Participant account fee changes

[John Feldt ERPA CPC QPA]

The SPD for a plan spells a distribution fee as a fixed amount (no mention that it is subject to change).

The plan sponsor increased the distribution fee on April 1 of this year, but they are still in the process of updating that fee disclosure page for the SPD.

A participant was recently paid out and the higher fee was charged to their account.

Must the change of a participant fee be disclosed before the new fee can be in effect or does a reasonable time period exist, such as 210 days like the SPD, for disclosing such changes?

[Jim Chad]

I want to bring this back up. The fee is listed on the application. Is updating this fee enough for a while?

[John Feldt ERPA CPC QPA]

Well, I'll attempt to answer my own post.

I think that under the current rules (in effect today), the SPD/SMM timing applies. However, next year when the new fee disclosure rules take effect, then the disclosure must be provided before the new fee can take effect. If any others want to opine, that would be great.

[Kevin C]

We always disclose new or higher fees before they take effect. The main reason we do it that way is to try to reduce participant complaints. If the fee is reduced, we make the change and update the disclosure shortly afterward.