Service Provider Fee Disclosures Under ERISA

Notional Example of an OV-2 Depicting Service ...
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Many plan sponsors are unaware of their fiduciary duty to understand all the fees paid in their company sponsored retirement plan. The awakening is coming, be prepared.

Employers that sponsor qualified retirement plans should be aware of the new fee disclosure requirements that will apply to record keepers, trustees, brokers, and other advisors to qualified retirement plans beginning April 1, 2012. Although these fee disclosure requirements apply to the service providers, employer sponsors of retirement plans will be obligated to determine whether or not the service providers to their retirement plan have complied with the fee disclosure requirement. In addition, employers must be prepared to evaluate the information they receive to more closely scrutinize the fees being paid to service providers.Failure to comply with the disclosure requirements may cause the employer and the sponsor to violate the prohibited transaction rules under ERISA, which may result in penalties imposed on service providers and plan sponsors. Set forth below is a summary of the action steps all employer sponsors of qualified retirement plans should be taking to comply with the April 1, 2012 deadline.

Adopting Employers in a multiple employer plan do not contract with service providers. This is a great opportunity for the employer to concentrate on running their businesses instead of worrying about yet another regulation to follow. A multiple employer plan allows the employer to handle their 401k just like they do all of their other employee benefit programs….they outsource virtually all of the compliance details to professionals who have ‘skin in the game’.

Please comment or call to discuss how this would affect your organization.

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