408(b) Disclosure Rule

[Below Ground]

Like many I am sure, I have been reading and listening to a lot about the new fee disclosure rules. As we approach July 1st, I find myself looking for a good suumary of requirements as applicable to a TPA Firm like ours.

Almost all of our revenue is from fees billed to the client, who directly pays these bills. We do, however, have some revenue which is paid directly from trust funds.

First, services related to benefit distribution fees are paid from that person's account. Second, we do receive some "revenue sharing". Finally, we do have a few clients that have our service fees paid using monies of the trust fund.

As always, any comments are greatly appreciated. Above that, does anyone recommend one of the many recorded seminars on this topic? Thanks!

[TPAnnie]

At risk of sounding like a complete idiot, I thought TPAs weren't considered covered service providers and therefore aren't subject to the regulation? Is this not the case?

[Below Ground]

Annie, if you recieve any payment, like a benefit distribution fee, from the trust fund you are impacted.

[HarleyBabe]

I too would like a point of reference for the TPA and what to provide. Is there a good site to use to find this info with examples.

[Below Ground]

There was a pretty good article in the ASPPA Archives, but I can't exactly recall the name. Something like "How 408(b) Disclosure Rules Impacts a TPA". I have researched this topic to death and can't provide any recommendation over that article. There were other resources but I found that piece to be the best. Anyway, I can tell you what we are doing...

We are sending out an annual mailing to ALL clients (suggested in article) to insure that our fees are covered. This allys the fear that you may send the client a bill, which historically they have always paid, and this year they pay with trust assets. Without the disclosure you have a prohibited transaction.

Our mailing is comprised of a brief cover letter that lists the services we expect to provide to that exact client, and both how and what we expect for compensation. The mailing also includes a separate listing for definitions for concepts and terms. An explanation of how revenue sharing works is an example.

The content and level of detail will depend upon the specifics of what services you provide the client. In addition, presenation style will factor in. Perhaps our approach won't work for you, but perhaps it may. Either way, better safe than sorry.

Good luck. Hope this helps!

[HarleyBabe]

It does help. Thank you very much.