DOL Issues FAB 2013-02 Extending Deadline for Sending 2013 and 2014 Comparative Charts

Practical Law Legal Update 7-535-3205 (Approx. 4 pages)

DOL Issues FAB 2013-02 Extending Deadline for Sending 2013 and 2014 Comparative Charts

by Practical Law Employee Benefits & Executive Compensation

Timing of Initial Annual Disclosures and Comparative Chart

Under currently effective DOL regulations issued pursuant to ERISA Section 404(a), plan administrators of ERISA-governed participant-directed defined contribution plans are required to disclose detailed investment-related information to plan participants and beneficiaries about the plans' designated investment alternatives on an annual basis (see Practice Note, Fee and Investment Disclosure Rules for Participant-Directed Plans: Investment-related Information).

Covered plans were required to furnish an initial comparative chart of these investment alternatives by:

August 30, 2012 (that is, 60 days after the July 1, 2012 effective date established for compliance with the final regulations issued under ERISA Section 408(b)(2)) for:
- calendar year plans; and
- non-calendar year plans with a 2012 plan year beginning November 1, 2011 through July 1, 2012.
For plans with a 2012 plan year beginning after July 1, 2012 and before November 1, 2012, 60 days following the first day of that plan's 2012 plan year.

The second comparative chart is required to be sent to participants "at least annually thereafter" these initial deadlines (the 2013 Comparative Chart). For example, if a plan administrator of a calender-year plan made the initial annual disclosure including the comparative chart on August 25, 2012, it would be required to furnish the 2013 Comparative Chart by August 25, 2013.

Plan administrators and service providers expressed concern with the timing requirement of subsequent annual disclosures because:

An annual August deadline (applicable for most plans) for the second comparative chart has no correlation to the timing of any other annual participant disclosures (for example, see Standard Document, Qualified Default Investment Alternative (QDIA) Notice).
This disclosure is more likely to attract the attention of participants and beneficiaries if it is distributed at other times (such as at the end of the year during enrollment periods or with individual benefit statements).

DOL Temporary Enforcement Policy Extending Disclosure Deadline

In this FAB 2013-02, the DOL's Employee Benefits Security Administration (EBSA), as an enforcement matter, extends the due date for the second comparative chart included in the required annual disclosure under ERISA Section 404(a) and, in certain cases, the third comparative chart.

This temporary enforcement relief applies to all plans covered by the participant disclosure regulations issued under ERISA Section 404(a), regardless of whether the plan operates on a calendar-year basis (see Practice Note, Fee and Investment Disclosure Requirements for Participant-Directed Plans: Covered Plans).

2013 Comparative Chart

A plan administrator of a covered plan may furnish the 2013 Comparative Chart no later than 18 months after the initial comparative chart was furnished to plan participants and beneficiaries. For example, if a plan administrator made the initial annual disclosure including the comparative chart on August 25, 2012, EBSA agrees not to take any enforcement action against the plan so long as the 2013 Comparative Chart is sent no later than February 25, 2014.

This means that, as a practical matter, that plan administrator could choose a date between August 25, 2013 and February 25, 2014 that correlates to the timing of other disclosure notices or is more likely to attract the attention of their participants and beneficiaries. That date would become the annual deadline under the regulation that would apply for future annual disclosures.

2014 Comparative Chart Extension for Plan Administrators Who Comply with Original Deadline

EBSA also offers temporary enforcement relief extending the deadline of the comparative chart that is required to be sent within a year of the 2013 Comparative Chart (the 2014 Comparative Chart) to plan administrators of covered plans who:

Have already furnished the 2013 Comparative Chart.
Intend to furnish the 2013 Comparative Chart by the original deadline because they have already incurred administrative costs or taken steps to satisfy the original deadline.

These plan administrators may furnish the 2014 Comparative Chart no later than 18 months after furnishing the 2013 Comparative Chart. For example, if a plan administrator made the initial annual disclosure including the comparative chart on August 25, 2012, and intends to furnish the 2013 Comparative Chart on August 25, 2013, EBSA agrees not to take any enforcement action against the plan so long as the 2014 Comparative Chart is sent no later than February 25, 2015.

EBSA Considering Regulatory Amendment to Permit Window Period for Required Disclosures

EBSA is considering revising the regulation's timing requirement to permit a 30-day or 45-day period during which subsequent annual disclosures, including the comparative charts, would have to be furnished (rather than fixing the annual period to end on one specific day). If parties wish to express a view on this possible amendment, they can contact EBSA's Office of Regulations and Interpretations at 202-693-8510.

DOL Issues FAB 2013-02 Extending Deadline for Sending 2013 and 2014 Comparative Charts | Practical Law