We had a very well-attended workshop earlier this month to discuss how plan sponsors can best prepare for the Department of Labor’s 408(b)(2) regulations soon to go into effect (July 1).

Mike Fennessy of Great West Retirement gave an overview of 408(b)(2) and offered insight into how companies like his put their fees together. John Lacey with MFS spoke on benchmarking fees and how to decide if the fees you are paying are reasonable. And we also heard from Lloyd Engleman of RBG who showed some sample reports to see what plan sponsors could expect to get from their providers. Some of the key takeaways from the workshop are:

1. Know your covered service providers – anyone who will charge you $1,000 for their services over the life of your retirement plan is a covered service provider who must disclose their fees

2. While 408(b)(2) does require that fees are disclosed, there is no standard format or uniformity to the level of detail that must be submitted. Some providers will have a one page document, others a 12 page report to discuss the fees. Some providers will be more forthcoming and transparent with their fees than others.

3. The DOL will issue fines to providers who do not distribute their fees to plan sponsors by July 1, 2012.

4. The providers will then send the fees on an annual basis going forward. Plan sponsors have the responsibility to make sure the fees are reasonable for the services they are receiving. One way to do that is to benchmark the fees and compare what you paid last year, or to get rates from other service providers every few years to get a better picture of the competitive rates. RBG offered to do a benchmark for anyone who attended, a process that can take several weeks to complete but that will offer insight into the fees paid for services rendered.

5. A few tips were offered to plan sponsors when they review the fee disclosures:

Know what share class your retirement investments are in; different share classes have different fees assigned to the same funds

Revenue sharing is the fee you can look to trim from the fee disclosures; right now, you don’t see those fees

Look for a wrap fee – it is how the providers pay for the plan

6. The plan sponsors should prepare plan participants prior to July 1^st about seeing the fees on their plan documents. Employees have not seen administrative fees on the reports in the past, and now they will have questions about why they are paying fees out of the money they have invested in the 401(k) plans.

Please contact us with questions about your employee benefit plan, and if you’d like to receive the benchmarking service from RBG.

There are some key administrative dates and deadlines for defined contribution retirement plans coming up in April that we’d like to remind you about. Please contact PBTK if you have any questions about these pending deadlines.

April Deadlines:

• April 1: Required minimum distribution
• April 2: Form W-3 and W-2 (electronic)
• April 2: Form 1099-R (electronic)
• April 2: Form 5330
• April 15: Excess deferrals and allocable income
• April 15: Form 1065 or 7004

Contact us for information on preparing the tax and audit documents necessary for your 401(k) or defined contribution retirement plan at 702-384-1120.

From Fiduciary News:

In February 2012, the DOL issued a Fact Sheet outlining the final regulations of its Fee Disclosure Rule set to go effective on July 1, 2012. Among the fiduciary duties 401k plan sponsors are now liable to undertake include obtaining fee disclosureinformation from, according the Fact Sheet, “the following covered service providers:

• ERISA fiduciary service providers to a covered plan or to a ‘plan asset’ vehicle in which such plan invests;
• Investment advisers registered under Federal or State law;
• Record-keepers or brokers who make designated investment alternatives available to the covered plan (e.g., a ‘platform provider’);
• Providers of one or more of the following services to the covered plan who also receive ‘indirect compensation’ in connection with such services: Accounting, auditing, actuarial, banking, consulting, custodial, insurance, investment advisory, legal, recordkeeping, securities brokerage, third party administration, or valuation services.”

Being that many 401k plan sponsors received these services from one source, otherwise known as a bundled service provider, and since the new Fee Disclosure Rule now requires fees to be broken out by service, FiduciaryNews.com thought it might be instructive to review the different service providers and their primary duties.

Click here for more of the article from Fiduciary News.

408(b)(2) – Are You Ready?

On July 1st the Department of Labor’s (DOL) regulation 408(b)(2) is scheduled to become law. All 401(k) plan sponsors will be required to know the fees charged by their 401(k) provider and determine whether those fees are reasonable for the services being rendered.

What exactly is 408(b)(2)? How does this impact plan sponsors and participants? What are reasonable fees?

Piercy Bowler Taylor & Kern (PBTK), a 401(k) plan audit firm, is hosting a workshop to help you understand the impact of 408(b)(2), evaluate your current fees and determine if they are reasonable. PBTK will be joined by Christine Soscia, a 401(k) expert with the Retirement Benefits Group (RBG). RBG manages over $8 billion in 401(k) assets.

Speakers: Michael Fennessy with Great West Retirement Services and John Lacey with MFS

RSVP: Please RSVP by March 12th to shiller@pbtk.com or register online

From a recent Reuters article out of Boston:

“More U.S. workers with 401(k) plans are selecting or defaulting to simple target-date mutual funds, an investment strategy that took its lumps during the credit crisis, but have emerged with greater popularity.

“Target-date funds, however, get mixed reviews from industry analysts who say some funds remain too aggressive even as investors near their retirement dates.”

Click here for the full article.