DB Plan Service Provider Fees

[Andy the Actuary]

Clients pay my fees in one of two ways: (a) From the company account and (b) from the pension plan directly upon invoice. I receive no indirect compensation.

My conclusion is that the final fee disclosure rules set forth in 2550-408b-2© do not apply to me and I'm not required to provide any disclosure.

Agree or disagree?

[Belgarath]

Don't agree, or at least don't automatically agree.

The disclosures apply if you "reasonably" expect to receive at least $1,000 of either "direct" compensation (compensation directly from the PLAN) or "indirect" compensation (for example, revenue sharing.) Sounds like you receive no indirect compensation, so the question is, do you reasonably expect to receive at least $1,000 in direct compensation? If so, then the disclosure rules apply (absent another exception, such as it being a one-person plan, for example.)

Take a look at 2550.408b-2©(1)(iii) for a definition of a Covered Service Provider.

[frizzyguy]

This is way to general a question.

I believe fee disclosure is required at the sponsor level but I do not believe it is at the participant level unless their benefit is effected. Maybe (and this is a big ole' fat maybe) PS58 costs on insurance or if the plan is charging them for the QPSA benefit but in the majority of cases, I don't think participant fee disclosure is required.

In both instances that you mentioned, I think that the disclosure is very easy though.

[Andy the Actuary]

Don't agree, or at least don't automatically agree.

The disclosures apply if you "reasonably" expect to receive at least $1,000 of either "direct" compensation (compensation directly from the PLAN) or "indirect" compensation (for example, revenue sharing.) Sounds like you receive no indirect compensation, so the question is, do you reasonably expect to receive at least $1,000 in direct compensation? If so, then the disclosure rules apply (absent another exception, such as it being a one-person plan, for example.)

Take a look at 2550.408b-2©(1)(iii) for a definition of a Covered Service Provider.

Okay, we're in a tug of war. I read that but also read the DOL explanation:

The final rule applies to covered service providers who expect at least $1,000 in compensation to be

received for services to a covered plan. The final rule applies to the following covered service providers:

 ERISA fiduciary service providers to a covered plan or to a “plan asset” vehicle in which such plan

invests;



• Investment advisers registered under Federal or State law;
  
• Record-keepers or brokers who make designated investment alternatives available to the covered
  
• plan (e.g., a “platform provider”);
  
• Providers of one or more of the following services to the covered plan who also receive “indirect compensation” in connection with such services:  Accounting, auditing, actuarial, banking, consulting, custodial, insurance, investment advisory, legal, recordkeeping, securities brokerage, third party administration, or valuation services.
  

In short, the DOL explanation (this is a hyperlink) is more clear that this only applies to actuaries if they receive indirect compensation. Your citation, which I had seen, went in the other direction. Hence, my post.

[Belgarath]

Hi Andy - no tug of war here - I often forget there are people out there who perform services other than as a DC recordkeeping TPA - which was what I was thinking about yesterday. I agree with you.