Employee Benefits Plans: DOL Revises 401(k), ERISA Rules


While you were working, the Department of Labor changed the rules governing disclosure of fees and providing investment advice to participants in ERISA, 401(k), and other retirement plans. For your reference, here’s a roundup of commentary and analysis on the DOL’s revised regulations, from lawyers and law firms on JD Supra:

On Investment Advice Regulations:

Department of Labor Finalizes Investment Advice Regulations (Ropes & Gray LLP):

“The Department of Labor has released long-awaited final regulations that will generally allow a range of investment advice to be provided to participants in 401(k) and similar individual account retirement plans. In particular, the new regulations implement rules added by the Pension Protection Act of 2006 that permit ‘fiduciary advisers’ to receive compensation from investment providers for giving investment advice to ERISA plan participants who manage their own accounts. The regulations will take effect December 27, 2011.” Read more»

How Financial Advisors Can Use the New 401(k) Advice Rules to Their Competitive Advantage (The Rosenbaum Law Firm P.C.):

“Years ago, the term retirement plan financial advisor was a vague term and really didn’t mean that the advisor had any retirement plan knowledge… Thanks to a lost decade for investing and the retirement crisis that a flat stock market has created, the Department of Labor (DOL) has tried to change the role of retirement plan advisors and make sure that they fulfill a role to help 401(k) plan participants and help limit a plan sponsor’s liability in the fiduciary process of selecting plan investments.” Read more»

Why 401(k) Plan Sponsors Should Make Sure Education and Advice is Offered To Their Participants (The Rosenbaum Law Firm P.C.):

“They often say that the road to hell is paved with good intentions… In order to avoid the road to hell, plan sponsors should make sure that their 401(k) plans allow for both financial education and advice to plan participants.” Read more»

On Fee Disclosure Regulations:

Now’s the Time For Plan Sponsors to Prepare for Implementation of New DOL Fee Disclosure Regulations (Poyner Spruill LLP):

“By no later than April 1, 2012, covered service providers for ERISA pension and 401(k) plans must provide plan fiduciaries with specific information on fees and expenses. If a covered service provider fails to comply, the provider’s contract or arrangement with the plan may be considered a prohibited transaction under ERISA and the Internal Revenue Code – even if the fees and expenses are otherwise reasonable.” Read more»

Employer Sponsored Retirement Plans: Updates and Upcoming Deadlines (Akerman Senterfitt):

“The service provider fee disclosure regulation requires service providers to disclose information to assist retirement plan fiduciaries in assessing the reasonableness of the service provider’s fees and compensation. The participant fee disclosure regulation requires plan administrators to make significant fee disclosures to participants in 401(k) and other defined contribution plans.” Read more»

Service Providers to ERISA Plans: DOL’s New Disclosure Regulations Are Imminent—Are You Ready? (Morgan Lewis):

“By their terms, the rules apply to ERISA-covered retirement plans, mainly corporate tax-qualified plans such as defined benefit and defined contribution retirement plans (including 401(k) plans), but not to welfare plans such as health plans and life insurance plans (although DOL is considering extending the rules to such plans) or individual retirement accounts (IRAs) (including IRAs that are part of “Simple” or “SEP” arrangements).” Read more»

Now’s the Time for Plan Sponsors to Prepare for Implementation of New DOL Fee Disclosure Regulations – Part II, Participant Fee Disclosure (Poyner Spruill LLP):

“The participant fee disclosure regulations require ERISA individual account plans (401(k), 403(b), etc.) with participant-directed investments to provide two types of disclosures to plan participants and beneficiaries: (1) an annual disclosure of specific plan and investment information, and (2) a quarterly disclosure of investment information and fees actually charged to participant accounts. For calendar year plans the initial annual disclosure must be provided no later than May 31, 2012.” Read more»

Additional Commentary and Analysis:

Pending Legislation Could Affect Employee Benefit Plans (Katten Muchin Rosenman LLP):

“Since the 112th Congress commenced at the beginning of this year, multiple bills have been introduced that, if enacted, would affect employee benefit plans and executive compensation. Some of this proposed legislation, which is currently in committee, is highlighted below.” Read more»

2011-2012 Regulatory Agendas for Employee Benefits Published by Treasury and DOL (Sutherland Asbill & Brennan LLP):

“The principal regulators of U.S. employee benefits have recently published their guidance plans for the coming months.

  • … the U.S. Department of Labor (DOL) issued its Spring 2011 Semi-Annual Regulatory Agenda… DOL’s agenda and related materials include 19 pending projects related to employee benefits.
  • … the U.S. Treasury Department and the Internal Revenue Service (IRS) released their 2011-2012 Priority Guidance Plan [which] includes 37 pending items addressing retirement benefits and 29 pending items addressing executive compensation and health care and other benefits.

Projects added since the previously published agendas are shown in bold; there are 37 new initiatives.” Read more»

Second Circuit’s Citigroup Decision Endorses Presumption of Prudence, Upholds Dismissal of Disclosure Claims (Morgan Lewis):

“In a much-anticipated decision, the U.S. Court of Appeals for the Second Circuit joined five other circuits in ruling that employer stock in a 401(k) plan is subject to a ‘presumption of prudence’ that a plaintiff alleging fiduciary breach can overcome only upon a showing that the employer was facing a ‘dire situation’ that was objectively unforeseeable by the plan sponsor. In re Citigroup ERISA Litigation, No. 09-3804, 2011 WL 4950368 (2d Cir. Oct. 19, 2011). The appellate court found the plaintiffs had not rebutted the presumption of prudence and so upheld the dismissal of their ‘stock drop’ claims.” Read more»


Follow Labor & Employment Law updates on: LinkedIn | Twitter | Facebook | JD Supra