In evaluating 408(b)(2) disclosures, it is amazing to see how many openly violate a key provision of the regulation. The regulation explicitly requires that each covered service provider describe both the direct and indirect compensation it "reasonably expects to receive."

The most frequent violation noted to date has been the disclosure of all possible compensation, without the inclusion of the compensation that the covered service provider "reasonably expects to receive". The erroneous interpretation of all possible compensation has been taken to a level of absurdity that makes it almost impossible for a responsible plan fiduciary to perform the required evaluation of the service arrangement.

Lists of possible fees have reached the point that they are meaningless. Consider the example of the inclusion of a fee for a checkbook cover! This is not a joke. There are documents that claim to comply with 408(b)(2) that list checkbook cover fees as compensation that the covered service provider expects to receive from every plan being serviced.

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