Relief for Participant Fee Disclosure Notice Timing

You may recall that in 2012, plan sponsors were required by the Department of Labor (DOL) to provide to plan participants a notice that disclosed detailed investment information for the plan. The DOL indicated that for any plan in which participants have the right to direct their own investments, the participants must be given basic plan and investment and fee information that will enable them to make informed decisions about the management of their accounts.

The initial notice had to be distributed no later than August 30, 2012 and the Department then required that a new notice be provided “at least annually thereafter” – meaning at least once within each subsequent 12-month period. The annual requirement meant that plans would need to provide the 2013 notice by August 30, 2013 (or sooner, depending on when the notice was provided in 2012). For plan sponsors, the requirement to distribute a notice in August is somewhat burdensome, because they would prefer to coordinate all required notices at the same time and most notices (safe harbor notices, QDIA notices, etc.) are due to be provided within 30 days of the plan year-end, or by December 1 for a calendar year plan.

The DOL was urged to reconsider the timing requirement, so that plans might have the opportunity to distribute the 2013 fee disclosure notices later, in coordination with other notices that would be given toward the end of the year. In response to many requests from service providers and plan administrators, the DOL has provided Field Assistance Bulletin 2013-02. The Bulletin effectively lets plan sponsors “reset” the deadline for the notice because it allows them to delay the 2013 fee disclosure notice until a date that is no more than 18 months after the date that the 2012 notice was provided. Subsequent notices will then have to be distributed within 12 months of the date that the 2013 notice is distributed. So, if the 2012 notice was provided on July 10, 2012, then the plan has until January 10, 2014 to provide the 2013 notice. If the 2013 notice is provided on November 20, 2013, then future notices will also be required to be distributed by November 20 of each following year. For employers that have already provided the 2013 notice, or are close to providing it, the Bulletin gives the employer the option of delaying the 2014 notice instead, so that it is distributed within 18 months after the 2013 notice, thus effectuating the “reset” in a future year. 

Plan sponsors should make a conscious decision about when to distribute the 2013 or 2014 notice, because the “reset” can only happen one time, and the date by which future notices will be required to be provided will hinge on the date that is set now. However, the Department is considering whether to allow a 30-45 day window during which subsequent notices may be provided, rather than the current requirement that each notice be provided within the 12-month annual date.

author

Annemarie Keehn has worked for over 29 years in the field of Defined Contribution Plan Administration. She graduated from Indiana University with a Bachelor of Science in Business Management. Anne joined RMS as an Account Executive in 2007. Her areas of expertise include qualified retirement plan administration and consulting, plan document underwriting, and compliance. She focuses the majority of her time at RMS on new client implementation and onboarding as well as assisting with marketing and new business initiatives.  She also maintains the plan document used by the firm and performs special research projects.  Anne has been awarded the designations of Qualified 401(k) Administrator and Qualified Pension Administrator from the American Society of Pension Professionals & Actuaries and has been approved by the Internal Revenue Service as an Enrolled Retirement Plan Agent. 

  

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