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Borzi Warns Providers on 408(b)(2) Compliance

Saying that she is troubled by 401(k) providers that are circumventing the 408(b)(2) fee disclosure rule’s demands, EBSA’s Phyllis Borzi warned providers March 11 that they need to do a better job at following the rule’s requirements to provide information that is easy to understand.

In a telephone press conference, Borzi noted that some providers furnish information that plan sponsors and participants cannot readily use nor understand; some disclosures are made on multiple documents; and it is difficult for employers to find the information they are looking for if their provider is not complying with the spirit of the regulations.

Borzi said that providing a surfeit of complex information has an even more pronounced effect on small employers, and that EBSA is especially concerned that doing so denies useful information to small businesses and their employees. 

Borzi made her remarks as DOL released a proposed amendment to the ERISA Section 408(b)(2) regulations that would require that a guide or summary accompany a covered service provider’s 408(b)2) disclosures. The DOL envisions requiring disclosures that include a set number of documents or a single document that has a set number of pages. The DOL is open to comments regarding how a guide to the contents of a disclosure would be structured, Borzi said. 

On the same call, DOL Secretary Thomas Perez reiterated his agency’s commitment to releasing the redraft of the fiduciary rule in August, which he stated is still a very important initiative.

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John Iekel is Senior Writer at ASPPA, as well as Editor of the ASPPA Net and NTSA Net web portals.