Participant disclosures

[thepensionmaven]

We are a non CSP TPA firm.

Are we subject to the 408(b ) and 404(a)(5) DOL regs?

We have been told "no".

[Bird]

I don't know all of the lingo in this industry so I don't know what "non CSP" means. I'm guessing it has something to do with not receiving sales compensation?

Anyway, if you receive any compensation from a plan, you must disclose it under the 408 regs. That could be percentage-based or it could be, say, for loan processing, distribution processing, etc., where you receive a fixed dollar amount. The plan must disclose to participants what fees and expenses they are paying under 404(a)(5). I don't know about other TPAs but we are at least monitoring it for our clients.

[Guest jmherisa]

Most plan documents allow a plan to pay for routine administrative expenses. That would include invoices you send to the plan sponsor; they still would have the option to use plan assets to pay it. So even if you do not receive revenue sharing or expect to receive any fees from the plan assets, your safest approach is to assume you need to provide a 408b2 disclosure to all of your clients. Also, for any of those plans that have participant-directed investments, they should include at least a general reference on the 404a5 annual participant disclosure about the possibility of plan assets that may be used to pay administrative expenses.

Technically however, if you have determined you are not a Covered Service Provider (in that your services as the TPA are limited and you NEVER receive any indirect compensation) you could argue that you are not required to provide a 408b2 disclosure. Many TPA firms have decided to provide one anyways to allow for the possibility of indirect compensation, and because the typical information in a 408b2 disclosure is info that the client should receive anyways, whether you are technically "required" to provide it or not.

[BG5150]

Anyway, if you receive any compensation from a plan, you must disclose it under the 408 regs.

Only if you expect to receive at least $1,000 over the life of the contract (not per year, but per contract).

And notices must go out if you COULD get revenue from the plan, not IF you do.