EBSA, SEC issue "no action" letter on fee disclosure

The U.S. Department of Labor’s Employee Benefits Security Administration and the U.S. Securities and Exchange Commission announced that information the EBSA requires plan administrators to give to plan participants or beneficiaries under its participant-level fee disclosure regulation will satisfy the requirements of Rule 482 under the Securities Act of 1933.

The SEC issued a “no-action” letter to resolve concerns about potential differences between the department's participant disclosure requirements and the SEC’s rules on advertising that may apply to plan investment options.

"This no-action letter is significant for many reasons, but primarily because it will help 401(k) plans and service providers understand what is expected of them under the Employee Retirement Income Security Act and the advertising rules under securities law," said EBSA Assistant Secretary Phyllis C. Borzi. "This ultimately will reduce the cost of regulatory compliance for these plans, which will benefit America's workers. This letter exemplifies the close and sustained coordination between our agency and the SEC, not only on this letter, but on many other matters affecting retirement plans and their financial service providers."

EBSA published its participant-level fee disclosure regulation on Oct. 20, 2010. It requires many retirement savings plans, such as 401(k) plans, to disclose information about investment alternatives. This includes fee and performance information, which must be provided to participants and beneficiaries in cases where they have the ability to direct the investment of their individual accounts. Most plans will be required to furnish the first set of disclosures under this regulation by May 31, 2012.

EBSA and the SEC have been working together on the no-action letter since 2010 to address concerns by plan representatives and their financial service providers regarding their obligations under ERISA and Rule 482.


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