408(b)(2) Compliance
As you know, I have done a series of short articles about overlooked and misunderstood issues for 408(b)(2) compliance. This article continues that series.
June 7, 2012
As you know, I have done a series of short articles about overlooked and misunderstood issues for 408(b)(2) compliance. This article continues that series.
In my last article, I discussed our concerns about the lack of awareness of discretionary investment managers concerning 408(b)(2) disclosures. This article addresses another one of our concerns . . . 408(b)(2) disclosures by advisers who refer investment managers and receive solicitor’s fees.
Covered service providers must make their 408(b)(2) disclosures by July 1, 2012—just weeks away. The failure to make those disclosures will cause their agreements with ERISA plans to become prohibited transactions, resulting in re-payments of compensation to the plans, taxes, interest and penalties.
At first blush, it seems like 2012 is the year of plan disclosures and participant disclosures. The 408(b)(2) regulation is effective July 1, 2012, and the 404a-5 regulation follows two months later. However, there is more DOL activity than initially meets the eye.
There is an emerging issue under both the participant and plan disclosure rules concerning the information that must be provided for asset allocation models (AAMs). It appears that some DOL officials are of the opinion that asset allocation models—at least under certain circumstances—are “designated investment alternatives” or DIAs. If AAMs
The DOL issued the final 408(b)(2) regulation on February 2, 2012. Key points are: The extension of the effective date to July 1, 2012; The fact that service providers are not required to provide a summary of the disclosures, though the DOL provided a sample “guide” that is not mandatory;
All of the service provider disclosures must be made by April 1, 2012. Once the disclosures are made, the focus will shift from service providers to plan sponsors. That is, after plan sponsors receive the disclosed information, they must prudently review and analyze it. In other words, they must engage
This is another in the series of articles about the 408(b)(2) disclosures – and the consequences of a failure to comply. This article discusses the legal responsibilities of plan sponsors. If a service provider fails to make the required disclosures, then under ERISA both the service provider and the plan
This is another in a series of articles about interesting issues under the 408(b)(2) disclosure regulation. In a previous article, I described the likely consequences of a failure to comply with the disclosure requirements—that is, the compensation paid to the service provider would need to be restored to the plan,
This is another in a series of articles on interesting issues presented under the 408(b)(2) regulation and its disclosure requirements. It has become fairly common for plans to have expense recapture accounts (which are also known as ERISA budget accounts, PERAs—plan expense recapture or reimbursement accounts, and by a variety
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