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Proposed DOL Rules On 401(k) Fee Disclosures

BY Marcia S. Wagner
June 27, 2008

On Dec. 13, 2007, the DOL issued its long-awaited proposed rule on the subject of 401(k) fee disclosures. The Department issued this rule against a backdrop of increased Congressional attention and media scrutiny, and it is likely to be contentious. This article explains the key features of the proposed rule.

Background

ERISA '408(b)(2) provides relief from ERISA's prohibited transaction rules for service contracts or arrangements between a plan and a party in interest if the contract or arrangement is reasonable, the services are necessary for the establishment or operation of the plan, and no more than reasonable compensation is paid for the services. The DOL has proposed amending the regulations under ERISA '408(b)(2) to: 1) clarify what constitutes a 'reasonable contract or arrangement'; and 2) require more comprehensive written disclosures concerning plan contracts with service providers.

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