Get ready for 2012!
By Patrick Metallic, CEBS
Manager, Director of Employee Benefit Services
pmetallic@sponselcpagroup.com
The Facts About Retirement Plan Fee Disclosures
As we approach year’s end, now is a good time for all those in charge of overseeing retirement plans to review their disclosure responsibilities. As we prepare to greet 2012, it’s important to remember that overlooked deadlines or missed disclosure requirements can become a costly mistake.
To help keep you up to date, we’ve developed this handy overview of the new retirement plan fee disclosure rules.
The U.S. Department of Labor has gone to great lengths to help retirement plan sponsors gain better understanding of fees associated with their plans. Fiduciaries require complete fee disclosure by service providers in order to fulfill their responsibilities. Greater fee transparency allows plan sponsors to make more informed decisions, and helps participants become better investors.
Fee Disclosure Regulations for Service Providers
The retirement plan’s service providers must provide fee disclosures to the plan sponsor by April 1, 2012. It must be made in writing and include: services, status and compensation. The disclosure should include a description of services the arrangement provides to the plan. It also must include a statement that it will provide fiduciary services to the plan.
In addition, the disclosure needs to describe all direct and indirect compensation the service provider reasonably expects to receive in connection with services. The description should contain sufficient information to permit evaluation of the reasonableness of the compensation.
A service provider must disclose any change in this information as soon as practicable, but no later than 60 days from the date on which the service provider is informed of changes.
Fee Disclosures to Participants
The plan administrator is responsible for providing fee disclosures to participants effective May 31, 2012. Most investment platforms will provide these to the participants.
Initial notice is required on or before the date the participant can direct his or her first investments. It must include general information on the plan, administrative expenses that may be charged against the account, and designated investment alternatives. This same information must be provided to all eligible employees at least once a year, whether or not they are enrolled in the plan.
A quarterly accounting of all fees and expenses assessed against participants’ plans is required. Notice of any changes to information provided in the initial and annual disclosures must be communicated to participants no later than 30 days, but no sooner than 90 days, prior to the effective date of the change.
If Sponsel CPA Group can be of assistance in helping you with an employee benefit issue, please feel free to contact Pat Metallic at (317) 613-7841 or pmetallic@sponselcpagroup.com.
