DOL Final Rule Gives Retirement Plans More Time to Deliver Fee Disclosures

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By Sean Forbes

March 18 — The Department of Labor is giving retirement plan administrators a two-month buffer period for providing annual fee disclosures to plan participants, the agency said in a final rule announced March 18.

Under a 2010 DOL regulation, plan administrators must provide fee disclosures to participants in participant-directed individual account plans, such as 401(k) plans, at least annually, after a participant can first direct his or her investments.

The current regulatory language defines the phrase “at least annually thereafter” as “at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis,” the DOL said.

The direct final rule (RIN 1210-AB68), published in the March 19 Federal Register (80 Fed. Reg. 14,301), replaces “12-month period” with “14-month period.”

Jan Jacobson, senior counsel for retirement policy at the American Benefits Council in Washington, told Bloomberg BNA March 18 that the rule “is a very workable solution.”

The ABC, along with the American Retirement Association (formerly the American Society of Pension Professionals & Actuaries), the American Council of Life Insurers, the ERISA Industry Committee and several other groups, sent the DOL a letter in October requesting at least a 45-day window to provide plan sponsors with flexibility in providing the required notices.

The agency also March 18 issued a proposed rule that is the same as the final rule and also was published in the March 19 Federal Register (80 Fed. Reg. 14,334). If commenters don't object to the proposed rule, the final rule will go into effect. If the agency receives “significant adverse comment,” it will withdraw the final rule.

Jacobson said she'd be surprised if the DOL receives adverse comments on the rule.

The DOL says on its website that an agency will issue a direct final rule when it thinks a rule “is noncontroversial and unlikely to receive adverse comments.” Such a rule is accompanied by a proposed rule that goes into effect unless an adverse comment is received, in which case the agency withdraws the final rule and proceeds with the proposed rule under normal notice and comment procedures, according to the DOL.

Temporary Enforcement Policy

The DOL also adopted in the final rule a temporary enforcement policy, effective immediately, under which plan administrators may rely on the amended rule before its June 17 effective date.

A plan administrator will satisfy the new timing requirement if it complies with the new definition establishing a two-month grace period for annual disclosures, provided that it reasonably determines that doing so will benefit participants and beneficiaries, the agency said.

The enforcement policy will expire on the effective date of the direct final rule.

The final rule will go into effect June 17 unless adverse comments are received by an April 20 deadline.

To contact the reporter on this story: Sean Forbes in Washington at sforbes@bna.com

To contact the editor responsible for this story: Phil Kushin at pkushin@bna.com

Text of the direct final rule is available at http://op.bna.com/pen.nsf/r?Open=sfos-9uqhe7, the proposed rule at http://op.bna.com/pen.nsf/r?Open=sfos-9uqhxd, and a fact sheet at http://www.dol.gov/ebsa/newsroom/fsdirectfinalrule.html.