DoL Issues Final Rule on Fee Disclosure

February 2, 2012 (PLANSPONSOR.com) – The U.S. Department of Labor’s (DoL) Employee Benefits Security Administration (EBSA) issued a final rule on 408(b)(2) fee disclosure Thursday. 

The DoL also announced a three-month extension to the rule’s effective date, meaning service providers must be in compliance by July 1, 2012, for new and existing contracts or arrangements between Employee Retirement Income Security Act (ERISA)-covered plans and service providers.

“As President Obama has said, we’re at a make or break moment for the middle class and those trying to reach it,” said Secretary of Labor Hilda L. Solis. 

“What’s at stake is the American value that hard work pays off. The common-sense rule that we are finalizing today will shed light on the true costs of 401(k) accounts and ultimately reward those working hard and saving for retirement," added Solis. 

“This rule, and its companion participant-level fee disclosure rule, will greatly increase the level of transparency in retirement plans. When businesses that sponsor retirement plans, and the workers who participate in those plans, get better information on associated fees and expenses, they’ll be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement.”

The DoL’s rule requires service providers to furnish information that will enable pension plan fiduciaries to determine both the reasonableness of compensation paid to the service providers and any conflicts of interest that may impact a service provider's performance under a service contract or arrangement. It requires disclosures of direct and indirect compensation certain service providers receive in connection with the services they provide.