Category Archives: ERISA

ERISA Rule 404a-5 Disclosure Deadline on the Horizon

ERISA Rule 404a-5 was enacted in order to provide greater transparency to investors in 401(k) type pension plans. The rule was adopted two years ago, but the August 30, 2012 deadline for plan administrators to issue the required disclosures is just around the corner.  As reported earlier this year, the August 30th deadline gives plan sponsors 60 days from the July 1, 2012 deadline for service providers to provide specific disclosures related to their costs and expenses to plan sponsors.

The Rule requires plan administrators to provide plan participants with certain plan-related and investment-related information, including:

–          General plan information about the structure and mechanics of the plan, such as how to give investment instructions, the plan’s investment options, and any arrangements that enable participants to select investments beyond those designated.

–          An explanation of any fees and expenses for general plan administrative services that are charged or deducted from all individual accounts and any fees and expenses that may be charged or deducted from individual accounts based on actions taken by the individual.

–          Required investment-related information includes performance data and benchmark information, as well as fees and expenses associated with the investments, such as operating expenses and shareholder fees, and any restrictions on the ability to purchase or withdraw from an investment.

The plan-related information must be provided to participants before they can direct their first investment and then annually thereafter. In addition, participants must receive at least quarterly statements showing the dollar amount of plan-related fees and expenses that were actually charged or deducted from the account, as well as a description of the services for which the charge or deduction was made.

Although investments advisers completed their required disclosures under Rule 408b-2 to plan sponsors, plans will undoubtedly be turning to their service providers for help with their required disclosures.

For assistance addressing plan questions about the required disclosures or any other compliance concern please contact Sarah Weber at or (619)298-2880.

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Department of Labor to Re-Propose Definition of “Fiduciary”

As discussed in a previous Jacko Law Group, PC Legal Risk Management Tip, in October of last year the Department of Labor (the “DOL”) published a proposed rule that would amend the definition of “fiduciary”, and would significantly expand the categories of persons who would be deemed to be fiduciaries subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). On Monday, however, the DOL announced that it will re-propose the rule, and stated that this decision was in part a response to requests from the public, including members of Congress and the financial services industry, that the DOL allow an opportunity for more input on the proposed rule. 

Some members of the financial services industry expressed concern that the originally proposed rule would limit service providers’ ability to provide advice to retirement plans.  For instance, The Securities Industry and Financial Markets Association (“SIFMA”) stated that the originally proposed rule would ultimately harm investors by raising the cost of saving and would cause retirement plan service providers difficulty in receiving fees or commissions.  To that end, in drafting the re-proposed rule the DOL will look to address concerns about the impact of the new definition on the current fee practices of brokers and advisers, and clarify the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products.

The re-proposed rule is expected to be issued in early 2012.

For additional information please contact Brent Cunningham, Associate by email at  or by phone at (619) 298-2880.

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