DOL Delays Deadlines for Fee Disclosure Rules

July 22, 2011

This article is an update to the July 26, 2010 and November 3, 2010 issues of the HRBenefits Authority, which reported on the Department of Labor’s (“DOL”) new retirement plan fee disclosure rules.  On July 13, 2011, the DOL issued final regulations extending the applicability dates of these rules.

Service Provider Disclosure Rules.  The DOL published interim final regulations on July 16, 2010, requiring retirement plan service providers to disclose detailed information to plan fiduciaries about the service providers’ fees and potential conflicts of interest.  These regulations were scheduled to take effect on July 16, 2011.  However, the DOL has delayed this effective date until April 1, 2012.

Participant Disclosure Rules.  In addition, on October 20, 2010, the DOL published final regulations creating new participant-level fee disclosure requirements for 401(k) plans and other participant-directed retirement plans.  The new disclosure requirements include (i) initial disclosures that are required on or before the date an individual first has the ability to direct his investments, (ii) annual disclosures and (iii) quarterly disclosures of fees and expenses actually deducted.  The regulations are effective for plan years beginning on or after November 1, 2011 (i.e., January 1, 2012, for calendar-year plans).

As originally published, the regulations established a transition rule that allowed plan fiduciaries 60 days from the regulations’ effective date to provide the initial disclosures (i.e., the disclosures required on or before the date an individual first has the ability to direct his investments).  The DOL has amended this transition rule to provide that the initial disclosures must be furnished on or before the later of:

(i)    60 days after the regulations’ effective date, or

(ii)  60 days after the April 1, 2012 effective date of the service provider disclosure rules.

This means, for example, that the initial disclosures for a calendar-year plan would need to be provided by May 31, 2012.

The DOL also expanded the transition rule to cover the first quarterly disclosures (i.e., the quarterly statements of fees and expenses actually deducted).  Under the amended rule, plan fiduciaries must provide the first quarterly disclosures no later than 45 days after the end of the quarter in which the initial disclosures are due.  For calendar-year plans, this means that the first quarterly disclosures would need to be provided no later than August 14, 2012, and would only need to include information for the second quarter of 2012. 

Contact Information.  If you have any questions about the new disclosure rules, please contact David Putnal (404.888.8836), Toby Walls (404.888.8870), Teri King (404.888.8847) or Angela Roberts (404.888.8822).

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