The U.S. Department of Labor has slightly delayed the deadlines on significant new
affirmative obligations for fiduciaries of retirement plans subject to the
Employee Retirement Income Security Act (ERISA).
Although the deadlines have been pushed back to April 1,
2012, employers should be preparing now to ensure that they are ready to comply
with the new requirements.
Under one set of obligations, fiduciaries responsible for
selecting service providers for retirement plans (i.e., investment managers,
recordkeepers, and certain other service providers that receive indirect
compensation) must consider a series of new information disclosures provided by
the prospective service providers before making a selection.
Disclosures include information regarding the nature of
the services to be provided, the extent to which the service provider is acting
as a fiduciary, and the amount and type of compensation the service provider
will receive. A fiduciary that fails to consider the new information
disclosures will cause the retirement plan to engage in an ERISA prohibited
Under a second set of obligations, fiduciaries of individual
account retirement plans-such as 401(k), 403(b), and 457(b) plans-that allow
participants to direct the investment of their accounts have a new affirmative
duty to disclose certain information to participants.
The information to be disclosed includes general plan
information (e.g., direction as to how to provide investment instructions),
information about plan expenses charged to participant accounts, and detailed
information about plan investment alternatives. The new regulations require
detailed disclosure on an annual basis and, in the case of plan expense
information, on a quarterly basis. A fiduciary's failure to satisfy the new
disclosure obligation could result in a breach of fiduciary duty under ERISA.
The new obligations demand that the following steps be
Ballard Spahr's Employee Benefits and Executive
Compensation Group will continue to follow these changes affecting fiduciaries
of retirement plans as well as other ERISA developments. If you have questions
or concerns, contact Brian M. Pinheiro, partner-in-charge of the Group, at
215.864.8511 or firstname.lastname@example.org, or Kurt R. Anderson, 215.864.8432 or
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