Fee Disclosure-"annually thereafter"

[Randy Watson]

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis.

Does this mean that the annual disclosure must be made within 12 months of the initial disclosure or just once every calendar year or something else? If it doesn't mean that the annual dislosure must be made within 12 months of the initial disclosure then you can go almost 2 years between disclosures. For example, if a plan makes it's annual disclosure on January 1, 2013 then it wouldn't have to make another annual disclosure until December 31, 2014.

How is everyone interpreting this?

[cpc0506]

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis.

Does this mean that the annual disclosure must be made within 12 months of the initial disclosure or just once every calendar year or something else? If it doesn't mean that the annual dislosure must be made within 12 months of the initial disclosure then you can go almost 2 years between disclosures. For example, if a plan makes it's annual disclosure on January 1, 2013 then it wouldn't have to make another annual disclosure until December 31, 2014.

How is everyone interpreting this?

This same issue was discussed on our office. The regulations do state "at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis." So if a notice is made on August 30, 2012, the concensus was that the next notice must be provided by August 29, 2013. And the dates keep backing up. Does this really make sense?

[ACox]

The 12 month period is a rolling 12 month period. So if you sent out the original notice on 8/30/12, the notice is required to be sent out again anytime before 8/29/13. To move to a calander year period for your notices, you would need to send out the notice again before the end of the year, or shortly after the first of the new year, or send out the notices back to back next year.

We contemplated sending out the notices again with our 9/30 statments, but decided that it was to soon and to see if the DOL would maybe allow for a special grace period to allow plan sponsors to move their notice deadline to a calander year basis.

[Randy Watson]

The 12 month period is a rolling 12 month period. So if you sent out the original notice on 8/30/12, the notice is required to be sent out again anytime before 8/29/13. To move to a calander year period for your notices, you would need to send out the notice again before the end of the year, or shortly after the first of the new year, or send out the notices back to back next year.

We contemplated sending out the notices again with our 9/30 statments, but decided that it was to soon and to see if the DOL would maybe allow for a special grace period to allow plan sponsors to move their notice deadline to a calander year basis.

That's how we were approacing this and we are considering sending out the annual disclosure on December 1 along with the safe harbor and QDIA notices. I hadn't even considered the possibility that we would have to provide the notice a day sooner during the next 12 month period (i.e., November 30, 2013). That seems as ridiculous to me as once a calendar year.

[GMK]

If I send a notice on 8/30/2012 and another notice on 8/29/2013, haven't I issued 2 notices in the 12 month period?

Why do I need to back up a day every year?. If I issue the notice every 8/30 of every year, then every 12-month period you can imagine will include at least one date on which I issued a notice.

Of course, be prepared for some nervous people when August 30 is a Sunday (and when the Mayan calendar expires). Until then, I'd look for some DOL clarification.

[Kevin C]

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis.

My copy of the regs is slightly different. It says:

At least annually thereafter means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

We're planning on one disclosure each calendar year, with future disclosures provided when the 1st quarter statements go out.

[cpc0506]

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis.

My copy of the regs is slightly different. It says:

At least annually thereafter means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

We're planning on one disclosure each calendar year, with future disclosures provided when the 1st quarter statements go out.

What date is associated with the Regs you mention?

[Kevin C]

The printed copy I have doesn't show the release date. I printed it on 7/26/2012 using WK Intelliconnect. It was the current version at that time. I'm referring to 2550.404a-5(h)(1).

[GMK]

If you meet the requirement in every 12 month period, then you meet it in any 12 month period.

The only way to meet it in any 12 month period is to meet it in every 12 month period.

If there is a single 12-month period during which you didn't issue the notice, then you didn't meet either the "every" or "in any" requirement.

So, what's the difference between:

at least once every 12 month period

and

at least once in any 12 month period

?

[PFranckowiak]

According to the DOL seminar I went to - that DOL speaker said that you must issue it within 12 months of the last time you issued the disclosure. Not over 12 months. I asked the stupid question about what if you went a few days over. She said they weren't looking at it to penalize people for missing it by a few days - just that they are complying. So take the date you gave it out and you get 12 months from that date to producte a new disclosure unless you have changes that need to be disclosed. If you produce a new fee disclosure before 12 months are up, then your clock starts again for the next 12 months. At least that I how I understood what she said.

I wish they would have just put the notice to go out the same time as the safe harbor notices - with a date range before the beginning of the plan year - but that would have been reasonable.

Pat