Approaching Deadline for 2013 Participant Fee Disclosure NoticeAdded by Hawley Troxell in Business Law, Employment Law, News on June 27, 2013
Retirement plan sponsors with individual account plans (including profit sharing, 401(k) and 403(b) plans) should begin to prepare participant fee disclosure notices for 2013. The 2013 notice is generally due within 12 months of the date the 2012 notice was provided. For example, if you provided the 2012 notice on August 30, 2012, you should provide the 2013 notice by August 30, 2013. As you prepare the 2013 notice, you should consider the following:
- Third Party Administrators (TPAs) and recordkeepers often assist in preparing this notice, but plan sponsors are ultimately responsible for providing an accurate notice to participants. Plan sponsors should confirm with TPAs/recordkeepers whether they are preparing the notice and that it will be provided in time for plan fiduciaries to review before it is distributed.
- The notice is intended to help participants understand available investments and the fees that may reduce investment income. Plan fiduciaries benefit from the notice because accurate disclosures can protect against breach of fiduciary duty claims. Plan fiduciaries should carefully review the notice and confirm that it is accurate and complies with applicable Department of Labor (DOL) requirements. In some cases, plan fiduciaries should consider including a cover letter with the notice summarizing important information and, if needed, supplementing the notice.
- The notice may be mailed, hand-delivered or, in some circumstances, provided electronically. Generally, unless a participant has expressly consented to email delivery, the notice may only be provided by email if the recipient has regular access to email as part of their work. In addition, the notice may be provided by your TPA/recordkeeper through a secure server if specific consent requirements are satisfied. If your TPA/recordkeeper will distribute the notice electronically for you, you should confirm that the distribution complies with the DOL electronic delivery rules.
- Several industry groups have requested that the DOL extend the notice deadline to allow the notice to be provided with other notices normally provided at the end of the year (such as automatic contribution or qualified default investment alternative notices). However, the DOL has not yet responded to these requests. We will update you if the deadline changes, but at this point plan sponsors should assume the 2013 notice is due within 12 months of the date is was provided in 2012.
- Confirm when the notice was provided in 2012 to ensure the 2013 notice is distributed timely.
- Coordinate with TPA concerning preparation and delivery of the notice.
- Review the notice for compliance with DOL requirements, accuracy, and clarity.
- Customize the notice or prepare a cover letter to clarify or supplement the notice (if appropriate).
- Distribute the notice.
If you would like help in reviewing the materials you receive from your TPA/recordkeeper for compliance with the fee disclosure rules or if you would like us to develop a cover letter to provide with the disclosure, please contact a member of our health care group or call 208.344.6000.
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