Probably the key takeaway is that sponsors (and their service providers) will have a lot of work to do to bring their plan disclosures into compliance with this new rule. Establishment of websites for non-public funds, developing and formatting participant communications, making sure that necessary information is captured, and the redesign of systems to accomplish all of this, will for many sponsors and service providers involve significant expenditure of management time and expense. The larger issue to consider may be how much of the cost associated with these changes will be passed along to plan sponsors and/or participants by those service providers.
No good checklists currently exist to assist sponsors in ensuring that each requirement is covered. Additionally, in some cases, service providers may not be willing or able to assist plan sponsors in complying with requirements. Perhaps this will be an appropriate time for sponsors to use outside experts who can do this effectively rather than having someone struggle to learn the rules once and rarely, if ever,apply them again.
The compliance burden aside, the information actually provided to participants may or may not be helpful. The DOL has done a lot of work – including focus group testing – to come up with a disclosure scheme that will improve participant choices. Whether, in practice, the new rules have their intended effect only time and experience will tell.
Friday, November 19, 2010
DOL Proposes Sponsor to Participant Disclosure Regulations
Here's an articlethat I wrote on the new regulations that the DOL wrote on ERISA Section 404(a). As I said in the article: