Field Assistance Bulletin Archives - EMPLOYEE BENEFITS BLOG

Socially Responsible Investing – No Good Deed Goes Unpunished

by Brian Tiemann and Lisa Loesel | Oct 2, 2018 | Employee Benefits, Retirement Plans

Socially responsible investing often sounds like an intriguing idea, but investing plan assets in a socially responsible manner is a notoriously tricky proposition. Earlier this year, the US Department of Labor issued additional guidance clarifying existing DOL guidance applicable to socially responsible investment of plan assets. However, the clarifications included in FAB 2018-01 may further limit the scenarios in which socially responsible investing could be considered prudent under the Employee Retirement Income Security Act of 1974, as amended (ERISA).

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DOL Permits Plan Administrators to Reset Annual Fee Disclosure Deadline

by McDermott Will & Emery | Aug 20, 2013 | Retirement Plans

by Karen Simonsen, Elizabeth Savard and Maggie McTigue

The United States Department of Labor (DOL) recently issued guidance that gives administrators of defined contribution plans a one-time opportunity to reset their deadline for providing participants with the plan’s required annual fee disclosure.

Background

Under DOL final regulations issued in 2010, administrators of 401(k) plans and other defined contribution plans with participant-directed investments must provide participants and beneficiaries with an annual fee disclosure that includes detailed plan and investment-related information (see “Department of Labor Issues New Rules on 401(k) Fee Disclosure to Participants” for more information). For most plans, including calendar year plans, the initial fee disclosure was due by August 30, 2012, with subsequent disclosures to be provided at least once in any 12-month period.

Plan administrators and other interested parties expressed concern that because the annual August 30 deadline does not coincide with the timing for other participant disclosures, it is not feasible to combine the distribution of the annual fee disclosure with other participant materials, thus requiring a separate mailing and associated costs. Also, some believed that the disclosure would be more effective when distributed with other plan communications or at a more relevant time, such as during enrollment periods.

New Guidance

In response to these concerns, the DOL issued Field Assistance Bulletin (FAB) 2013-02, which provides plan administrators with a one-time opportunity to reset the deadline for the annual fee disclosure if the plan administrator determines that doing so will benefit plan participants and beneficiaries. Under this guidance, a plan administrator will be treated as satisfying the annual notice requirement by furnishing the 2013 disclosure no later than 18 months following the date of the initial disclosure, after which the 12-month period would apply. For example, if the initial disclosure was furnished on August 25, 2012, the 2013 disclosure would be due no later than February 25, 2014. If a plan administrator chose to furnish the 2013 disclosure on December 20, 2013, then the 2014 disclosure would be due no later than December 20, 2014.

In addition, for those plan administrators who have already taken steps and incurred costs to furnish the 2013 disclosure, the one-time reset opportunity may instead be applied to the 2014 disclosure. For example, if a plan administrator has already worked on the 2013 disclosure and it is furnished on August 25, 2013, the 2014 disclosure would be due no later than February 25, 2015, and then the 12-month period would apply beginning with the 2015 disclosure.

FAB 2013-02 is welcome guidance for plan administrators who wish to distribute the annual fee disclosure with other participant materials or at a different time of the year. Although this guidance does not address concerns that plan administrators must satisfy a fixed annual deadline for the disclosure, the DOL indicated that it is considering further revising the timing requirement to permit a disclosure window (for example, distribution within a 30-45 day period) in future years.

DOL Revises Guidance on Participant Fee Disclosures for Brokerage Window Investments

by McDermott Will & Emery | Aug 8, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Diane M. Morgenthaler, Elizabeth A. Savard and Maggie McTigue

The U.S. Department of Labor (DOL) recently issued new and welcome guidance for fiduciaries of account-based retirement plans by withdrawing its controversial guidance on fee disclosures for brokerage windows, self-directed brokerage accounts and similar arrangements (SDBAs). For now, the DOL has reverted to its prior regulatoqury guidance that fee disclosures with respect to particular investment options that participants select through an SDBA are not required, unless the SDBA option is specifically identified as available under the retirement plan. This new guidance removes the burden of monitoring the number of participants invested in a particular option through the SDBA and of making fee disclosures with respect to certain SDBA options.

Background

As described in our June 12, 2012, newsletter, the DOL issued Field Assistance Bulletin (FAB) 2012-02 on May 7, 2012, to provide additional guidance on the participant fee disclosure requirements for defined contribution plans with participant-directed investments. Historically plan fiduciaries have taken the position that they are not responsible for monitoring the particular investment options participants select though an SDBA. However, in Q&A-30 of FAB 2012-02, the DOL indicated that plan fiduciaries may need to make participant fee disclosures with respect to an investment option that is only available through the SDBA if a significant number of participants elected to invest in that option. This position surprised many plan administrators because it was inconsistent with prevailing interpretations of prior DOL guidance. In addition, the DOL was criticized for issuing their position in an FAB rather than through a rulemaking process that would have given interested parties notice and an opportunity to comment.

New Guidance

In response to requests from benefits industry groups and other interested parties, the DOL issued FAB 2012-02R, which withdraws the prior Q&A-30 and replaces it with a new Q&A-39. Under Q&A-39, an investment option is a designated investment alternative for purposes of the participant fee disclosure rules only if it has been specifically identified as available under the plan. Thus, fee disclosures generally will not be required for investment options that participants select through an SDBA.

Q&A-39 is welcome guidance for fiduciaries of plans with SDBAs, as it removes the burden of monitoring the number of participants invested in a particular option through the SDBA and of making fee disclosures with respect to certain SDBA options. Fiduciaries are still bound by the general ERISA fiduciary duties of prudence and loyalty to participants who use SDBAs, including taking into account the nature and quality of services provided in connection with the SDBA. The DOL also noted that while plans are not required to have a particular number of designated investment alternatives, the failure to designate any investment alternatives (for example, to avoid fee disclosure obligations) would raise questions under the general fiduciary duties of prudence and loyalty.