Legal Alerts

Department of Labor Delays Requirement that 401(k) Plans Obtain Information on Plan Fees to January 1, 2012


Plan sponsors of 401(k) and pension plans have a fiduciary duty to determine that fees charged against plan assets are reasonable. Some employers have been sued in court by participants claiming the value of their accounts suffered from high fees for investment and other services. In response, the U. S. Department of Labor (“DOL”) issued interim-final regulations requiring service providers (mutual fund managers, record-keepers, etc.) to disclose information to assist employers in understanding the reasonableness of the fees being charged for plan services and to assess potential conflicts of interest that might affect the quality of those services. These regulations were to become effective on July 16, 2011.

Recently, the DOL announced that it intends to delay the effective date of these fee disclosure interim-final regulations from July 16, 2011 to January 1, 2012. The regulations will apply to contract or arrangements in existence on or after January 1, 2012. Employers sponsoring any type of retirement plan should contact their service providers to obtain the required disclosures.

Employers should also remember that 401(k) and similar plans offering participant direction of plan investments must give new, detailed fee disclosure information to participants for plan years beginning on or after November 1, 2011. The service providers should also be providing employers this information in a format that meets DOL requirements. 

If you have questions about whether your plan is covered by these regulations or need assistance in reviewing either of the disclosures discussed above, please contact one of our Employee Benefits attorneys.

This information provided above about a new development of the law is intended for general informational purposes only. It should not be construed as legal advice or legal opinion on any specific facts or circumstances and you are urged to consult a Lindquist & Vennum LLP attorney or one of your own choosing concerning your situation and specific legal questions you have.

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