By Kurt R. Anderson
and Brian M. Pinheiro
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
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 transaction.
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 taken:
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 email@example.com, or Kurt R.
Anderson, 215.864.8432 or firstname.lastname@example.org.
Copyright © 2011 by Ballard Spahr LLP.
(No claim to original U.S. government material.)
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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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