5 Hot Benefit Issues This Summer, as appeared in Employment Law360July 16, 2012
Joan Disler, Chair of the firm's National Employee Benefits Practice Steering Committee, in the Newark office, wrote an article titled "5 Hot Benefit Issues This Summer." (Click to read full version — subscription required.)
Following is an excerpt:
In accordance with final regulations under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, which were released by the U.S. Department of Labor (DOL), plan fiduciaries should have received fee disclosures by July 1, 2012, from the covered service providers of their defined benefit and defined contribution plans.
Under the new rules, service providers — for example, investment advisers and brokerage firms — were required to disclose to plan fiduciaries, including employer plan sponsors and plan administrators, certain direct and indirect compensation of $1,000 or more that they receive in connection with services provided to a plan.
The disclosure requirements do not apply to individual retirement accounts, individual retirement annuities, simplified employee pension plans, simple retirement accounts or welfare benefit plans.
Plan fiduciaries that received disclosures must evaluate the reasonableness of the compensation paid for necessary services and identify potential conflicts of interest on a timely basis in order to avoid a prohibited transaction and resulting penalties. The disclosures must include such information as descriptions of all the services provided and compensation that will be received in connection with the services, including compensation in connection with the termination of a service agreement and any "related parties" compensation.
If the plan fiduciaries determine that a covered service provider failed to disclose the required information, the plan fiduciaries must make a written request to the service provider to obtain the missing information. If the service provider fails to comply with the written request within 90 days, the plan fiduciaries must notify the DOL of the failure. Sample forms to report a delinquent service provider are provided by the DOL.
As the disclosure requirements are detailed and specific, employers should have a process in place through which the disclosures can be reviewed and action taken if required information is not provided.
Also see Ms. Disler's Take 5 newsletter on these topics, available in full from Epstein Becker Green's website.