408b-2 disclosures

Although  this is a related topic, it is not connected to a different discussion I initiated in another recent thread.

When we do our 408b-2 disclosures, we specify the amount/formula for any Revenue Sharing all in the one disclosure document. However, I believe it is acceptable under the regulations to have this in more than one document, as long as the required information/format is used.

Just curious if folks out there generally combine all in one document, or use two or more. For example, a basic 408b-2 disclosure that has everything except the Revenue Sharing formula, and then referring to an attachment prepared/published by the mutual fund company that describes the specific Revenue Sharing amounts/formula/calculation?

Its been a while since I dug into the specifics, but...

I believe you have to be more precise than just referring to "document X".  It should refer to a page or a section in the cross referenced document so that the recipient can easily access the required information

We generally use one document.

Makes sense. Thanks. (Never really paid much attention to this aspect, since as I stated previously, we just use one document, but good to know!)

And FWIW, brokerage firms often (always?) use multiple documents, which I have tried to follow, and sometimes found the cross-referenced document to be unintelligible and/or incomplete.  If you even get the right document, of course.

I guess this is somewhat of a basic question - are TPA's required to provide the following on an annual basis:

- The actual amount of revenue sharing/TPA compensation received

- The actual amount of such revenue sharing credited (or not credited) back to the plan's billing

If so, is it sufficient to provide such information in the billing, or would it be part of the annual 408b2 disclosure

I don't think 408b2 is an annual disclosure.  

3 minutes ago, Bird said:

I don't think 408b2 is an annual disclosure.  

I think the disclosure is quarterly, but certain things which only need to be provided annually can use the 408b2 as a means for either delivery or disclosure.  For example, if vesting is disclosed annually on a benefit statement, a quarterly 408b2 disclosure can identify the annual benefit statement as the place to look for information  regarding vesting.  I think. 

23 minutes ago, Mike Preston said:

I think the disclosure is quarterly, but certain things which only need to be provided annually can use the 408b2 as a means for either delivery or disclosure.  For example, if vesting is disclosed annually on a benefit statement, a quarterly 408b2 disclosure can identify the annual benefit statement as the place to look for information  regarding vesting.  I think. 

Are you talking about 404a-5 disclosures?  I may need more coffee, but it sounds like you are talking about participant disclosures rather than covered service provider - plan sponsor disclosures.

The 408b-2 disclosure should discuss the CSPs services, compensation and fiduciary status.  If nothing changes, there is really no requirement for a new notice.  Many smaller firms combine their service agreement and 408b-2 disclosure, which could be evergreen or annual.

404a-5 disclosures should disclose participant level fees and compensation formula on an annual basis.  Quarterly statements with some information is also provided, which must include actual fees deducted from a participant account in the prior quarter.

Right, thanks.

So there is no requirement then to provide the total amount of the checks received by the consultant directly to Sponsor (as opposed to recordkeeper's annual Schedule A information)?