The Employee Benefits Security Administration, an arm of the U.S. Department of Labor, has extended the effective date for the interim final fiduciary-level fee disclosure rule, 408(b)(2), from July 16, 2011 to April 1, 2012.
Initially proposed in the summer of 2010, the Department ruled to enhance the required fee disclosures from certain pension plan service providers to plan fiduciaries. Now known as Regulation 408 (b)(2) under ERISA, this disclosure is considered to be part of a “reasonable” contract or arrangement for services.
The Department received many requests for an extension of the effective date based on the need for updating systems and procedures in order to more accurately collect and disclose information. A January 1, 2012 extension was agreed upon. In addition, the Department agreed to align the 408(b)(2) regulation with participant-level disclosure regulation believing that the additional time would assist plan fiduciaries and administrators in gathering the information needed for compliance.
After careful consideration of feedback from commentators the Department is amending the effective date of the 408(b)(2) regulation to April 1, 2012. Although the Department hasn’t yet published a final 408(b)(2) regulation, to the extent the final regulation includes changes from the interim final rule, the Department agrees that covered service providers and plan fiduciaries would benefit from additional time. This time would allow them to review such changes and make final modifications to their systems and disclosures. A final 408(b)(2) regulation is expected to be published before the end of the year. Additional extensions are not expected to follow.
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