New Regulations for Service Providers

On July 16, 2010, the U.S. Department of Labor (DOL) issued interim final regulations under ERISA Section 408(b)(2) that impose new disclosure requirements on “covered service providers” providing services to specified pension plans subject to ERISA. Additionally, on Oct. 20, 2010, the DOL issued more final regulations under ERISA Section 404(a) that require the disclosure of certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in participant-directed individual account plans (e.g., 401(k) plans). These regulations, viewed in connection with the requirement, which became effective in 2009, to report actual fee information on the Schedule C of the Form 5500, demonstrate a clear policy shift by the DOL toward disclosure as a principal means of assisting plan fiduciaries to “satisfy” their duties and ensuring that participants have the information necessary to make informed decisions about the management and investment of their retirement savings. This article focuses exclusively on the new fee disclosure requirements imposed on covered service providers to ERISA pension plans under the interim final regulations issued in July of 2010 (the “Regulation”). Section I briefly describes the relevant law; Section II describes the Regulation; and Section III discusses the impact of the new requirements on plan fiduciaries and provides practical advice regarding steps to take in advance of their effective date.