BY RICHARD STOLZ
bar for plan
he job of being a retirement plan fiduciary may soon be a more
lonely experience. Or maybe it will just seem that way under the Department of
Labor’s 408(b)( 2) regulations. Earlier this year, the agency extended the compliance date for the new disclosure rules under ERISA section 408(b)( 2) from July
16, 2011, to Jan. 1, 2012, meaning retirement plan service providers have more
time to prepare before they are required to disclose to plan sponsors that they
are indeed acting as a plan fiduciary. Further, the extension pushes back the
transition rule for providing initial disclosures from 60 days after the effective
date to 120 days after the effective date. Thus, for calendar-year plans, initial
disclosures don’t need to be made until April 30, 2012.
Sponsors will want to use the extended compliance timeline to more closely
review their fiduciary status and rededicate themselves to the task of fulfilling
their obligations as fiduciaries.
Although the thrust of the disclosure regulations deals with fee disclosure
by plan providers (see “No free lunch” from EBN June 15 for tips on how plan
sponsors can prepare 401(k) participants for the fee disclosure rules), 408(b)( 2)
also requires companies providing services to retirement plans to disclose their
status in relationship to the plan. That is, they must explicitly state that they are
acting in a fiduciary capacity — but only if indeed that is what they are doing.
“On the other hand, if they are not [acting as a fiduciary], there is no requirement that they make that negative statement,” notes veteran ERISA attorney
Fred Reish, a partner with Drinker Biddle in Los Angeles.
(SEE FIDUCIARY ON PAGE 24)