DOL Amends Deadline for Participant-level Fee Disclosure
The United States Department of Labor (the “DOL”) recently issued a final rule amending the “participant-level fee disclosure” regulation required pursuant to ERISA Section 404(a)(5). The amendment makes a technical adjustment to the timing requirement by providing plan administrators with flexibility as to when they must furnish annual disclosures to participants and beneficiaries. Pursuant to the amendment, plan administrators are now required to issue annual disclosures on or before the date on which a participant can first direct his or her investments and at least once in any 14-month period, thereafter.
Background:
On October 20, 2010 the DOL issued final regulations establishing the disclosure requirements for participant-directed individual account plans. Plan administrators of applicable plans were required to provide participants with detailed comparisons of plan investment alternatives and other detailed investment-related information no later than August 30, 2012. Furthermore, the regulation required plan administrators to furnish this information “at least annually thereafter”. The term “at least annually thereafter” meant at least once in any 12-month period, without regard to whether the plan operated on a calendar or fiscal year basis. Therefore, a plan administrator that was required to begin providing these notices in August 2012 was required, under the original rule, to provide annual notices on or before the same date in August 2013, and each subsequent year thereafter.
The New Amendment:
The new DOL amendment replaces the “12-month period” with “14-month period”. Thus, the definition, as amended by the new DOL rulemaking states that the term “at least annually thereafter” means “at least once in any 14-month period, without regard to whether the plan operates on a calendar year or fiscal year basis.” Pursuant to the Department’s view, this definition achieves a correct balance by ensuring that participants and beneficiaries receive annual disclosures on a consistent and regular basis, and without unwarranted delays in-between disclosures, while at the same time offering plan administrators some flexibility.
The amendment will become effective on June 17, 2015, unless the DOL receives significant adverse comment during the public comment period. Nonetheless, if a plan’s disclosures are due prior to June 17, 2015, plan administrators may rely on the new 14-month rule if they reasonably determine that doing so will benefit participants and beneficiaries.
This document has been prepared for information purposes only and is not intended as, and should not be relied upon as legal advice. If you have any questions or comments about the matters discussed in this notice, wish to obtain more information related thereto, or about its possible effect(s) on policy or operational matters, please contact us.
- René J. Avilés-García – raviles@nullferraiuoli.com
- Tatiana Leal-González – tleal@nullferraiuoli.com
- Reinaldo Díaz-Pérez – rdiaz@nullferraiuoli.com
- Ediberto López-Rodríguez – elopez@nullferraiuoli.com
