(Cont...)
What this Week’s Guidance Says
The regulations governing 403(b)
plans in 2007 led some plan sponsors to decrease the number of service
providers offered under the plan, but the plan sponsor does not have the
ability to map assets of discontinued vendors, so many plan sponsors questioned
how to track down those vendors.
When the DOL required expanded reporting
on Schedule C of the Form 5500, it provided relief from pre-2009 relationships;
it also provided that relief for 408(b)(2) provider disclosures with the final
regulations issued February 3. The Department has provided that same relief for
participant disclosures under 404(a)(5) in its recent guidance in question 2
(see “DOL Issues Additional Guidance for Participant FeeDisclosures"). “This really helps many 403(b) [sponsors],” Roggow
said. “It was a logical progression, but it had to be formally articulated
before sponsors could rely on it.”
Question 15 in the guidance relates
what information must be furnished relating to a closed fund, Roggow noted. He
said that sometimes based on a custodial or annuity contract arrangement,
sponsors may not have discretionary authority over a fund; they may not be able
to map assets out of a fund it closes to new money. The DOL document says plan
sponsors must disclose information about a closed fund because the employee
needs to know whether to remain in the fund; however, the guidance says
sponsors may choose to disclose this information only to those participants
still in the fund. That would help mitigate the confusion of providing the
information to all employees, even those without access to closed funds. In
addition, it may help plans encourage participants to leave closed funds and
discontinued vendors.
Question 21 addresses whether a plan
administrator must provide a single, unified comparative chart or if it can
send charts from multiple providers in one participant communication. Roggow said
an aggregated disclosure makes for a better participant experience and also
aligns better with the intent of disclosures; however, the DOL allows for a
paper clip approach.
“A lot of this is common sense and
practical in the application of the regulations, but the DOL does allow for a
reliance on a good-faith effort in complying with a reasonable interpretation
of the regulation,” Roggow said. “In this first year, we are all in this
together and sponsors will be in good shape.”
Rebecca Moore