Rumor has it the Department of Labor may once again push out the compliance deadline for 401(k) fee disclosure rules.
On Wednesday, Reuters released a story – unconfirmed by DOL – that the department may scrub the April 1 effective date in order to give service providers more time to modify their systems based on new regulation (which hasn't been finalized, though DOL hints it should be out by the end of this month.)
The American Society of Pension Professionals and Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR) argue that a specific disclosure rule – the 408(b)(2) regulation – is an important issue that needs to be resolved, and that three months is a tight (and very costly) timeline for compliance.
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The 408(b)(2) regulation requires service providers to disclose their compensation to plan sponsors. [See Coming in six months: A focus on 401(k) fees to find out what may shock plan sponsors about this compensation disclosure.] Specifically, the groups are concerned about whether the rule will require a summary disclosure statement, and the "parameters for what it must contain and how it is to be formatted."
"It doesn't make sense, to build a system to potentially accommodate a summary without the parameters for the system's design," group leaders said in a Dec. 19 letter.
Service providers are also concerned they are wasting time and money on enlisting legal help for a process that still needs to be worked out.
So while the DOL may give service providers their "breathing room," Reuters reports regulators are not going to delay the deadline for too long, and a 2012 date is still on the horizon.
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