401(k) fee disclosure rules clarified, deadline delayed
By National Underwriter
By Andy Stonehouse
Plan sponsors will now have until July 1 to meet the much-discussed regulations on 401(k) fee disclosure, following Department of Labor announcements Thursday on the final rulings.
The three-month extension of the final date was issued to give sponsors and administrators extra time to effectively prepare for a new level of transparency in the 401(k) market.
In recent months, the industry has asked for more time to comply with the rulings; Thursday’s announcement effectively finalizes those rules and starts the clock.
Changes to the ruling include more clarity on plan fiduciaries and their indirect compensation, plus more focused rules regarding investment-related disclosures. The latter, for instance, must now be declared annually.
The 401(k) fee disclosure rules were first issued in July 2010 with a one-year deadline for implementation, but the deadline was extended to April 1 after members of the industry raised concerns about the difficulties of preparing for and implementing those not-entirely-finalized rules.
"I would say this is somewhat useful, although a little bit longer would have been more helpful ... but there's value in the delay," said Brian Graff, executive director and CEO of ASPPA. "Most of the industry has been building this out from a systems perspective for months."
The DOL has also delayed the implementation of a requirement for plan providers to offer a summary “roadmap” document of fees. That summary document will evidently be issued separately in June.
Concern remains that without the roadmap in place, plan sponsors will be required to create a best guess on meeting the rulings in disclosure documents, and then issue new disclosures in the future.
"Folks are still concerned about that, as they don't want to have to go through the process a second time," Graff added.
Plan administrators for calendar-year plans must now make their disclosures for plan-level and investment-level information by Aug. 30 of this year, with a first quarterly statement issued by Nov. 14, 2012
The DOL also announced it will soon solicit public comment on a separate proposal requiring providers to offer tools to assist plan fiduciaries in identifying and locating the information to be disclosed, located in a litany of documents.
Jamie Kalamarides, senior vice president of Prudential Retirement's Institiutional Investment Solutions, said his firm supports the DOL's announcements.
"Today's regulations and guidance are critical first steps toward enhancing the retirement security of all workers," he said. "We look forward to working with the agencies in encouraging new and innovative solutions."
Originally published on LifeHealthPro.com