US Labor Department issues interim final rule on disclosure of fees and conflicts of interest affecting 401(k) and other retirement plans

WASHINGTON — The U.S. Department of Labor today announced an interim final rule that will enhance disclosure to fiduciaries of 401(k) and other retirement plans. The rule will assist fiduciaries in determining both the reasonableness of compensation paid to plan service providers and any conflicts of interest that may impact a service provider's performance under a service contract or arrangement.

The interim final rule comes on the heels of considerable work on the part of House of Representatives and Senate legislators to improve the current disclosure system.

"The steps we are announcing today would not have been possible without the leadership and vision of House Education and Labor Committee Chairman George Miller and Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin. By highlighting the negative consequences that undisclosed fees can have for workers' retirement security, they made possible the type of dialogue between policymakers and the regulated community that has allowed for the development of meaningful regulatory standards on such a complex issue," said U.S. Secretary of Labor Hilda L. Solis. "This regulation will give fiduciaries valuable information about compensation and revenue sharing, and the disclosure of this information will benefit millions of participants and their families."

"Improving disclosure will mean that plan fiduciaries can make more informed decisions about important plan services, the cost of the services and the potential conflicts of interests that their service providers may have," said Phyllis Borzi, assistant secretary for the Labor Department's Employee Benefits Security Administration.

The interim final rule will enhance disclosure to pension plan fiduciaries by requiring the disclosure of the direct and indirect compensation certain service providers receive in connection with the services they provide. The rule applies to plan service providers that expect to receive $1,000 or more in compensation and that provide certain 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.

To view the interim final rule, go to http://www.dol.gov/ebsa. Written comments on the interim final regulation should be addressed to the Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5665, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: 408(b)(2) Interim Final Rule. The public also may submit comments electronically by e-mail to e-ORI@dol.gov or through the federal e-rulemaking portal at http://www.regulations.gov.