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News July 18, 2011 Issue

DOL Again Extends Deadline For Adviser Compensation And Services Disclosures

Advisers just got an additional three months to comply with the deadline for providing advance disclosures to ERISA plan clients.

Advisers now have until April 1, 2012 to begin complying with an interim final rule, which had been originally required on July 16. In February, DOL announced its intention to extend the deadline to January 1, 2012, and formally proposed the extension in June. In response to comments received on that proposal, the DOL found that additional time was warranted to allow service providers to update systems and procedures for information collection and disclosure.

On July 13, the DOL issued a final rule further extending the compliance deadline to April 1, 2012.

The disclosures are required by ERISA Section 408(b)(2), which mandates advance disclosure from advisers and other employee benefit plan service providers to plan fiduciaries about the services they provide and the compensation they receive.

Section 404(a) is a related obligation that requires additional, similar advance disclosures to plan participants. In connection with the delay of plan fiduciary disclosures, the DOL also extended the effectiveness of the final rule for plan participants.

The DOL received many requests that additional time be provided for parties to comply with the participant-level disclosure regulation, said the release. Parties argued that participant disclosures would be facilitated by first bringing the overarching contracts and arrangements into compliance with the plan fiduciary requirements. The DOL agreed that aligning the application of the two regulations would assist plan fiduciaries and plan administrators in obtaining the information required to comply with the participant-level disclosures.

As a result, compliance with the interim final rule for advance disclosures to plan fiduciaries was extended to April 1, 2012.

Compliance with the participant-level disclosures is due 60 days after the effective date of the fiduciary-level fee disclosure rule or 60 days after the first day of the first plan year after November 1, 2011.

Certain additional disclosures that must be provided to plan participants on a quarterly basis must commence 45 days after the end of the first quarter in which the initial disclosures are made.