The Department of Labor announced that retirement plan sponsors
can reset their annual due date for providing participant fee disclosures.
The temporary enforcement policy will now allow plan
sponsors will now be able to reset the date for annual distribution of the
investment comparative chart required to be furnished to plan participants. Most
plans were required to provide the comparative chart by August 30, 2013, one
year after the initial disclosure was provided.
Background
On October, 20, 2010, the Employee Benefits Security
Administration (EBSA) published a final regulation on disclosure requirements
for participant-directed individual account plans (29 CFR § 2550.404a-5). The
regulation required that plan administrators disclose detailed
investment-related information to plan participants and beneficiaries about the
plans' designated investment alternatives.
Plans operating on a calendar-year basis had to furnish a
comparative chart of the investment alternatives for the first time no later
than August 30, 2012, and subsequently "at least annually
thereafter[.]" The regulation defines "at least annually
thereafter" to mean at least once in any 12-month period, without regard
to whether the plan operates on a calendar or fiscal year basis. For
example, a plan administrator that furnished the first required chart on August
25, 2012, must furnish the next comparative chart no later than August 25,
2013. This timing requirement was intended to ensure that participants and
beneficiaries receive consistent and regular information about their plan's
investment alternatives.
Many plan administrators and
service providers expressed concern that an annual August deadline for the comparative
chart has no correlation to the timing of any other annual participant
disclosures. And although the regulation allows the comparative chart to be
distributed along with other disclosures, because of the timing requirement, it
will generally have to be distributed in its own separate mailing increasing
plan costs.
For these reasons, many plan
administrators and service providers asked EBSA to provide plans with more
flexibility so that the annual deadline for furnishing comparative charts can
be aligned in a cost-effective manner with the furnishing of other participant
notices and disclosures.
Temporary Enforcement Policy
Under the enforcement policy
contained in Field Assistance Bulletin 2013-02, plan administrators may reset
the deadline one time, for either the 2013 or the 2014 comparative chart, if
the responsible plan fiduciary determines that doing so will benefit the plan's
participants and beneficiaries and provided that no more than 18 months may pass
before participants receive their next comparative chart. This enforcement
policy does not alter a plan administrator's obligations under the regulation
to timely update the investment information that is available at the plan's
internet address or to notify participants about changes to investment
information, such as a new plan investment option.
The Bulletin establishes a temporary enforcement policy until
EBSA issues further guidance in this area. Under this policy, EBSA will not
take any enforcement actions against a plan administrator who complies with the
conditions in this Bulletin. The Bulletin does not relieve plan administrators
from other obligations under the regulation that are intended to ensure that
participants and beneficiaries have access to updated investment-related
information.
The department’s participant-level fee disclosure
regulation—implemented last year—requires that administrators of defined
contribution retirement plans disclose information about plan investment
options, such as fee and performance information, to participants and
beneficiaries at least annually. Plans operating on a calendar year had to
furnish their first chart no later than August 30, 2012, and their second chart
is due no later than August 30, 2013. Many other plan disclosures, however,
such as pension benefit statements, are disclosed later in the calendar year.
Permitting a one-time "re-set" of the deadline will allow plan
administrators to align the comparative chart with other participant
disclosures.
Consideration of
Regulatory Amendment
The EBSA acknowledges that the
one-time "re-set" permitted by this Bulletin does not address concerns
that the current timing requirement may result in a fixed annual deadline for
comparative charts. Accordingly, EBSA is considering whether revisions to the
regulation’s timing requirement to provide reasonable flexibility to plan
administrators on a permanent basis. Specifically, EBSA is considering whether
to allow a 30-day or 45-day window during which a subsequent annual comparative
chart would have to be furnished, rather than fixing the 12-month "at
least annually" period to end on one specific day.