January 31, 2011

To Aid With Compliance of DOL's ERISA Rules, Principal Releases White Paper

Paper explains what types of plans and who is covered by new rules

Principal Financial Group published a white paper to help retirement plan sponsors understand and comply with new fee disclosure rules, the company announced Monday. The white paper is authored by ERISA expert Jamey Delaplane of the Washington, D.C.-based law firm Davis & Harman LLP.

The Department of Labor released an interim final rule on July 16, 2010, to clarify what constitutes a "reasonable" contract under ERISA section 408(b)(2). Retirement plan providers are required to disclose fee and service information to plan sponsors, in order to help them fulfill their fiduciary duties.

Principal's white paper, “New Participant Fee Disclosure Rules: What Plan Sponsors Need to Know,” covers topics such as who is impacted by the new rules, what type of information must be disclosed, special disclosure rules for products like annuities and target-date funds, and how and when disclosures must be made. It is available online at www.principal.com/feedisclosure.

“While the regulation isn’t a sea change from the type of information currently provided, it does generally change how the information will be presented—and many plan sponsors have questions about how to comply,” Greg Burrows, senior vice president of retirement and investor services at The Principal,said in a press release.

The rules apply to any plan subject to ERISA, except IRAs, including SEPs and SIMPLEs. Service providers are subject to the new disclosure rule if they expect to receive $1,000 or more in compensation from a contract. Welfare plans like group health plans, group term life insurance and disability plans are not considered covered plans, but the white paper notes that the DOL intends to develop a separate set of regulations to expand disclosure to those plans.

RIAs may be covered by the new rules if they provide advice to the plan fiduciary on subjects like investment options in a 401(k) plan, or choosing investment managers.

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