<nobr>Jun 15, 2011</nobr>

ERIC Urges DOL to Extend Transition Periods for Fee Disclosure Rules, Expand Safe Harbor for Electronic Disclosure

ERIC on June 14 urged the Department of Labor (DOL) to include a transition period as part of the fiduciary-level fee disclosure rule to allow adequate time for service providers to comply with the new rules and for plans sponsors to review the information received.

ERIC's comments are in response to the DOL's proposal published June 1 in the Federal Register to extend the applicability dates of the interim final rule concerning fiduciary-level fee disclosure and the final rule concerning participant-level fee disclosure.

DOL proposed to extend from July 16, 2011, to January 1, 2012, the applicability date requiring plan service providers to disclose information about their fees and potential conflicts of interest to plan fiduciaries under section 408(b)(2) of ERISA.

ERIC argues, however, that it is not possible to assess whether the proposed extension of the applicability date of the fiduciary-level disclosure rule is adequate without knowing when the final regulation will be published or what changes will be made. The letter urges the DOL to provide that the applicability date should be no earlier than 180 days after the final regulation is published in the Federal Register.

In addition, ERIC argues that the fiduciary-level disclosure rule should include a transition period no less than 180 days from when service providers are first required to discharge their obligations under the fiduciary-level disclosure rule. This would give plan fiduciaries adequate time to review the information received, reassess the reasonableness of each service provider's compensation, determine what changes (if any) are appropriate, and take any additional steps they determine are necessary.

DOL also proposed to extend from 60 days to 120 days the transition period for employers to provide initial disclosures under the final participant-level regulation requiring that employers disclose information about plan and investment costs to workers who direct their own investments. The letter notes that because the applicability date is tied to November 1, 2011, rather than January 1, 2012, the transition period will be up to 60 days shorter for plans with plan years that start in November or December. ERIC urges that the deadline for furnishing initial participant-level disclosures should be no earlier than 120 days after the deadline for receiving the fiduciary-level disclosure.

ERIC also urged DOL to expand the safe harbor standard for electronic distribution of the participant-level disclosure, contending that the restrictions imposed by the existing safe harbor make electronic disclosure impractical with respect to many plan participants. The letter refers to ERIC's June 3 response to the Department's request for information regarding electronic disclosure, and suggests that at a minimum, the standard set forth in Part 2 of FAB 2006-3 should apply until further guidance is issued.

ERIC's letters can be accessed by clicking on the links below.

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For more information:
Ted Godbout
Director, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
tgodbout@eric.org
www.eric.org

Websites:

ERIC Comments on Fee Disclosure Dates

ERIC Comments on Electronic Disclosure

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