Sponsors of Participant-Directed 401(k) Plans Should Not Ignore the Proposed Disclosure Requirements

The Department of Labor has proposed that these new rules be effective for plan years beginning in 2009. However, most of the regulations are not yet final and there is an intervening presidential election between now and Jan. 1, 2009. (Democratic leaders in the House of Representatives have made clear that they do not think the current proposed regulations go far enough.) The Department of Labor has made clear that it intends to try to issue all the regulations in final form by the time the Bush administration leaves office in January 2009, but even if they were issued tomorrow (and they won't be) it is already too late for sponsors and service providers to update reporting systems before the beginning of the 2009 plan year.

So let us assume, for reality's sake, that most of the guidance will not be effective until at least the 2010 plan year. The question then becomes whether there is something participant-directed 401(k) plan sponsors and service providers to 401(k) plans should be doing to be ready for the 2010 plan year. Making system changes seems premature. There are still too many unanswered questions and too much likelihood of changing requirements.