Trust Updates Archive

20070508--TRN, BofA DOL to Release New Disclosure Reporting Rules

(
Dec. 11, 2007--Chicago, IL)--The U.S. Department of Labor's Employee Benefits Security Administration is releasing its proposed disclosure rules regarding 401(k) and other employee benefit plans tomorrow, December 12. The rules are intended to assist fiduciaries in determining the reasonableness of compensation paid to plan service providers and in identifying conflicts of interest arrangements. The DOL's proposal comes on the heels of congressional criticism finding the current disclosure reporting process inadequate.

Legislation currently pending requires substantially greater disclosure of revenue-sharing arrangements by plan providers, and investment advisors.

A November 2006 General Accounting Office study found that plan participants get neither a complete picture of 401(k) fees nor the ability to compare investment options. The study criticized DOL initiatives. It found that despite the DOL's efforts, the information reported on Form 5500 -- a plan's annual report -- does not include all fees paid by 401(k) plans, such as mutual fund investment fees. Without this information, the GAO insisted, DOL and plan sponsor oversight is limited.

In July 2007,George Miller (D-Calif.), chairman of the House Education and Labor Committee introduced H.R. 3185, the 401(k) Fair Disclosure for Retirement Security Act, saying that the DOL has been too slow to act. The legislation would amend ERISA to require detailed fee disclosures from service providers to plan sponsors and from plans to participants. It would also require the DOL to enforce these requirements, with statutory penalties for failure to comply.

On December 12, the DOL will also be issuing its 2007 Form M-1, the annual report for multiple employer welfare arrangements. MEWAs are arrangements that offer medical benefits to the employees of two or more employers or to their beneficiaries. The filing date for the form is March 3, 2008, but an automatic 60-day extension to May 2 can be requested. The form can be completed and filed online at http://www.askebsa.dol.gov/mewa . The 2007 form is virtually identical to last year's form, according to regulators..

For more on these topics, see the upcoming issue of Trust Regulatory News.

No statement in this issue is offered as or should be
construed as legal opinion or advice
.

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