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Fee Disclosure Requirements by the Department of Labor

Regulations, effective July 1, 2012, from the Department of Labor under section 408(b)(2) require certain retirement plan service providers to disclose detailed information regarding the services they provide along with their compensation to plan fiduciaries. This has too frequently overshadowed the August 30, 2012 requirements for regulations under section 404(a)-5, the date by which Federal law required plan sponsors to disclose plan facts and fees to all eligible employees and participants.

Section 404(a)-5 enforces certain fiduciary responsibilities held by plan sponsors and administrators regarding the distribution of participant fee disclosure information. The nature of this disclosure can be broken down into two categories of information consisting of plan related information and investment related information, and must be provided to participants in a very specific format.

Failure to provide fee disclosures to your plan participants can result in a prohibited transaction, causing serious civil penalties. In addition, if participant losses are suffered as a result of plan sponsors not following this rule, it can potentially result in a penalty from the DOL.

Plan related information showing fees and expenses actually charged to an individual must be provided quarterly while other plan related information and investment related information must be furnished initially and annually.

For more information, or for a list of who must receive this disclosure, please contact our Employee Benefit Plan Group.