Stroock Special Bulletin
"DOL Issues Interim Final Fee Disclosure Rules: Keyword 'Reasonable'"
On July 16, 2010, the Department of Labor ("DOL") released interim final rules (the "Final Regulations") under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") concerning disclosure in connection with services rendered to plans covered by ERISA. Section 408(b)(2) requires that certain service provider arrangements with ERISA plans and related compensation be reasonable in order to be exempt from prohibited transactions under Section 406 of ERISA and analogous provisions of the Internal Revenue Code (the "Code").
This Stroock Special Bulletin provides an overview of the Final Regulations, which provide that certain arrangements will not be considered reasonable unless the service provider discloses certain fee and compensation information in writing to a responsible plan fiduciary. If not, the arrangement may no longer qualify for Section 408(b)(2)'s statutory prohibited transaction exemption. The Final Regulations will be effective as of July 16, 2011. This effective date will apply prospectively as well as to all then-existing arrangements.