DOL Proposed Regulations Regarding Service Provider Disclosures: A New and Improved (?) Way of Doing Business for Both Service Providers and Plan Sponsors

BACKGROUND

On December 13, 2007, the U.S. Department of Labor (DOL) issued proposed regulations under the Employee Retirement Income Security Act of 1974 (ERISA) that set forth new disclosure requirements for certain service providers to employee benefit plans.1 The proposed regulations are in response to enhanced complexities in compensation arrangements for providing services to employee benefit plans, which have made it difficult for plan fiduciaries to understand the precise costs associated with specific services and whether conflicts of interest exist among service providers. The proposed regulations are intended to introduce transparency to service providers’ fees and potential conflicts of interest, so as to provide plan fiduciaries with sufficient information to be able to make informed decisions about services and costs, and will require major changes in how service providers operate as well as impact employers who contract for those services. The regulations would take effect 90 days after publication of the final regulations.

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