“Extending these dates will more closely align the application of the two rules and ensure that parties have sufficient time to comply with the requirements of the rules,” according to a DOL notice. It will also calm the outcry from a retirement plan community very concerned that the current applicability dates were unrealistic.
In the June 1 notice (76 Fed. Reg. 31544), DOL indicated that it wants to extend applicability dates of its interim final rule on fiduciary-level fee disclosures and its final rule on participant-level fee disclosures, both issued last year.
The fiduciary disclosure rules require enhanced disclosure from certain pension plan service providers to plan fiduciaries as part of a “reasonable” contract or arrangement for services under ERISA 408(b)(2). The effective date for those rules was initially July 16, 2011, but earlier this year DOL announced it would extend the rules’ effective date until Jan. 1, 2012, after receiving “many requests” for an extension to allow affected parties “to update systems and procedures for information collection and disclosure.”
The participant disclosure rules involve the disclosure of plan fee and expense information by plan administrators to plan participants and beneficiaries and modify ERISA 404(c). Those rules became effective on Dec. 20, 2010, but their requirements only begin to apply for plan years beginning on or after Nov. 1, 2011. The rules also include a transition rule under which a plan has 60 days after its applicability date to furnish the initial disclosures that otherwise must be furnished before the date on which a participant or beneficiary can first direct his or her investments.
As with the fiduciary disclosure rules, DOL received requests for additional compliance time, and agreed with commenters that aligning the effective dates of the two rules would help plans, fiduciaries and plan administrators effectively comply with the rules. So while DOL is not changing the effective date of the participant disclosure rules, DOL is altering its transition rule so a plan would have 120 days (rather than 60 days) after its applicability date to furnish the initial disclosures. Accordingly, a calendar year plan would have to provide the initial disclosures no later than April 30, 2012, and quarterly statements of fees/expenses actually deducted) would have to be provided no later than May 15, 2012.
The DOL is seeking comments on the proposal until June 15. Comments can be sent electronically to e-ORI@dol.gov or submitted at http://www.regulations.gov.