DOL's latest start date — Jan. 1 — still too soon, industry group contends
The SPARK Institute on Friday asked the Labor Department to extend the effective date for fee disclosure rules on 401(k)s beyond Jan. 1.
The group, which represents mutual fund companies and insurers, is responding to the agency's plans for a bevy of new mandates governing defined-contributions plans. Specifically, the DOL wants retirement plan service providers to spell out to plan sponsors their fiduciary status. The department also wants providers to detail the services they provide and disclose their compensation.
The rule, now in its interim final form, was supposed to take effect July 16. But the DOL decided to push that date back to give firms more time to comply.
SPARK, however, anticipates that the Labor Department's final version of the regulation will include a summary disclosure requirement — a burdensome task for providers.
Further, the regulation hasn't been submitted to the Office of Management and Budget for review yet, a process that typically takes about 90 days. As a result, service providers wouldn't have enough time to prepare, SPARK contended.
“Assuming that the rules are sent to OMB as of the date of this letter, final rules would not be released until mid-September 2011,” wrote Larry H. Goldbrum, general counsel for SPARK. “As a result, the regulated community is likely to have less than four months to adapt and comply.”
Instead, the group is pushing for plan providers to have at least six months to get in compliance after the final rule is published.
SPARK also is asking for more time on participant disclosures, pushing for another 120 days from the date that service providers are expected to comply with the new rules.
Currently, the deadline for calendar year plans to furnish initial disclosures is April 30, 2012; disclosure via quarterly statements must start by May 15, 2012. Plans that don't begin on a calendar year will have even shorter time frames: Providers for plans that begin on Nov. 1 will have to provide statements by March 16, Mr. Goldbrum wrote.
