Earlier this month we reminded you that plan administrators of
participant-directed ERISA defined contribution retirement plans
(e.g., 401(k) plans, 403(b) plans, profit sharing plans and money
purchase plans) had to annually disclose certain fee information to
participants and beneficiaries, and that for most plans there was
an upcoming deadline in August 2013 for the second round of annual
notices. Please click here to read that prior Alert. We noted in
that Alert that practitioners and employers had appealed to the
U.S. Department of Labor ("DOL") to provide some
flexibility to plans regarding the timing of the annual
disclosures. We now write to inform you that the DOL has recently
released guidance providing for a one-time extension of the
deadline to provide annual fee information.
The DOL has released a temporary enforcement policy providing that
a plan administrator is able to furnish the second round of annual
"comparative charts"1 no later than 18 months
after the prior (i.e., the first) comparative chart was furnished.
Given that for most plans the first annual fee disclosure notices
were initially required by August 30, 2012, the second round of
annual fee disclosure notices now will be due as late
as February 2014. For example, if a plan had
distributed its first comparative chart on August 25, 2012, the
second distribution would be due no later than August 25, 2013, but
under the DOL's guidance the plan now has until February 25,
2014 to make the second distribution. This gives plan
administrators a one-time opportunity to "re-set" the
timing for the distribution of their plans' annual fee
disclosure notices (in subsequent years, the annual disclosure will
be due by the yearly anniversary date of the prior years'
distribution, which date could change from year-to-year depending
on the actual distribution date each year).
The DOL recognizes that some plan administrators have already
furnished the second round of annual fee disclosures or have
already taken steps to comply by the August 2013 deadline. For
these plan administrators who have already or will meet the 2013
deadline, the DOL has provided that they also have the opportunity
for a one-time "re-set" of the timing of their annual fee
disclosures by furnishing the 2014 disclosures (i.e., the third
round of fee disclosures) no later than 18 months after furnishing
the prior years' (i.e., the 2013) disclosures. For example, if
a plan had distributed the first comparative chart on August 25,
2012 and furnishes the second annual comparative chart on August
25, 2013 (i.e., within the normal 12-month deadline), the third
annual comparative chart would normally be due no later than August
25, 2014, but under the DOL's guidance the plan now would have
until February 25, 2015 to furnish the third annual comparative
chart.
The DOL indicated that it is continuing to review the ongoing
timing rules that apply to the annual fee disclosures, and could
very well issue additional guidance in this regard in the near
future. In the meantime, the "re-set" opportunity should
be helpful to plan administrators who may want to try to implement
a more practical annual distribution date for its fee disclosures.
We again remind plan administrators and plan sponsors to contact
their service providers to discuss preparation and distribution of
annual fee disclosure notices, being mindful that plans with
multiple service providers will have more affirmative obligations
with respect to compiling and distributing relevant fee information
from their various providers.
1 For your convenience, you may click here (www.dol.gov/ebsa/participantfeerulemodelchart.doc) for a copy of the DOL's model comparative chart.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
