Disclosure obligations/duty to monitor

[LIBERTYKID]

The 408(b)(2) regulations require service providers to disclose detailed information about plan fees and compensation to plan sponsors. In general, plan sponsors must evaluate the fee and compensation information received from the plan’s service providers and determine that the services and fees are necessary and reasonable. In a 403(b) plan that permits participants to make salary deferrals only to one of 7 approved vendors and the participant can direct in any investment option offered by the vendor, what is the sponsor’s obligation to monitor the fees and expenses of each vendor? What must be disclosed to the sponsor by each vendor? What should the participant fee and investment disclosure information look like?

[FormsRstillmylife]

First off, you must determine whether this program is a plan covered by ERISA. Since there is no employer contribution and there are 7 vendors, this sounds like it may not be an ERISA plan. If a 5500 is being filed, then it has been determined that it is an ERISA plan.

If the program is not subject to ERISA, the vendors are subject to SEC disclosure requirements to the account holders (participants). The ERISA disclosure requirements do not apply.

If this is an ERISA plan, then the ERISA disclosure requirements apply in the same way they would to a 401(k).

[LIBERTYKID]

[if this is an ERISA plan, then the ERISA disclosure requirements apply in the same way they would to a 401(k).

But do they apply in the same way? If the sponsor designates various vendors, such as Merrill Lynch, Schwab, Vanguard and TIAA-CREF , but lets the particpant select any investment option from each, what exactly is disclosed? Perhaps a list of the vendors, how to contact each, any PLAN charges for maintaining the accounts, and how to make deferrals; but I don't think a side by side comparison of investment options or expenses incurred through the use of the investment account needs be disclosed. Trying to confirm this interpretation is correct is what I am getting at.

[Belgarath]

They apply in the same way. IF this is an ERISA 403(b) plan, there's no special reduction or change in the disclosure requirements. That includes the comparative formats, etc... - the "Full Monty."