Bulletin - BenefitsLink |   |
| Supplement to December 12, 2007 |
Official Guidance; News
DOL 'Fact Sheet' on Proposed Reg on Disclosure of Fees Received by Plan Service-Providers (PDF)
2 pages. Excerpt: "The proposed regulation focuses on disclosure of the direct and indirect compensation received by service providers and potential conflicts that may affect their objectivity. The proposed regulation affects only certain service providers whose contracts or arrangements are most likely to raise concerns about the receipt of indirect compensation, the fiduciary nature of the services to be provided, or conflicts of interest that might affect the provision of services. In addition, the Department is proposing a class exemption that would provide relief to a plan fiduciary who enters into a contract that is not 'reasonable' because, unknown to the plan fiduciary, the service provider failed to comply with its disclosure obligations under the proposed regulation." (U.S. Department of Labor, Employee Benefits Security Administration)
Press Release: U.S. Labor Department Proposes Regulations To Increase Disclosure Of Fees And Conflict Of Interests Affecting 401(k) And Other Employee Benefit Plans
(Full text follows:)
The U.S. Department of Labor today announced a proposed rule that will enhance disclosure to fiduciaries of 401(k) and other employee benefit plans to assist them in determining the reasonableness of compensation paid to plan service providers and conflicts of interest that may affect a service provider's performance under a service contract or arrangement.
[BenefitsLink editor's note: the text of the proposed regulation will appear in the Thursday, December 13 Federal Register.]
"One of the department's top priorities is improved disclosure in order to ensure that participants and fiduciaries have the information they need to make informed decisions," said U.S. Secretary of Labor Elaine L. Chao. "We are working quickly to implement regulations that foster fair, competitive and transparent prices for services as well as combat excessive or hidden plan fees."
The proposed regulation would enhance disclosure to plan fiduciaries by requiring that contracts between certain service providers and plans provide for specific and detailed information. The proposal requires that all services furnished to a plan and all compensation, direct and indirect, to be received by the service provider be disclosed in writing. The proposal also requires the disclosure of possible conflicts of interest of the service provider that may affect the performance of plan services.
In addition, the department is proposing a class exemption to provide relief to plan fiduciaries who enter into deficient contracts with service providers that, unbeknownst to the plan fiduciary, failed to comply with their disclosure obligations.
[BenefitsLink editor's note: the text of the proposed class exemption will appear in the Thursday, December 13 Federal Register.]
"401(k) savings and other employee benefit plans are critical to the retirement and health security of American workers and their families," said Bradford P. Campbell, assistant secretary for the Labor Department's Employee Benefits Security Administration. "This initiative enhances disclosure of fees and conflicts of interest that can affect workers' interests and is an important part of our continued efforts to enhance workers' benefit security."
Comments on the proposed regulation should be directed to the U.S. Department of Labor, Employee Benefits Security Administration, Room N-5655, 200 Constitution Ave. N.W., Washington, D.C. 20210, Attention: 408(b)(2) Amendment; or electronically to e-ORI@dol.gov or via www.regulations.gov.
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