The American Society of Pension Professionals and Actuaries is urging the Department of Labor to extend the deadline for complying with DOL’s 408(b)2 and 404(a) fee disclosure regulations as the department has yet to issue final guidance on either.
Craig Hoffman, general counsel and director of regulatory affairs for ASPPA, told DOL in a Dec. 19 letter that while ASPPA supports DOL’s efforts to improve fee disclosure for individual retirement plans, “unfortunately the application of both the interim 408(b)(2) and 404(a) regulations is only three months away and the DOL has not issued the final guidance needed to create systems to comply with the regulations.”
The DOL’s Employee Benefits Security Administration announced in July that it was extending the interim final rule deadline on its plan level fee disclosure rule, 408(b)(2), to April 1, 2012. But Hoffman told DOL that the effective date for the fee disclosure regs should be “no earlier than one year after the 408(b)(2) regulation is published in final form.”
Given the delay in finalizing the regulation, Hoffman wrote, “significant uncertainty remains about what will ultimately be required.” One example, he said, is whether the 408(b)(2) regulation will require a summary disclosure statement and if so, what will be the parameters for compliance.
“It’s crucial that sufficient time be provided to build the infrastructure necessary to support the new disclosure regime which requires considerable systems work. Our members have told us engineers are already in the process of rewriting software code and programs to accommodate the new disclosure requirements, but additional time will be needed after the regulation is issued because only then will the final system design specifications be known,” Hoffman wrote.
Hoffman went on to say that ASPPA recommends DOL extend the applicability date for the 408(b)(2) and 404(a) regulations to “ensure an orderly transition period.” The extension of the transitional rule under the 404(a) regulation is insufficient relief given the delay in finalizing the 408(b)(2) regulation as well as the ongoing review of electronic disclosure standards under the Employee Retirement Income Security Act (ERISA), he explained.