A news release from the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) said the additional guidance to help plan administrators and service providers complies with the new reporting requirements. The guidance is in the form of 40 frequently asked questions (FAQs) developed in response to questions from the employee benefit community on the new Schedule C requirements, EBSA said.
The FAQs cover such issues as the alternative reporting option for eligible indirect compensation, electronic disclosure of fee information by service providers, fee reporting for brokerage window options in participant directed plans, and reporting on gifts, entertainment and other non-monetary compensation.
The department is not requiring plan administrators to report service providers on the Schedule C as failing to provide fee and compensation information if the service provider furnishes the plan administrator with a written statement that the service provider made a good faith effort to make any necessary recordkeeping and information system changes in a timely fashion, and despite such efforts, was unable to complete the changes for the 2009 plan year.
Questions discussed in the new EBSA document include:
- Is the Schedule C information on service provider indirect compensation required to be reported based on the plan’s year or can the information reported be based on the service provider’s fiscal year?
- Are all the fees and expenses charged against an investment fund and reflected in the value of the plan’s investment – such as an investment fund’s payments for legal services provided to the fund, fees paid to the fund’s accountant, and expenses associated with SEC filing requirements – reportable indirect compensation for Schedule C purposes?
- A recordkeeper may enter into an “alliance” arrangement with a broker/dealer to provide services offered together as a “package” sold by agents of the broker/dealer. The recordkeeper and broker/dealer are not affiliated to one another and each has a separate contract or arrangement with the plan. In connection with this alliance arrangement, the broker/dealer pays compensation to the recordkeeper. The compensation may be flat per-participant fees or asset-based fees based on the value of plans’ investments in mutual funds or other investment vehicles offered to the plans by the broker/dealer. The broker/dealer pays the compensation for plan administration and recordkeeping services the recordkeeper provides to the broker/dealer’s plan clients. Is the compensation paid by the broker/dealer to the recordkeeper “eligible indirect compensation?”
The FAQs are available here.