Good news from the DOL about fund disclosures

In response to push-back from the investment and plan fiduciary community, the DOL revised the rule calling for fund disclosures that was to take effect at the end of August, 2012. Plan fiduciaries were looking at significantly increased administrative duties to monitor investments within funds and disclose specific fees to plan participants.

The ruling was delivered in a Field Assistance Bulletin (FAB 2012-02) instead of through the process in which affected parties have the ability to offer comments and feedback prior to taking effect. With the impact of letters and meetings arguing against the new ruling, the DOL issued a revised Field Assistance Bulletin (FAB 2012-02R). The ruling discrepancy in Q&A 30 was replaced with Q&A 39. This is a great example of how making your opinions known can have an impact on revising rules when arguments are clear and well-presented.

The more practical, revised version of disclosure requirements does not prohibit the use of a brokerage window self-directed brokerage account, or similar plan arrangement in an individual account plan. In other words, the ruling is broader regarding designated investment alternatives (DIAs). A DIA depends on whether it is specifically identified as available under the plan (not individual investments within funds). And, when a plan consists of brokerage accounts, the fiduciary has an ERISA responsibility to provide a selection of DIAs. A plan fiduciary must be careful not to designate investment alternatives to avoid investment disclosures.

Bottom line – you need to continue to monitor the investment funds and fees, but you don’t need to micro-manage within funds.

For the exact language, see Q39.