You’re probably all aware of this, but just in case, here’s a legal alert I received Monday from the K&L Gates law firm reminding employers about the U.S. Department of Labor’s deadline extension — from July 16, 2011, to Jan. 1, 2012 — for achieving complete compliance with the new disclosure requirements under the Employee Retirement Income Security Act.
It’s not hard to discern, reading between the lines of this alert — specifically the quotes of DOL Assistant Secretary Phyllis C. Borzi — that the disclosure rule was far more complicated (dare I say confusing, overwhelming and of grave concern) for fiduciaries and HR and benefits professionals than the DOL probably imagined.
As Borzi puts it in the K&L release, the DOL “intended to have final rules in place sufficiently in advance of the July 16 applicability date to avoid compliance problems for both plans and their service providers.” But given the numerous comments the DOL received about the newly required disclosures, the DOL “now believe[s] plans and plan-service providers would benefit,” she says, “from an extension of the rule’s applicability date.”
At least it sounds like both sides are working together on this. Or at least it sounds like that’s the goal!
Just to refresh, here’s the earlier alert — from July 28 — from K&L Gates about the new disclosure requirements on service providers. The new rules make dramatic changes to an existing regulation that allows for a commonly used exemption from ERISA’s prohibited transaction rules for a broad variety of retirement-plan service arrangements.
As K&L puts it, the amended rule makes it so the exemption “is not available unless the service provider makes detailed disclosures that describe, among other things, the services to be provided, the compensation — direct and indirect — that the service provider will receive and the service provider’s possible status as an ERISA fiduciary.”
Hopefully, the DOL will be providing much-needed additional guidance on this between now and the first day of 2012. Hopefully, service providers, fiduciaries, and HR and benefits professionals will be taking advantage of it.