On May 31, 2011, the Department of Labor's Employee Benefits Security Administration (EBSA) announced, in an effort to align the compliance of two regulations, a proposal to extend the compliance deadline for its service provider level fee disclosures and to extend the deadline for initial disclosures under its participant level fee disclosures.  Comments on the proposal are due within two weeks of the June 1, 2011 publication date.  Final approval of the extension is expected soon thereafter.

Service provider level disclosure rules were published July 16, 2010 as interim final regulations requiring service providers for retirement plans (401(k)/defined contribution plans other than SIMPLE and IRA arrangements and defined benefit pension plans) to disclose fee arrangements to employers.  These rules were to take effect on July 16, 2011, although in February 2011 the EBSA announced its intention to extend that compliance date to January 1, 2012. This notice of extension starts that process.

Participant level disclosure rules were published October 20, 2010 as final rules effective as of December 20, 2010 but applicable for plan years beginning on or after November 1, 2011 (January 1, 2012 for calendar year plans).  EBSA is not extending that effective date.  Instead, EBSA proposes to give plan fiduciaries 120 days rather than 60 days in which to provide the initial disclosures under the participant-level rules.  For calendar year plans, the initial disclosure for participants would be due by April 30, 2012 and would now include all participants and beneficiaries who have the right to direct plan investments up to the date the disclosure is provided.  The quarterly statement of fees and expenses actually deducted would need to be furnished by May 15, 2012. 

The extension is primarily for the benefit of the service providers who now have additional time to furnish fee disclosures to plan fiduciaries.  It gives employers less time to determine if applicable fee disclosures have been provided and to take the steps outlined in the regulations to request the applicable disclosure or, if not provided, to report the service provider to the EBSA.

Employers and plan administrators should begin to prepare for compliance now because the actual compliance with these new regulations will coincide with a busy time of year for plan compliance -- the first quarter of the year.  Fiduciary committees should become familiar with the fee disclosure requirements at both the service provider and participant levels and consider the role and timing of the committee in reviewing fee disclosures.