Benefit Plans to Increase Disclosure about Costs

employee benefit plan disclosures

Beginning this July, employee benefit plans will be required to disclose more information about the direct and indirect fees paid to certain outside providers, such as administrative services, recordkeeping, and investment advice. Direct costs paid by either the plan or the sponsor (like the fees paid for the Plan’s audit) are not included.

The service providers must provide to the Plan detailed written information about the cost of the services provided and identify any potential conflicts of interest. The information must include details about the arrangement.

The cost of services paid by the Plan will have to be disclosed to the Plan participants starting with the quarter ended September 30, 2012. That disclosure will include the details about costs and expenses deducted from the participants’ accounts.

When discussing these new required disclosures with your Plan’s service providers, consider all possibilities about how best to share this information with the Plan’s participants. For example, the DOL will allow the information to be transmitted electronically.

Finally, it is important to document your analysis of the information provided to you by your Plan’s service providers. Needless to say, you should expect the DOL to pay increased attention to this topic.

http://www.dol.gov/ebsa/pdf/2012-02262-PI1.pdf

Please contact us to discuss the implementation of these new benefit plan requirements. You can never start too soon.