Pension Protection Act Blog

The Dept. of Labor released the long-awaited proposed regulations on fee disclosures and fiduciary responsibilities. Officially called the proposed regulations on “Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans”, these proposed regulations are 103 pages long and include a model disclosure notice.

The regulations are a little too involved to provide a brief summary here. I am working on a comprehensive guide to these regulations along with speaking at two webinars next week about these regulations because they really seem to encompass the DOL’s ideas on what information should (must) be disclosed to participants and beneficiaries. The DOL states in the regulations that their intention is to establish uniform, basic disclosures for participants and beneficiaries without regard to whether the plan is covered by Code section 404(c). To reach that goal, the DOL has taken a multi-prong approach. Some disclosures are to be made to participants and beneficiaries in the summary plan descriptions (SPDs). Some disclosures are to be made in the quarterly benefit statements which are already required by the Pension Protection Act. And some disclosures are to be made on separate forms. To faciliate disclosure, the DOL has included a model disclosure notice within these regulations.

The requirement to include some information in the SPDs is coming a little late for the EGTRRA defined contribution plans. I know a number of plan document providers which already have the SPDs for their EGTRRA defined contribution prototype and volume submitter plans programmed and in production, and will find it burdensome to pull the SPDs back out of production in order to include the fee disclosure information. Over the last couple of years, a running debate among pension geeks has revolved around the disconnect between the DOL’s 5-year rule for SPDs and the IRS’ 6-year rule for plan documents. These regulations add further fuel to that fire as the DOL is imposing information disclosures on fees and fiduciary responsibility which will not be reflected in the actual EGTRRA documents which the IRS approved a few months ago.

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