The Employee Benefits Security Administration (EBSA) will wait until Jan. 1, 2012, to begin applying new retirement plan service provider fee disclosure regulations.
EBSA, an arm of the U.S. Labor Department, had been intending to start applying new disclosure rules under Section 408(b)(2) of the Employee Retirement Income Security Act (ERISA), July 16, 2011.
EBSA published the interim final regulations in July 2010, in an effort to persuade retirement plan service providers to give the cost information that plan fiduciaries need to assess the reasonableness of the fees charged and to look out for potential conflicts of interest.
EBSA received many public comments, including suggestions for a summary plan document system to help plan fiduciaries use the cost data, according to Phyllis Borzi, the Labor Department assistant secretary in charge of EBSA.
"We now believe plans and plan service providers would benefit from an extension of the rules applicability date," Borzi says in a statement.
The regulations implement provisions of the Pension Protection Act of 2006,
and EBSA has been working on them for years. A version developed while President Bush was in office was supposed to take effect after President Obama became president. The Obama administration postponed implementation several times, then canceled implementation and announced plans to draft its own version.
The regulations will require service providers to disclose both direct and indirect compensation.
The rule applies to plan service providers that expect to receive $1,000 or more in compensation and that provide specified fiduciary or registered investment advisory services; make available plan investment options in connection with brokerage or recordkeeping services; or otherwise receive indirect compensation for providing certain services to the plan, officials say.
In addition to requiring a plan to break out administrative expenses such as legal and accounting fees separately, the regulations will require that a plan describe the fees participants must pay to complete steps such as taking out a plan loan or having a qualified domestic relations order processed.
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