WASHINGTON BUREAU — The SPARK Institute is asking the U.S. Labor Department to change a new retirement plan fee disclosure postponement proposal and give retirement plans more time to comply.
The Employee Benefits Security Administration (EBSA), an arm of the Labor Department, recently announced that it is pushing the compliance date for plan-level disclosure rules back to Jan. 1, 2012, from July 16, 2011.
The SPARK Institute, Simsbury, Conn. – a group for large retirement plan service providers and investment managers – believes complying with the widely anticipated final 408(b)(2) rules may take a significant amount of time and effort to implement, according to Larry Goldbrum, the group’s general counsel.
“Without knowing what will be in the final rules, service providers cannot determine the amount of time and effort that will be needed to make changes to their systems, materials, policies and procedures,” Goldbrum writes in a comment letter.
Drafters of the disclosure rules, which were first proposed in July 2010, want to ensure that retirement plan service providers give plan sponsors and plan fiduciaries information they can use to determine whether plan service compensation amounts are reasonable and whether the providers have conflicts of interest.
EBSA also has drafted separate rules for disclosures by plan sponsors to plan participants, eligible non-participants and plan beneficiaries.
The Labor Department has not yet adopted final disclosure rules.
The Labor Department has been working on the fee disclosure regulations to implement provisions of the Pension Protection Act of 2006 (PPA).
The department also is planning to modify the rules governing the disclosure requirements plans must meet to qualify under Section 408(b)(2) of the Employee Retirement Income Security Act (ERISA) for a statutory exemption from the ERISA prohibited transactions list.
Goldbrum notes that the compliance deadline for the participant rules, which have not yet been completed, could affect the plan administrators as well as the plan sponsors.
Sponsors and administrators will have to address matters such as the compliance rules for non-registered investment products, applying the new rules to non-calendar year plans, and applying the new rules to multi-vendor 403(b) plans, Goldbrum says.
The SPARK Institute is proposing that the compliance date for the new 408(b)(2) rules come at least 180 days following the date of publication of the final rules in the Federal Register
For investment information about non-registered investment products, the final participant disclosure rules should offer plan sponsors a 1-year good faith compliance exception, the institute says.
The institute also would like to see the Labor Department’s final rule keep the participant disclosure rules from a 2006 field assistance bulletin in effect until the department has completed work on an electronic communications safe harbor and other rules.