Labor Dept. to delay plan fee disclosure rules

The Labor Department today announced a proposal to push back to Jan. 1, 2012, the effective date for retirement plan service providers to begin disclosing fees. The regulation will require service providers such as record keepers and broker-dealers to spell out to plan sponsors their fiduciary status, detail the services they provide and disclose compensation. Originally, the rule was expected to take effect July 16, though the DOL spoke subsequently of a possible delay to give firms more time to comply. News of a new deadline did not surprise those in the retirement industry, though they had hoped that the delay would be longer. Currently, the plan fee disclosure rule is in its interim final form and has not been sent to the Office of Management and Budget, so the regulation could be subject to changes before its final version is published. Review at the OMB could take up to 90 days, and if the rule undergoes substantive changes, service providers might feel that they will need even more time to comply. Once the 14-day comment period for the DOL's delay opens tomorrow, industry participants will voice concerns, said Bradford P. Campbell, counsel at Schiff Hardin LLP and a former head of the DOL's Employee Benefits Security Administration. “I think people will say, ‘Thank you for extending the deadline to Jan. 1, but if you're going to make more changes in the final version, you need to give us more time,'” he said. The Labor Department also is giving employers more time to provide initial fee disclosures to employees. A second fee disclosure regulation, expected to take effect for plan years beginning Nov. 1, will require plan sponsors to disclose information about costs to employees. Originally, plan sponsors had a 60-day period to provide the disclosures to employees. The DOL today lengthened that period to 120 days. “We want employers and workers to benefit from the increased transparency provided by these rules as soon as possible,” said Phyllis C. Borzi, assistant labor secretary for the Employee Benefits Security Administration. “But we also appreciate that service providers may need more time for compliance efforts because they have not yet seen a final ERISA 408(b)(2) regulation,” she said, referring to the Employee Retirement Income Security Act of 1974.