US Labor Department improves procedures for plan sponsors seeking relief under new fee disclosure rules

WASHINGTON – The U.S. Department of Labor's Employee Benefits Security Administration has announced improved procedures for plan sponsors who wish to obtain fiduciary relief for a service provider’s failure to comply with the department’s plan-level fee disclosure rule. http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=26218&AgencyId=8&DocumentType=2

The final “408(b)(2)” regulation (77 FR 5632, Feb. 3, 2012), effective on July 1, 2012, includes a provision to protect plan sponsors or other responsible plan fiduciaries from liability for a breach of their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) when, unbeknownst to the plan sponsor, a service provider failed to comply with the regulation’s comprehensive disclosure requirements.

If a plan sponsor discovers that required information has not been furnished, the sponsor must notify the department, by regular mail or electronically, when efforts to obtain the undisclosed information from a service provider are not successful.  The direct final rule continues to permit paper or electronic submissions, but enhances the existing procedures by providing a dedicated P.O. box address (U.S. Department of Labor, Employee Benefits Security Administration, Office of Enforcement, P.O. Box 75296, Washington, DC 20013) and a web-based tool, at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/fiduciary-responsibilities/fee-disclosure-failure-notice, that will assist plan sponsors in ensuring that all required information is submitted and providing immediate confirmation that notices have been received by the department.

"These revised submission procedures will help plan sponsors who, through no fault of their own, do not receive the disclosures promised to them by the 408(b)(2) regulation.  When efforts to resolve the disclosure failure with their service provider are ineffective, plan sponsors will be able to take advantage of an easy-to-use, online tool that will guide them through the information that must be submitted to the department and provide immediate confirmation that their notice has been received.  Of course, plan sponsors who wish to submit a paper notice may continue to do so,” said Assistant Secretary of Labor for EBSA Phyllis C. Borzi.  “Department staff also will be able to more efficiently receive, process, and review these notices, which will in turn benefit the plan sponsors who seek relief.”

Parties wishing to comment on this direct final amendment to the 408(b)(2) regulation may do so by August 15, 2012 in accordance with instructions provided in the direct final rule.  Unless significant adverse comment is received, these revised procedures will be effective on September 14, 2012.

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.