On March 11, 2014, the Department of Labor (DOL) issued a proposed rule that would amend its final service provider fee disclosure regulation under ERISA Section 408(b)(2) (final rule) to require covered service providers to provide a guide to assist pension plan fiduciaries in reviewing the disclosures required by the final rule. The covered service provider would be responsible for providing a guide to plan fiduciaries if the initial disclosures required by the final rule are contained in multiple or lengthy documents.

The DOL is soliciting comments on the proposed rule within approximately 90 days. One area of particular interest is the DOL's request for comments on the number of pages or length of document that will trigger this guide requirement if the initial disclosures are furnished in a single, lengthy document.

In early 2012, the DOL published a final regulation requiring disclosures of compensation and fees from service providers to plan fiduciaries of pension plans (including 401(k) plans) in order for the provider's contract with the plan to be considered reasonable under ERISA Section 408(b)(2) (see Practice Note, Service Provider Disclosure Requirements for Pension Plans). The final rule became effective for covered plans on July 1, 2012.

The final rule does not require the service provider to make the required initial disclosures in a specific format. However, the DOL reserved paragraph (c)(1)(iv)(H) of the final rule because it intended to publish, in a separate proposal, a guide or similar requirement to help plan fiduciaries review the required disclosures. It also made available a sample guide as an appendix to the final rule if covered service providers chose to voluntarily provide the information pending the issuance of a proposed rule (see Practice Note, Service Provider Requirements for Pension Plans: Summary Initial Disclosure Guide).

The proposed rule does not require covered service providers to provide the new guide if they already furnish the required initial disclosures to the responsible plan fiduciary in a concise, single document. This new requirement applies only to covered service providers whose initial disclosures are either:

The DOL is specifically requesting comments on the number of pages or length of document that will trigger the guide requirement if the initial disclosures are furnished in a single, lengthy document.

The DOL proposes both format and content requirements for the new fee disclosure guide.

The DOL also announced its intention to conduct approximately 8-10 focus group sessions with approximately 70-100 fiduciaries to small pension plans (that is, those with fewer than 100 participants). The purpose of the focus group testing is to explore current practices relating to service provider fee disclosure and the effects of the final rule. The focus group participants will be asked to provide detailed information regarding their experience with the final service provider disclosure rules.

The focus group testing may provide the DOL with more information about the need for the proposed guide. However, the results of the testing will not be made available until after the close of the 90-day comment period for this proposed rule. The DOL acknowledged that it may reopen the comment period for this proposed rule if required as a result of information learned from the focus group testing.

The proposed rule will be effective 12 months after the publication of the final rule in the Federal Register, though the DOL invites comments on suggestions for alternative effective dates.