Time & Attendance
By Patty Kujawa
Jul. 1, 2011
The Labor Department issued an interim final regulation July 16, 2010, which would require certain pension plan service providers to give detailed information on fees and possible conflicts of interest to plan sponsors.
On June 1, the Labor Department formally proposed to extend the effective date of this interim final regulation, known as Section 408(b)(2) of the 1974 Employee Retirement Income Security Act, to Jan. 1, 2012, from July 16, 2011. It is expected the rule will become final in late summer or early fall.
A second regulation, under Section 404(a) of the same federal pension law, was finalized in October 2010. It requires plan sponsors to give participants with self-directed accounts like 401(k)s, specific information on administrative and investment costs. This regulation starts for plan years beginning on or after Nov. 1. The June 1 notice proposed to change this rule’s 60-day transition provision to up to 120 days.
The department said in the June proposal that all these extensions should help service providers and plan sponsors comply with the requirements by these new effective dates.
An interim final rule is different from a final rule in that it asks for public comments and has the potential to change. In the example of the provider disclosure, the Labor Department signaled in February that it would extend the effective date to January 2012. Also, it carries the full weight of a final rule, and those affected are required to comply by its start date. Last, federal departments and agencies are allowed to modify a final rule, like in this case changing the compliance date with the participant disclosure regulation.
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