Phyllis Borzi, head of EBSA, testifying in Congress. (Photo: AP)

Providers of participant-directed individual retirement account plans like 401(k)s will have a two-month grace period to provide annual fee disclosures, the U.S. Department of Labor’s Employee Benefits Security Administration announced on Wednesday. The subject of the disclosures, however, is the same.

Under the current definition, plan administrators must provide annual fee and expense disclosures no later than exactly 12 months after a participant received the initial disclosure. EBSA, part of the Department of Labor, changed the rule to require disclosures to participants at least once every 14 months in response to comments from organizations that represent employers, plans, recordkeepers and other service providers.

Among the comments received by the department is that the current definition requires plan administrators to track the specific date a participant received his or her disclosure plan-by-plan or participant-by-participant basis. Large plans may have tens of thousands of participants, though.

Other commenters raised concerns that many sponsors and service providers try to consolidate disclosures to prevent overwhelming participants, but the current definition hindered their ability to do so.

Furthermore, some commenters argued that flexibility in fee disclosure actually benefited participants, by expediting some materials or avoiding conflicts when new investment options are being considered.

Plan administrators must still make participant disclosures within the new time frame regardless of whether the plan operates on a calendar year or fiscal year basis. The rule will be published in the Federal Register on Thursday and will take effect June 17unless commenters express widespread opposition.

In the announcement of the amended rule, the department also asked whether the definition of “at least quarterly” needed to be changed as well. No commenters suggested such a change was necessary, according to EBSA, but the department suggested that might be because Field Assistance Bulletin 2006-03 allows plans a 45-day window to provide quarterly benefit statements to participants, and Field Assistance Bulletin 2012-02R allows fee disclosures to be made along with benefit statements.

EBSA may consider withdrawing the revised definition if enough commenters object. Comments should be made by using the Federal eRulemaking Portal, http://www.regulations.gov; emailing e-ORI@dol.gov and including “RIN 1210-AB68” in the subject line; or mailing comments to Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210.

— Check out ERISA at 40: ‘Terrible’ or ‘A Job Well Done’? on ThinkAdvisor.