Focus on Retirement Plans

Benefits Brief
February 8, 2012

401(k) Compliance Check Questionnaire Interim Report   

Those who have been to one of our more recent programs are aware of the 401(k) Compliance Check Questionnaire that the Internal Revenue Service distributed to 1,200 randomly selected 401(k) plans in 2010. Recipients of the Questionnaire were required to provide information on a wide array of topics including contribution features, distribution options, investment options and knowledge and use by plan fiduciaries of I.R.S. correction programs.  

Last week, the I.R.S. published an Interim Report along with a Highlights of Findings. Based largely on data for the 2008 plan year, this material provides some interesting statistics. For example, fifty-four percent of respondents continue to impose a one year of service eligibility requirement, and sixty-four percent of respondents continue to impose an age 21 eligibility requirement.  

Plan sponsors looking for a quick (and free) benchmark report might find this material interesting.  

If you have questions about either this project or any of the I.R.S. or Department of Labor correction programs, please contact a member of the Benefits Group.

Fee Disclosure Regulations Finalized   

Last week also saw the publication, at long last, of the final ERISA § 408(b)(2) regulations. As we discussed at our June 2011 program, these regulations substantially change the way in which the “reasonable compensation” exemption to the prohibited transaction rules applies by requiring various service providers to disclose fees to plans in order for the exemption to apply. The new regulations move the effective date for the first round of disclosures by service providers to plan fiduciaries from April 1, 2012 to July 1, 2012. This in turn moves the initial quarterly disclosure date for participant-level disclosure under the final ERISA § 404(a) regulations to November 14, 2012 for calendar year plans (45 days after the end of the third quarter of 2012).  

One significant omission from the final regulations is the requirement of a summary disclosure table or roadmap to the disclosures. With respect to this item, the Department decided that any such requirement would be the subject of a later regulation, although the final regulation includes a “sample guide” to the initial disclosures.

If you have any questions about the new fee disclosure regulations or would like to discuss how they apply to your plan, please contact a member of the Benefits Group. 

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