide variety of employee benefits matters and transactions. Fraser Stryker works with employers to implement and maintain employee benefit plans that help attract and retain top talent. Fraser Stryker also represents ERISA plan fiduciaries and service providers advising them on their duties and responsibilities. For more information on the fee disclosure regulations, please contact Nicole R. Konen.