Ballard Spahr LLP: DOL Eliminates Fee Disclosure Requirement for Brokerage Windows

Ballard Spahr LLP: DOL Eliminates Fee Disclosure Requirement for Brokerage Windows

By Clifford J. Schoner

Responding to the comments of the benefits community, the U.S. Department of Labor has revised its enforcement guidance on the applicability of participant-level fee disclosure requirements to investments made through brokerage windows. 

In May, the DOL issued a field assistance bulletin that surprised many plan sponsors. It stated that the requirement to disclose fee information to participants about investment alternatives specifically made available under a defined contribution plan could apply to certain investments made by participants through brokerage windows or comparable arrangements. On July 30, the DOL reversed its course, issuing a revised bulletin that eliminates the requirement to disclose fee information to participants for all investments made available to participants solely through brokerage windows or comparable arrangements.

While ERISA fiduciaries will welcome this news, the relief offered by the revised bulletin is limited in some respects.  For example, all participant-directed investments under defined contribution plans, including brokerage windows and similar arrangements, remain subject to plan-related disclosure requirements, such as the requirement to provide participants with information about administrative fees and expenses.  Moreover, the bulletin suggests that ERISA fiduciaries retain additional obligations concerning investments under a brokerage window or similar offering that the DOL intends to define by working with the benefits community to establish "a practical and cost-effective" approach.

Ballard Spahr's Employee Benefits and Executive Compensation Group assists employers in understanding their fiduciary obligations, and can help develop policies and procedures to document the exercise of your organization's fiduciary responsibilities regarding the investment and administration of plan assets. If you have questions, please contact Clifford J. Schoner at schonerc@ballardspahr.com or 215.864.8626.


Copyright © 2012 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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