The Department of Labor (DOL) introduced December 12 its long awaited proposed rules on enhancing the fee disclosures that fiduciaries of 401(k) plans and other employee benefits plans receive to help them determine whether the compensation paid to plan service providers is reasonable, as well as conflicts of interest that may affect a service provider’s performance under a service contract or arrangement.
The proposed rules, according to DOL, would require that contracts between certain service providers and plans provide for specific and detailed information. “The proposal requires that all services furnished to a plan and all compensation, direct and indirect, to be received by the service provider be disclosed in writing,” DOL said in a release. “The proposal also requires the disclosure of possible conflicts of interest of the service provider that may affect the performance of plan services.”
In addition, DOL said in the release that it is proposing “a class exemption to provide relief to plan fiduciaries who enter into deficient contracts with service providers that, unbeknownst to the plan fiduciary, failed to comply with their disclosure obligations.”
Comments on the proposed regulation should be sent to DOL’s Employee Benefits Security Administration.