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5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.


Sponsors, service providers urge modification of proposed fee disclosure regs

Proposed regulations on retirement plan fee disclosures should be modified and clarified before being finalized and the effective date delayed, according to hearing testimony by representatives of associations of plan sponsors, retirement plan professionals and service providers. The hearing was held on March 31, 2008 at the Labor Department in Washington, D.C.

On December 13, 2007, the Labor Department’s Employee Benefits Security Administration (EBSA) issued proposed regulations under ERISA 408(b) (2). The proposed regulations (see CCH Pension Plan Guide 20,537F) are designed to provide plan fiduciaries with sufficient information to evaluate the reasonableness of compensation and fees directly and indirectly paid to certain service providers (including affiliates), and assess the potential for conflicts of interest that may affect the performance of a service provider.

After receiving more than 100 comments on the proposed regulations, various affected parties testified at the hearing, including David L. Wray, President of the Profit Sharing/401k Council of America (PSCA), Robert B. Chambers, past chair of the board of directors of the American Benefits Council (ABC), and Bruce Ashton of Reish, Luftman Reicher & Cohen, speaking for the American Society of Pension Professionals & Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR).

Wray recommended that the requirement that service providers disclose conflicts of interest be removed from the proposed regulations, but that the requirement to disclose “material” relationships be retained. Chambers urged the DOL to finalize the proposed regulations in three separate components: defined contribution plan disclosure, defined benefit plan disclosure and health and welfare plan disclosure, in that order. Ashton urged the DOL to require uniform compensation disclosure in three categories: investment fees and expenses, transaction fees and expenses, and recordkeeping and administrative fees and expenses. He advocated requiring such disclosure of all service providers, even those considered a bundled provider under the proposed regulations, and stated that such disclosure would be the most meaningful for decision makers for small plans.

CCH Note: Fee disclosure has also drawn the interest of lawmakers. On April 16, 2008, the House Education and Labor Committee approved H.R. 3185, the 401(k) Fair Disclosure for Retirement Security Bill.