Reprieve for 401(k) service providers

Brokers and firms that provide services to retirement plans can breathe a little easier now that the Labor Department has bumped back the effective date of its fee disclosure regulation to next January.
The extension gives service providers a little bit of breathing room as they prepare to give plan clients detailed disclosures on their fees and services.
“I think they have enough time to prepare for this,” Stephen W. Kraus, a partner at the law firm Jorden Burt LLP and co-chairman of its employment and Employee Retirement Income Security Act practice, said of plan providers. “They had at least a year before it was implemented.”
Last Friday, the department opted to bump the effective date of its plan fee disclosure regulation to Jan. 1, 2012, from July 16, 2011. Retirement plan providers, such as Fidelity Investments and Putnam Investments, as well as broker-dealers, registered representatives and advisers, kept a close eye on the proposed rule, as it required them to spell out their services and compensation, and disclose whether they are acting as fiduciaries.
The rule, particularly in context with a volley of Labor Department regulatory initiatives, threatened to shake up the broker-sold 401(k) plan market, as industry observers expected that reps who were once informally providing investment advice to plans would have to pull back their services or risk losing clients to registered investment advisers.
“It makes sense to me to delay implementation until the DOL decides what the final rules will be, otherwise service providers will try to figure out how to comply and then find out that things may have changed,” Mr. Kraus said.