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DOL Issues Additional FAQs on New Fiduciary Rule

The DOL recently released a set of FAQs related to its new plan fiduciary definition and related exemptions (the “Final Rule”). Specifically, the FAQs clarify that service providers who are required to provide ERISA Section 408(b)(2) notices to retirement plan sponsors, which disclose the service provider’s fees and services, are not required to update those notices to state the service provider is now a fiduciary until the date when fiduciary status must first be disclosed under the Final Rule’s Best Interest Contract and Principal Transaction Exemptions, which is currently January 1, 2018. (Please note that on August 9, 2017, the DOL filed a motion with the court presiding over the ongoing litigation concerning the Final Rule’s validity, stating that the DOL intends to further delay the effective date of the Best Interest Contract and Principal Transaction Exemptions for an additional 18 months.) In addition, the FAQs clarify that communications regarding… Continue Reading

DOL Issues Proposal to Amend 408(b)(2) Regulations

The U.S. Department of Labor proposed an amendment to the regulations under ERISA Section 408(b)(2) that would require service providers to provide a guide to employers to assist the employer in understanding the fee disclosures.  The guide would be required if disclosures are made using multiple or lengthy documents.  The guide would be required to specifically identify the document, page, or other specific locator, such as section, that would enable the employer to quickly and easily find fee information.  An announcement of the DOL’s proposal can be found here, and the text of the proposed amendment can be found here.

New DOL Guidance Regarding Fee Disclosures and Brokerage Windows

Previously, the United States Department of Labor (“DOL”) issued guidance suggesting that a plan fiduciary may not have met its fiduciary obligations if there are no designated investment alternatives under a plan (i.e., it is solely a brokerage window) or if a significant number of participants select an investment through a brokerage window and the fiduciary does not treat such investment as a designated investment alternative. The DOL issued new guidance replacing this previous guidance. In reversing its prior position, the new guidance clarifies that the fee disclosure regulation does not require that a plan have a particular number of designated investment alternatives and the selection through a brokerage window of a particular investment by a significant number of participants does not impose such a requirement. However, the guidance notes a fiduciary’s failure to designate investment alternatives to avoid disclosure requirements would raise questions under ERISA’s fiduciary duties of prudence… Continue Reading

October 2019
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