DOL Fee Disclosure Notice Failure

July 13, 2012

The DOL has upped the price for a service provider and a plan sponsor to come under the prohibited transaction exemption for a person who provides services to 401k plans and other deferred compensation plans subject to ERISA. Very briefly, a service provider should (absent an exemption) have made a disclosure to the plan sponsor on or before July 1 respecting its compensation and potential conflicts of interest. If a service provider failed to make such a disclosure, there is a prohibited transaction issue for the service provider. If a service provider failed to make the requisite disclosure, there is in addition a prohibited transaction issue for the plan sponsor unless the plan sponsor, first, requests that the service provider make the requisite disclosures and, second, then notifies the DOL if the service provider fails to respond to that request within 90 days. The DOL on July 13 announced (1) a new post office address for plan sponsors to use to report a failure by a service provider, (2) the elimination of the DOL email address previously provided for reporting a failure and (3) the creation of a DOL website for reporting a failure. Note that the website has not come online to date. To view the July 13 announcement, Click here Please contact Jan Marsh (678-336-7135)  if you would like to discuss the foregoing in more detail.

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