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DOL Proposes Guide to Help Plan Fiduciaries with 408(b)(2) Disclosures

On March 25, 2014, the Department of Labor issued a proposal to amend its ERISA Section 408(b)(2) regulations by requiring covered service providers to furnish a “guide” along with the required disclosures, if the disclosures are contained in multiple or lengthy documents.

In 2012, the DOL published regulations under Section 408(b)(2) requiring specific disclosures from plan service providers so as to “ensure that responsible plan fiduciaries are provided information they need to meet their fiduciary obligations when selecting and monitoring service providers for their plans.” See EBSA Fact Sheet March 2014, However, the DOL has acknowledged consistently since the regulations’ issuance that allowing service providers to satisfy their disclosure obligations by using documents from different sources might make it difficult for small- and mid-sized plan sponsors to find and understand the information they need from multiple sources.

The proposed regulations only apply to service providers who make disclosures through multiple or lengthy documents. Under the proposal, multiple/lengthy document providers would have to provide a guide, in a separate document, that would specifically identify the document, page, or other sufficiently specific locator, such as a section, that enables the responsible plan fiduciary to quickly and easily find the required information.

We echo the DOL’s concern with the multiple/lengthy document approach to 408(b)(2) disclosure duties. In our experience, these disclosures have not accomplished the DOL’s disclosure purposes, as they have been less “disclosure” than treasure hunt – transferring the burden that was intended to be the service provider’s to the responsible plan fiduciaries to track down and then decode less-than-entirely-comprehensible disclosures. The proposal is now open for public comments which must be filed by June 9, 2014.


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