408(b)2 Reporting Period

[kwalified]

Hi,

I am putting together this disclosure. I have a few plans that I receive revenue sharing lunch money. It's almost not worth doing the disclosure, since it will about cost me as much to produce it as I get in revenue sharing. Anyway, for the 5/31/12 disclosure to calendar year plans, is it acceptable to report 2011 plan year revenue sharing? We are a non-producing TPA whose expenses are paid from the plan sponsor, not the plan. Also, if the RS I get is less than $1000 per plan, it is my understanding the disclosure is not required.

Thanks

[Bill Presson]

Hi,

I am putting together this disclosure. I have a few plans that I receive revenue sharing lunch money. It's almost not worth doing the disclosure, since it will about cost me as much to produce it as I get in revenue sharing. Anyway, for the 5/31/12 disclosure to calendar year plans, is it acceptable to report 2011 plan year revenue sharing? We are a non-producing TPA whose expenses are paid from the plan sponsor, not the plan. Also, if the RS I get is less than $1000 per plan, it is my understanding the disclosure is not required.

Thanks

What 5/31/12 disclosure? The earliest date the notice is required is 7/1/12.

If you receive revenue sharing, then you are a covered service provider and are receiving payment from the plan.

Also, the $1,000 limit is total fees for the life of the plan, not annually.

[kwalified]

Hi,

I am putting together this disclosure. I have a few plans that I receive revenue sharing lunch money. It's almost not worth doing the disclosure, since it will about cost me as much to produce it as I get in revenue sharing. Anyway, for the 5/31/12 disclosure to calendar year plans, is it acceptable to report 2011 plan year revenue sharing? We are a non-producing TPA whose expenses are paid from the plan sponsor, not the plan. Also, if the RS I get is less than $1000 per plan, it is my understanding the disclosure is not required.

Thanks

What 5/31/12 disclosure? The earliest date the notice is required is 7/1/12.

If you receive revenue sharing, then you are a covered service provider and are receiving payment from the plan.

Also, the $1,000 limit is total fees for the life of the plan, not annually.

Correct, 7/1 not 5/31 I was looking at the old 404(a)(5) disclosure date to participants.

Still, what is the reporting period? Is it the prior plan year? Jan-June 30? The life of the plan, which number will accumulate in subsequent plan years? Some of these micro plans I have not received in excess of $1000 in RS. I suspect the safest route would be to report all income.

[Bill Presson]

Hi,

I am putting together this disclosure. I have a few plans that I receive revenue sharing lunch money. It's almost not worth doing the disclosure, since it will about cost me as much to produce it as I get in revenue sharing. Anyway, for the 5/31/12 disclosure to calendar year plans, is it acceptable to report 2011 plan year revenue sharing? We are a non-producing TPA whose expenses are paid from the plan sponsor, not the plan. Also, if the RS I get is less than $1000 per plan, it is my understanding the disclosure is not required.

Thanks

What 5/31/12 disclosure? The earliest date the notice is required is 7/1/12.

If you receive revenue sharing, then you are a covered service provider and are receiving payment from the plan.

Also, the $1,000 limit is total fees for the life of the plan, not annually.

Correct, 7/1 not 5/31 I was looking at the old 404(a)(5) disclosure date to participants.

Still, what is the reporting period? Is it the prior plan year? Jan-June 30? The life of the plan, which number will accumulate in subsequent plan years? Some of these micro plans I have not received in excess of $1000 in RS. I suspect the safest route would be to report all income.

408(b)(2) is prospective and tells the employer what you expect to happen, not what did happen.

[Belgarath]

"Also, the $1,000 limit is total fees for the life of the plan, not annually."

I might not necessarily agree with this across the board. If your contract is for one year only, and then must be extended or renewed, then I think you can base it on the one year contract period.

Personally, I think it is wise to disclose whether required or not.

[Bill Presson]

"Also, the $1,000 limit is total fees for the life of the plan, not annually."

I might not necessarily agree with this across the board. If your contract is for one year only, and then must be extended or renewed, then I think you can base it on the one year contract period.

Personally, I think it is wise to disclose whether required or not.

Correct. I actually meant to type life of the contract, rather than life of the plan.

Thanks.

[kwalified]

A previous poster stated this disclosure is prospective... how am i to disclose miniscule quarterly RSA payments to me as a TPA when I have no idea what the plan sponsor will be contributing or even if the RSA program will still be in effect?!?!?! I guarantee you with all the changes and companies scrambling to lower their fees, these RSA payments will be a thing of the past. They are more trouble than its worth now.

[Belgarath]

You can take one of (at least two) approaches:

1. Disclose what you currently receive or expect to receive per plan year, either as a dollar amount or formula or percentage - whatever, even if you do not believe disclosure is required. This is the very conservative, very safe approach. You don't get in trouble by over-disclosing.

2. Determine that you do not "reasonably" expect to receive $1,000 over the life of the contract or arrangement, and don't bother with the disclosure. You can always do one if in the future your revenue sharing amounts go up.

My spies indicate that most people are just doing disclosures even when not required, but they may be spying on the wrong people.

[Guest AEAllen]

What 5/31/12 disclosure? The earliest date the notice is required is 7/1/12.

If you receive revenue sharing, then you are a covered service provider and are receiving payment from the plan.

Also, the $1,000 limit is total fees for the life of the plan, not annually.

Mr. Presson--

The statement that "the earliest date the notice is required is 7/1/12" is wrong. In general, the disclosures are due in the hands of the plan fiduciary "reasonably in advance of" the date the contract or arrangement is in effect. The DOL has said that in the case of existing contracts or arrangements, they expect compliance as of July 1. This would mean that the disclosures would be required reasonably in advance of that date. For those entered into after July 1, the general rule applies. But for an exisitng contract or one entered into on or close to July 1, technically, July 1 is not early enough.

And the $1,000 threshold is for over the course of the contract or arrangement, not the life of the plan.

[Bill Presson]

Mr. Presson--

The statement that "the earliest date the notice is required is 7/1/12" is wrong. In general, the disclosures are due in the hands of the plan fiduciary "reasonably in advance of" the date the contract or arrangement is in effect. The DOL has said that in the case of existing contracts or arrangements, they expect compliance as of July 1. This would mean that the disclosures would be required reasonably in advance of that date. For those entered into after July 1, the general rule applies. But for an exisitng contract or one entered into on or close to July 1, technically, July 1 is not early enough.

And the $1,000 threshold is for over the course of the contract or arrangement, not the life of the plan.

We'll have to agree to disagree on the 7/1/12 date, but I'm willing to bet that most disclosures were distributed closer to 7/1 than 5/31.

And I agree that I misspoke on "plan". I noted above that I meant to type contract.

[Bird]

I'm hijacking the thread a little, but has anyone paid attention to this from the DOL:

If a service provider fails to provide the required information, the contract or arrangement between the plan and the service provider is prohibited by ERISA, and the plan fiduciary will have engaged in a prohibited transaction. However, the final rule exempts from this prohibition plan fiduciaries who did not know that the service provider had failed to disclose some of the required information. To qualify for the exemption, the plan fiduciary must, among other things, request the missing information from the service provider in writing and, if that fails, the fiduciary must notify EBSA within a certain timeframe. Plan fiduciaries will be able to submit the notice to EBSA online through this web page.

So, if you don’t know you didn’t get the info, it’s ok, but you have to ask for what you didn’t know about and then report to the DOL that you didn’t get something that you didn’t know about. Did I get that right?

[Guest AEAllen]

Mr. Presson--

The statement that "the earliest date the notice is required is 7/1/12" is wrong. In general, the disclosures are due in the hands of the plan fiduciary "reasonably in advance of" the date the contract or arrangement is in effect. The DOL has said that in the case of existing contracts or arrangements, they expect compliance as of July 1. This would mean that the disclosures would be required reasonably in advance of that date. For those entered into after July 1, the general rule applies. But for an exisitng contract or one entered into on or close to July 1, technically, July 1 is not early enough.

And the $1,000 threshold is for over the course of the contract or arrangement, not the life of the plan.

We'll have to agree to disagree on the 7/1/12 date, but I'm willing to bet that most disclosures were distributed closer to 7/1 than 5/31.

And I agree that I misspoke on "plan". I noted above that I meant to type contract.

I definitely disagree on the practical effect of the 7-1-12 effective date w/r/t existing contracts or arrangements. The DOL has said many times that the meaning of the effective date is NOT simply that disclosures are due by that date. That is an oversimplification. The reg is effective on that date and disclosures are required to be made reasonably in advance of the effective date of the contract or arrangement.

As far as what's actually going on out there -- I am seeing all kinds of misreadings of the rule, so I agree with you there.

[GMK]

So, if you don’t know you didn’t get the info, it’s ok, but you have to ask for what you didn’t know about and then report to the DOL that you didn’t get something that you didn’t know about.

Who thought it would be that easy? Now, where did I put my Magic 8 Ball?

[Guest AEAllen]

I'm hijacking the thread a little, but has anyone paid attention to this from the DOL:

If a service provider fails to provide the required information, the contract or arrangement between the plan and the service provider is prohibited by ERISA, and the plan fiduciary will have engaged in a prohibited transaction. However, the final rule exempts from this prohibition plan fiduciaries who did not know that the service provider had failed to disclose some of the required information. To qualify for the exemption, the plan fiduciary must, among other things, request the missing information from the service provider in writing and, if that fails, the fiduciary must notify EBSA within a certain timeframe. Plan fiduciaries will be able to submit the notice to EBSA online through this web page.

So, if you don’t know you didn’t get the info, it’s ok, but you have to ask for what you didn’t know about and then report to the DOL that you didn’t get something that you didn’t know about. Did I get that right?

No, you didn't. It means is that on discovering the absence of required disclosures, the plan fiduciary must request the information from the service provider in order to get PT relief for itself. If the absence of required disclosures is never discovered by the plan fiduciary, a prohibited transaction will still have occurred because the contract cannot, under the regulation, be "reasonable" as required by the exemption. Whether there are any consequences of that depends on it turning up on audit/investigation by the Department. Just because you don't know that you didn't get the information, does not mean that you are off the hook, in other words.

[Bird]

No, you didn't. It means is that on discovering the absence of required disclosures, the plan fiduciary must request the information from the service provider in order to get PT relief for itself. If the absence of required disclosures is never discovered by the plan fiduciary, a prohibited transaction will still have occurred because the contract cannot, under the regulation, be "reasonable" as required by the exemption. Whether there are any consequences of that depends on it turning up on audit/investigation by the Department. Just because you don't know that you didn't get the information, does not mean that you are off the hook, in other words.

OK, I get that, but I'm not so sure the way I stated it is wrong either. And I must say that your insight on this is more than a little scary.

[kwalified]

No, you didn't. It means is that on discovering the absence of required disclosures, the plan fiduciary must request the information from the service provider in order to get PT relief for itself. If the absence of required disclosures is never discovered by the plan fiduciary, a prohibited transaction will still have occurred because the contract cannot, under the regulation, be "reasonable" as required by the exemption. Whether there are any consequences of that depends on it turning up on audit/investigation by the Department. Just because you don't know that you didn't get the information, does not mean that you are off the hook, in other words.

OK, I get that, but I'm not so sure the way I stated it is wrong either. And I must say that your insight on this is more than a little scary.

[Guest AEAllen]

No, you didn't. It means is that on discovering the absence of required disclosures, the plan fiduciary must request the information from the service provider in order to get PT relief for itself. If the absence of required disclosures is never discovered by the plan fiduciary, a prohibited transaction will still have occurred because the contract cannot, under the regulation, be "reasonable" as required by the exemption. Whether there are any consequences of that depends on it turning up on audit/investigation by the Department. Just because you don't know that you didn't get the information, does not mean that you are off the hook, in other words.

OK, I get that, but I'm not so sure the way I stated it is wrong either. And I must say that your insight on this is more than a little scary.

Not sure I understand your last comment -- I've just been paying attention. My clients expect that.

[Bird]

Insult taken - I've been paying attention too. If you do have clients, then my comment was meant as a compliment. Your insightful comments, in the aggregate, made me wonder if you worked in the private sector

Ed Snyder

[Guest AEAllen]

Insult taken - I've been paying attention too. If you do have clients, then my comment was meant as a compliment. Your insightful comments, in the aggregate, made me wonder if you worked in the private sector

Ed Snyder

No insult intended -- I just was suprised that my comments seemed all that insightful. Thank you.