Dol sensibly recognized that, for the many 408 b2 disclosures that can be appropriately provided in a straightforward form, a guide would be a cost without a benefit. These disclosures must meet the erisa 408b2 regulations and report the advisers. Verify that they have received the appropriate disclosures from. Beginning july 1, 2012, a contract between a plan and a covered service provider will not be reasonable for purposes of erisa section 408 b2 unless the service provider discloses certain compensation information to plan fiduciaries. The 408b2 fee disclosure is a powerful tool in the employers 401k toolbox. Why 408b2 is a flop for the 401k business and how rias.
Employer fee disclosure faqs publications insights faegre. Identify the service providers from whom you expect disclosure documentation, and ensure you receive one disclosure report from each. Form sponsored individual retirement arrangement ira. For the first time, plan sponsors and participants would know exactly what their 401k plan was costing them, because 408 b2 would finally force service providers to disclose all of the compensation they receive from a plan. Employee retirement income security act of 1974 erisa.
Establish a schwab company retirement account master account. Learn what a 408b2 disclosure is, who prepares it, and what you can use it for as an employer offering a small business 401k plan. These regulations, the 408b2 regulations, become effective on july 1, 2012, for new and existing service arrangements. What fee disclosure rules really mean for plan sponsors shrm. Understanding your plans investment options, services and plan fees erisa section 408 b2 overview the following information is intended to be used in conjunction with the edward jones disclosure of services, fees and other compensation disclosure document you received. Fund ble them to m rvice provider is responsibl f erisa. The dol has at least two continue reading 408b2 guide and more. Invesco offers a quick and easy way for erisa plan sponsors to create, download and print planspecific 408b2 and 404a5 disclosure reports for prototype. This form and the information provided are not substitutes for the advice and services of an attorney and tax specialist. The fund is a collective trust established and maintained. The information is intended to comply with 408 b2 of the employee retirement income security act of. The department of labor section 408 b2 and section 404a regulations are designed to provide retirement plan fiduciaries and plan participants with more complete information regarding compensation paid in connection with retirement plans, including both direct and indirect compensation, and revenuesharing arrangements, as.
Department of labors 408 b2 regulations require service providers to erisa covered plans to provide the responsible plan fiduciary with the information the responsible plan fiduciary needs to make informed decisions when choosing which services providers to hire for the erisa plan. Dols final rule reasonable contract or arrangement under section 408b2 fee disclosure. You have received your irc 408b2 disclosures from your covered service providers. The adv part 2a brochure is the primary disclosure document of a registered investment adviser. A checklist for participant 401k fee disclosures shrm. Erisa section 408 b2 disclosures deutsche bank securities inc. In todays release of the final 408 b2 regs, the dol provided tremendously needed relief for 403bplans. Specifically, 408b2 requires the following ongoing actions of plan sponsors.
The primary purpose of the new regulations is to ensure that plan fiduciaries are provided with the. The full text of the department of labors final 408 b2 regulation is located at. Erisa section 408b2 regulations faqs retirement plan service providers are required to disclose feerelated information to plan fiduciaries to assist them in evaluating the reasonableness of the service contract or arrangement under erisa section 408 b2. This article seeks to clear up some of the confusion in the interest of helping employers stay compliant and ensure plan participants are well served. Fiduciaries and service providers of covered plans must ensure to abide by the new regulation by july 1, 2012.
Erisa 408 b2 sample advisory agreement and memorandum the following memorandum and the accompanying sample advisory agreement are intended to highlight general considerations by investment advisers in complying with erisa regulation section 2550. The department believes that disclosure of expected compensation in the form of known ranges can be a reasonable method for purposes of. New fee disclosure requirements under erisa section 408b2. Erisa section 408 b2 fee disclosure form the following template can serve as a disclosure document for use in complying with the disclosure requirements of section 408 b2.
Erisa 408b2 disclosure requirements ria compliance. Prior to approving the client profile form in account center, principals must ensure a disclosure was provided for new accounts satisfying 408 b2 criteria i. The final regulation does not apply to a simplified employee pension described in section 408k of the code, a simple retirement account described in section 408p of the code, an individual retirement account described in section 408a of the code, or an individual retirement annuity described in section 408b of the code. Erisa plan fiduciaries need to examine and evaluate a plans administrative expenses in order to ensure that a plan does not engage in a prohibited transaction by paying unreasonable fees to service providers. Erisa 408b2 sample advisory agreement and memorandum. Every service that an adviser will provide must be covered by an agreement. Apr 17, 2014 the dol recently issued a proposal to require a 408 b2 guide.
Apr 10, 20 first proposed in 2007 by the department of labor, regulation 408 b2 was hailed as a gamechanger for the 401k industry. Erisa section 408b2 disclosure document citi investment. About plan sponsor and plan participant fee disclosure. Final dol 408 b2 disclosure regulation february 08, 2012 as described in our lawflash dated february 2, 2012, 1 the department of labor dol has issued a final regulation adopting disclosure requirements for retirement plan service providers under section 408 b2 of the employee retirement income security act of 1974 erisa. John hancocks compensation, fees and services, along with the. Every service that an adviser will provide must be covered by an. Form 408 1 form 408general information change by registered agent to name or address the attached form is drafted to meet minimal statutory filing requirements pursuant to the relevant code provisions. As a service provider for qualified retirement plans, american century brokerage is providing you with information about our services, expenses and fees. If yes, determine which service providers are covered 3. Important 408b2 relief for 403b plans the business of. The focus group participants will be asked to provide information including the following. Specifically, section 408 b2 provides relief from erisas prohibited transaction rules for service contracts or arrangements between a plan and a party in interest if the contract or arrangement is reasonable, the services are necessary for the establishment or operation of the plan, and no more than reasonable compensation is paid for the. Principal helps people and companies around the world build, protect and advance their financial wellbeing through retirement, insurance and asset management solutions that fit their lives. Responsible plan fiduciary duties under section 408 b2 of the.
Dol requested commentary on the page length criterion, including on page format and font size and other constraints to prevent manipulation of that criterion. Federal register amendment relating to reasonable contract. Specifically, 408 b2 requires investment advisers who provide advisory services to erisa. Erisa section 408b2 regulation frequently asked questions. Under the 408 b2 regulation, a prohibited transaction could occur if a covered service provider fails to provide the responsible plan fiduciary with this information. For contracts in effect on or after july 1, 2012, the 408 b2 regulation requires that plan fiduciaries be provided with additional information about covered service providers eg.
Their erisa section 408 b2 disclosure documents, if applicable and as provided by such thirdparty advisers, are included as part of, or attached to the end of, their respective form advs, which are available under their names on. Sep 26, 2018 the 408b2 fee disclosure is a powerful tool in the employers 401k toolbox. The attached form is drafted to meet minimal statutory filing. Dec 21, 2007 testimony on reasonable contract or arrangement under 408 b2 march 31, 2008 hearing transcript april 1, 2008 hearing transcript if you want to obtain a copy of the court reporters official transcript, you should contact the court reporter, neal r gross, at 202. Educate yourself and other plan fiduciaries so you understand what the rules require and where your fiduciary obligations lie.
It is important to remember that the final regulations reserved a section for welfare plan disclosure. Verify you have received all of the required disclosures 4. Annuities are contracts sold by insurance companies that provide a guaranteed stream of income in exchange for a onetime or recurring premium payment. An overview of 408b2 and 404a disclosure regulations. Mar 16, 2012 the department of labor dol published its final section 408 b2 regulation in february, prescribing the disclosure requirements that are required from retirement plan service providers. Determine if your plan is covered under the regulation 2. Responsible plan fiduciary duties under section 408b2 of. Under the 408 b2 regulation, a prohibited transaction could occur if a covered. The dol continues with its sensitivity to the challenges created for 403b plan sponsors in the transition to an employer accountable world. It is important that fiduciaries of retirement plans understand the services that pershing advisor solutions provide, and the related compensation pershing advisor solutions expects to receive for those services from retirement plan clients or third parties. Reasonable contract or arrangement under section 408b2. The preamble to the final regulations noted that commenters to the regulations supported disclosures specifically tailored to welfare plans. This document is a sample disclosure form which has been.