Fiduciary Requirements: Amended Timeframe for Providing Participant Level Annual Fee Disclosure Notices

Today the Department of Labor published a Direct Final Rule¹ in the Federal Register, amending the timeframe for plan administrators to provide participant-level annual fee disclosure notices (under ERISA §404(a)(5)). The amendment makes a technical adjustment to the timing requirement, providing plan administrators with flexibility as to when they must furnish annual disclosures.

Prior to the rule published today, plan administrators were required to provide participant level-fee disclosure notices annually, at least once in any 12-month period (without regard to whether the plan operates on a calendar or fiscal year basis). However, there was concern that a permanently fixed annual deadline, set at one year exactly from the last annual disclosure, might impose undue administrative burden on plan administrators due to the lack of flexibility in the date. The new Direct Final Rule replaces "12-month period'' with "14-month period.'' This window should accomplish the goal of providing participant-level annual disclosures on a consistent and regular basis, while at the same time offering plan administrators some flexibility. 

The amendment is effective June 17, 2015. However, during the interim period until the effective date, EBSA will treat a plan administrator as satisfying the current "12-month rule" if disclosures are furnished within the new 14-month deadline (provided that the plan administrator reasonably determines that using the extended deadline will benefit participants and beneficiaries).

The rule can be found here. 

¹A Direct Final Rule is used in limited circumstances where an agency believes that a rule is noncontroversial and unlikely to receive adverse comments.  Simultaneous with the Direct Final Rule, the agency publishes a Notice of Proposed Rulemaking in the Federal Register with a statement that the rule will be effective as a Final Rule as of a particular date unless an adverse comment is received.  If an adverse comment is filed, the agency would withdraw the Final Rule and continue with the Proposed Rule under normal notice and comment procedures.