New DOL Disclosure Regulations


April 6, 2012

Two new Department of Labor (“DOL”) regulations will soon become effective that impose significant new obligations on retirement plans and their service providers.  The first regulation (the “Service Provider Disclosure Regulation”) requires certain retirement plan service providers to make new disclosures about the fees they receive.  The second regulation (the “Participant Disclosure Regulation”) requires plans to make new disclosures to participants who are allowed to direct the investment of their accounts.

This article summarizes the new disclosure requirements and alerts you to actions you may need to take to comply with the regulations.  It is not a technical analysis of these new requirements or legal advice specific to any particular situation.  If you have an affected retirement plan, you may have a duty to act!



The Service Provider Disclosure Regulation establishes specific disclosure obligations by “covered service providers” to ensure that “responsible plan fiduciaries” of “covered plans” receive information necessary to: (a) make informed decisions when selecting and monitoring covered service providers and assessing the reasonableness of service provider fees (both direct and indirect); (b) identify potential conflicts of interest; and (c) satisfy ERISA’s participant reporting and disclosure requirements.

Action Items

If your plan is a covered plan (defined below), you should:

  • Identify your plan’s “responsible plan fiduciary” and “covered service providers.”
  • Review your plan’s covered service provider contracts and fees to ensure they are reasonable.  Consider obtaining bids from other service providers.  There is no requirement to obtain the lowest cost services—fees must only be reasonable given the nature, quality and extent of services provided.
  • Establish procedures to track the receipt of disclosures, to evaluate the information received and to request additional information, if necessary.
  • If necessary, obtain assistance in interpreting and evaluating service provider contracts and fees.

You may also wish to request fee disclosures from your other service providers and to use this opportunity to review your fiduciary obligations and ensure your compliance with them.  The first website listed on page 6 of this article provides useful information for doing so.

Effective Date

The Service Provider Disclosure Regulation is effective July 1, 2012, for new and existing service provider contracts.

Covered Plans

The Service Provider Disclosure Regulation applies to ERISA-covered defined benefit and defined contribution retirement plans, including profit sharing and 401(k) plans.  IRAs, SEPs and SIMPLE-IRAs are excluded. 

Definitions:  Covered Service Provider; Responsible Plan Fiduciary

A “covered service provider” is any service provider who receives $1,000 or more in compensation from a covered plan in connection with providing one of the following categories of services, regardless of whether an affiliate or subcontractor actually performs the services or receives the compensation:

  1. Fiduciary/Registered Investment Adviser.  Service providers acting as a fiduciary or registered investment adviser (“RIA”) to the plan or to an investment product holding plan assets.
  2. Platform Recordkeeping/Brokerage Services.  Recordkeepers and brokers that provide a platform of investment options (i.e., “platform providers”) to a participant-directed individual account plan as part of their service contract; and
  3. Services For Indirect Compensation.  Providers of the following services that receive any indirect compensation: accounting, auditing, actuarial, banking, consulting, custodial, insurance, investment advisory, legal, recordkeeping, securities brokerage, third party administration, or valuation.

The “responsible plan fiduciary” is the fiduciary with the authority to enter into contracts on behalf of the covered plan.  Typically, it will be the plan administrator identified in the plan, not the plan’s third party administrator (“TPA”).

Required Disclosures

Covered service providers must disclose the following information to the responsible plan fiduciary in writing in advance of the date a service contract is entered into, renewed or extended:

  • A description of the services to be provided.
  • Whether the covered service provider is acting as a fiduciary or RIA, and, if so, the associated fees.
  • All direct and indirect compensation to be received by the covered service provider, its affiliates, or subcontractors, including compensation paid upon termination of the service contract and compensation paid among the covered service provider and any affiliates or subcontractors.
    • “Direct compensation” is compensation received directly from the plan.
    • “Indirect compensation” is compensation received from any source other than the plan sponsor, the covered service provider or its affiliates and subcontractors.
    • If indirect compensation is received, a description of the compensation arrangement, including the sources of the indirect compensation and the services to which it relates.
    • If recordkeeping services are provided, the compensation attributable to such services, even if recordkeeping services are part of a “bundled” service contract.
    • How such compensation is paid (e.g., billed to the plan or deducted from investments).

Changes to the foregoing information must generally be disclosed within 60 days of the change.

Other Requirements; Penalties

It is important that you identify your plan’s covered service providers and track the receipt of disclosures.  If you do not receive the necessary information, you are required to ask for it.  If a covered service provider fails to make required disclosures, you are required to notify the DOL of the failure and you may need to terminate the service provider contract.  If you fail to comply with the Service Provider Disclosure Regulation, you will have participated in a “prohibited transaction,” which could result in you paying substantial penalties.



The Participant Disclosure Regulation requires plans to make certain new disclosures to participants and beneficiaries who are allowed to direct the investment of their accounts.  Plan administrators must coordinate with their TPAs and investment platform providers to ensure that the necessary disclosures will be made.

Action Items

If your plan is a covered plan (defined below), you should:

  • Identify the person or committee responsible to make the disclosures.  This responsibility is imposed on the “plan administrator” identified in the plan.  The plan administrator is not the plan’s TPA.
  • Determine what new information must be disclosed to participants (described below).
  • Review the required disclosures with your TPA and investment platform provider and assign disclosure responsibility for each required item.
  • Review and modify your service provider contracts to ensure they appropriately allocate disclosure responsibilities.
  • Establish procedures to verify that disclosures are timely made.
  • If necessary, obtain assistance in reviewing and modifying your service provider contracts and ensuring your disclosure obligations will be met.

Effective Date

The first Annual Disclosures (described below) must be made by the later of:  (a) August 30, 2012; or (b) 60 days after the first day of the first plan year beginning on or after November 1, 2011.  The first quarterly disclosures (described below) must be made no later than 45 days after the end of the quarter in which the first Annual Disclosures are required.  The chart at the end of this article summarizes the Participant Disclosure Regulation’s various disclosure timing rules.

Covered Plans

The Participant Disclosure Regulation applies to any ERISA-covered participant-directed individual account plan other than an IRA, SEP or SIMPLE-IRA.

Disclosure Requirements

  • Initial and Annual Disclosures.  The following information must be disclosed to participants and beneficiaries on or before the date they can first direct the investment of their accounts (i.e., the Initial Disclosures), and annually thereafter (i.e., the Annual Disclosures):
    • General Plan Information.  Information about the plan’s structure and mechanics, including the investment options currently designated by the plan into which participants and beneficiaries may invest their accounts (“designated investment alternatives”), how investment instructions are given and a description of any self-directed brokerage accounts that allow participants to select investments outside the plan’s designated investment alternatives.
    • Administrative Expense Information.  An explanation of administrative fees and expenses that may be charged to participants’ accounts, regardless of whether the employer pays all or a portion of the costs, as well as the basis for which such charges are or could be allocated to individual accounts (e.g., pro rata or per capita).  Administrative fees and expenses include the cost of legal, accounting, and recordkeeping services.
    • Account-Specific Expense Information.  An explanation of fees and expenses that may be charged to a participant’s account based on the actions taken by the participant, regardless of whether the employer pays all or a portion of the cost.  Examples include fees to process plan loans or qualified domestic relations orders.
  •  Comparative Investment Information.  The following information in a chart or similar format designed to allow participants to easily compare the plan’s designated investment alternatives:
    • Performance Data.  Specific information about the historical investment performance for each designated investment alternative under the plan.
    • Benchmark Information.  An appropriate benchmark securities index for each designated investment alternative that does not have a fixed rate of return, along with performance of the selected index.
    • Fee and Expense Information.  The total annual operating expenses of each designated investment alternative that does not have a fixed rate of return, stated as a percentage of assets and as a dollar amount per $1,000 invested, and a description of any shareholder-type fees or restrictions on a participant’s ability to purchase or withdraw from the investment.
    • Internet Website; Glossary.  An internet website address where participants can access additional information about the plan’s designated investment alternatives and a glossary of terms to assist participants in understanding them.
  • Changes.  Participants must generally be given 30 days’ advance notice of changes to plan-related information.  If advance notice is not possible, it must be given as soon as reasonably possible after the change is effective.
  • Quarterly Statements of Actual Charges.  Participants must be given quarterly statements showing the amount of plan-related fees and expenses actually charged to their accounts.
  • Different Rules for Annuities and Self-Directed Brokerage Accounts.  Different disclosures are required when a plan offers an annuity as a designated investment alternative or allows participants to use self-directed brokerage accounts.


Failure to comply with the Participant Disclosure Regulation may result in a breach of fiduciary duties under which you could be held liable for losses resulting from participants’ investment decisions.  You will not be liable for erroneous information if you have reasonably and in good faith relied on information received from or provided to participants by a covered service provider. 


The following websites may be helpful:


We are prepared to help you meet your obligations under the new DOL regulations by:

  • Answering specific questions about the regulations and how they apply to you;
  • Identifying your covered service providers and interpreting disclosures you receive;
  • Reviewing existing or proposed contracts between your plan and its covered service providers to ensure they specify each party’s role and responsibilities in making the required disclosures; and
  • Reviewing service provider and participant disclosures to determine whether they are adequate.

If you have questions, please contact any member of our Employee Benefits Practice Group:

Craig A. Smith
Jeffery D. Kirtner


Type of Disclosure Deadline
Initial Disclosure On or before the date the participant or beneficiary is eligible to direct investments.
First Annual Disclosure For plans with a plan year beginning during the period from November 1, 2011 through July 1, 2012:  August 30, 2012.For plans with a plan year beginning during the period from July 2, 2012 through October 31, 2012:  60 days following the first day of the plan year.
Ongoing Annual Disclosure Every 12 months.
Changes to Information in Initial or Annual Disclosure At least 30 but no more than 90 days in advance of the change, or as soon as reasonably possible after the change is effective.
First Quarterly Disclosure For plans with a plan year beginning during the period from November 1, 2011 through July 1, 2012:   November 14, 2012.For plans with a plan year beginning during the period from July 2, 2012 through October 31, 2012:  45 days after the end of the quarter in which the first Annual Disclosure is required.
Ongoing Quarterly Disclosure Every 3 months.
After Investment in Designated Investment Alternative Materials the plan receives regarding voting, tender or other rights, to the extent such rights are passed through to the participant or beneficiary under the terms of the plan.
Upon Request Prospectuses, financial reports and other information provided by the issuer of the designated investment alternative.

 This article provides general information and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. If you have specific legal questions, you are urged to consult with an attorney concerning your own situation.