EBSA: Fee Disclosure Regs Coming

The head of the Department of Labor's Employee Benefits Security Administration (EBSA) said today that the agency plans to release its long-awaited regulation dealing with providers’ fee disclosure under 408(b)(2) in May 2010.

Assistant Secretary of Labor Phyllis C. Borzi made the comment during a Web chat where she answered questions about the department’s regulatory agenda and how EBSA plans to handle various retirement plan and other benefit program issues.

Also relating to the 408(b)(2) issue, Borzi said:

  • that EBSA would keep in mind the need to coordinate various fee disclosure requirements as pointed out in a recent Government Accountability Office (GAO) report, promising to “incorporate those insights into our solution.” (See “GAO Makes Suggestions to DoL about Fee Reporting.”); and
  • that regulators would provide “a (transition) period that will be adequate for effective and efficient implementation of the new rules.”

Borzi also addressed inquiries about investment advice and said the agency is re-examining the rules governing fiduciary status (see “EBSA Examines Fiduciary Status, Investment Advice”). Other highlights from the Web session with Borzi include:

  • Regulators are still considering how well investors will be able to cope with the amount of information contained on an already-released model participant fee disclosure statement under 404(c). They have presented it to a focus group to gauge understanding, have studied sample fund fact sheets, and have worked with other government agencies also trying to formulate similar public disclosure documents.
  • EBSA continues to ponder whether and how it should promulgate new rules governing target-date funds after holding public hearings on the issue earlier in the year with the Securities and Exchange Commission (SEC) (see “Target-Dates Useful but Flawed, Witnesses Tell SEC and DoL”). Borzi commented: “We’re working on checklists for fiduciaries and participants so that they can better understand what their choices are.”
  • Regulators continue working on additional regulatory guidance for 403(b) sponsors—including on Form 5500 requirements—and have consulted with accounting industry representatives on transition issues related to the ERISA (Employee Retirement Income Security Act) audit requirement.
  • When it releases a request for information in January about its newly announced lifetime retirement income project (see “DoL Set to Issue Annuity Project RFI”), EBSA will particularly be looking for information on how best to deal with “both real and perceived impediments to the offering and selection of these (investment) products.”
  • EBSA plans to release by next month a “bright line safe harbor for employers who remit (participant) contributions promptly.”

An archive of the full Q&A session is available here.

A document summarizing the DoL’s full regulatory agenda is available here.