The Department of Labor has slightly delayed the deadlines on significant new affirmative obligations for fiduciaries of retirement plans subject to the Employee Retirement Income Security Act.

Although the deadlines have been pushed from this July to April 1, 2012, employers should be preparing now to ensure that they are ready to comply with the new requirements.

Under one set of obligations, fiduciaries responsible for selecting service providers for retirement plans (i.e., investment managers, recordkeepers, and certain other service providers that receive indirect compensation) must consider a series of new information disclosures provided by the prospective service providers before making a selection.

Disclosures include information regarding the nature of the services to be provided, the extent to which the service provider is acting as a fiduciary, and the amount and type of compensation the service provider will receive. A fiduciary that fails to consider the new information disclosures will cause the retirement plan to engage in an ERISA prohibited transaction.

Under a second set of obligations, fiduciaries of individual account retirement plans - such as 401(k), 403(b), and 457(b) plans - that allow participants to direct the investment of their accounts have a new affirmative duty to disclose certain information to participants.

The information to be disclosed includes general plan information (e.g., direction as to how to provide investment instructions), information about plan expenses charged to participant accounts, and detailed information about plan investment alternatives. The new regulations require detailed disclosure on an annual basis and, in the case of plan expense information, on a quarterly basis. A fiduciary's failure to satisfy the new disclosure obligation could result in a breach of fiduciary duty under ERISA.

The new obligations demand that plan sponsors:

* Provide training to plan fiduciaries, including investment committees, on new fiduciary obligations.

* Contact plan service providers about information to be provided.

* Update recordkeeping and communication systems to satisfy the quarterly disclosure requirements.

* Review and evaluate information disclosures.

* Make and carry out fiduciary decisions.

Brian M. Pinheiro is partner-in-charge and Kurt R. Anderson is counsel in the employee benefits and executive compensation group with Ballard Spahr. Pinheiro can be reached at pinheiro@ballardsphar.com and Anderson can be reached at andersonk@ballardspahr.com.

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