Heads Up

Plan advisers who have not already done so should hustle to help plan sponsors prepare for 404(a)(5).

Plan sponsors must provide fee information to participants by August 30, 2012, under the Department of Labor’s (DOL) Employee Retirement Income Security Act (ERISA) regulation 404(a)(5). However, with all the attention surrounding the 408(b)(2) regulation—which requires most service providers of retirement plans to disclose information about fees and services to plan sponsors by July 1—some industry experts think preparation for 404(a)(5) is falling by the wayside.

Fred Reish, chairman of the financial services ERISA team at Drinker Biddle & Reath LLP, is concerned about plan sponsors’ lack of urgency in 404(a)(5) preparation. Sponsors have the misconception that the burden of participant disclosure falls on the recordkeeper, when, in reality, the recordkeeper is simply a service provider operating under a contract and does not act as the fiduciary, Reish explains.

Many plan sponsors still do not fundamentally understand that they can be liable for participants’ investment decisions, he says. “It’s still the plan sponsor’s responsibility. What [they] have not really looked at is that the legal burden is on the ERISA plan administrator.”