If your company sponsors a 401k plan, a new ERISA regulation could mean extra paperwork… and potentially extra liability.
The new regulation related to ERISA 408(b)(2), goes into effect July 1, 2012. The regulation requires plan service providers to disclose their plan fees to plan trustees. So plan sponsors can expect to see some additional notices from their plan providers (if they haven’t already). After that, however, is when plan sponsors need to get to work uncovering potential conflicts of interest with current plan providers and completing an analysis documenting why current fees are reasonable.
Sounds pretty straightforward, but how do you determine what’s reasonable? Unfortunately, ERISA requirements can be easy to understand, but hard to comply with.
The frustrating burden of determining reasonableness falls on plan sponsors. Service providers are simply required to provide their fee information. Plan sponsors have the legal duty to receive the information, insure its completeness and perform a reasonableness analysis to comply with the regulation.
Unfortunately, just because you’re a plan sponsor doesn’t necessarily mean that you feel confident making a legal judgment about the reasonableness of your plans fees. Do you know how to work through all the investment lingo to understand the disclosures? Do you know enough about benefit plan fee information to attest to its completeness?
If not, there is a better way. Having the legal duty to determine if the fees are reasonable doesn’t mean that you, yourself, need to do the determining – it means that you have a legal duty to ensure that the determining gets done.
Contact our Ohio Pension Administration team
Rea & Associates offers a plan benchmarking service which will provide you with an independent, unbiased report. Plan-Compare™ provides the documented process required by ERISA 408(b)(2), to objectively determine the reasonableness of plan fees. In fact, PlanCompare™ goes above and beyond the ERISA requirement in obtaining independent full fee disclosure and identifying where conflicts of interest may exist between service providers. And because you’ll be in compliance, you have a much lower probability of litigation.
We’ll take on determining what’s reasonable, and you can get back to the business of running your business. Contact us to see if a Plan-Compare™ report is right for you.