ASPPA requests 'transitional period' for fee disclosure regs

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In the ever-changing football game that is the timing of 408(b)(2) fee disclosures, today brought another move: A request, on the behalf of ASPPA, to consider a one-year period of "transitional relief" for the implementation of the rules.

While there have been several extensions and delays in implementation of the rulings, Craig P. Hoffman, general counsel and director of Regulatory Affairs for ASPPA, has requested that the DOL consider a one-year grace period to allow plan sponsors and providers more time to put the disclosure regs into place.

As Hoffman said, that's mostly because the long-awaited "Frequently Asked Questions" guide, promised by the DOL - which many in the industry hoped would help tie up many of the loose ends still remaining about disclosure regulations - has not actually materialized, despite being promised about three months ago.

"People have had to move forward on ways to design their systems to meet the regulations, but there remain a number of unresolved issues," Hoffman explained. "Many of our members have already started sending out their fee disclosures, despite the ambiguities."

It might also prove to be disruptive to sponsors and providers to suddenly have to change their documentation yet again, if the requested FAQs do suddenly materialize, he added.

In his letter, forwarded to the DOL on behalf of ASPPA, NAPA and the Council of Independent Recordkeepers, Hoffman has also requested a clarification to the ruling stating that asset allocation studies not be considered Designated Investment Alternatives.

If held as DIAs, it's feared that extra regulatory disclosures would be necessary, in addition to the disclosures on the underlying funds - making them more difficult to offer as services.

Hoffman said ASPPA is not asking for a freeze on the intentions - or the DOL enforcement - associated with the 408(b)(2) regulations, but said that an extra year's grace period and a somewhat "liberal standard" for initial enforcement on the part of DOL might go a long way.

"The DOL can still go after anyone who's breaking the rules, that's not what we're asking for," he said. "There's a lot of good people out there but, unfortunately, they don't have the ability to turn on a dime and suddenly adapt to new rules. We hope that the DOL will give people the benefit of the doubt, and be sensitive to our request." 

As scheduled, the deadlines remain the same, though Hoffman said he's optimistic that the DOL will consider a "soft launch" for the regs. Those dates, once again:

July 1: Deadline for plan sponsors to receive fee disclosure data from all covered service providers.

August 30: All 401(k) plan sponsors must disclose most plan facts and investment fees.

November 14: All 401(k) plan sponsors issue their first quarterly fee disclosure showing the fees deducted from individual participant accounts for the third quarter.




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